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The quest for the best forex trading system

  • #1
  • First Post: Mar 19, 2006 10:43am Mar 19, 2006 10:43am
The best advice for the eager newbie is learn a system perfectly and trade it with discipline.

I want to be as good as the best trader in the world. What is that trader's average pip gain/loss per trade? What is thier percentages of wins/BEs/losses? What is their record for wins in a row?

It is very clear to me that it is all about the pips. If your system works, it doesn't matter if it is large wins and frequent small losses or rare losses and consistant small wins. It is about the total pip gain for your entire trading career.

While important, I don't mean for this to be a discussion of psychology. It is a discussion of, "what is the record for getting pips, and what is the best system, and what makes me the most money?

My goal is to find the system with the most infrequent losses, so I can increase my position size. If the case of a few losses, I would reduce my risk level per trade until the system is improved or the system wins back beyond where I was before the loss.

Long post but I think I superb topic worth your time to discuss. There are many great systems already on this forum that anyone would be happy with if they perform as designed, but this is about the ABSOLUTE BEST

Thanks in advance and good trading.

P.S. I was inspired by a show on dice controllers playing craps. THey are beating the casinos consistantly. Dude has a system, a system of discipline and consistancy. It occurred to me that it would be less sexy but more profitable to design the best possible system in forex. And as long as you have a good broker, the market doesn't get wise to your winning streak, and you don't have to fly all over the world to different casinos to avoid heat http://www.strategybuilderfx.com/for...ilies/wink.gif
I keep a close watch on this chart of mine...
  • #2
  • Mar 19, 2006 11:16am Mar 19, 2006 11:16am
Grab a cup of coffee and start back testing...





Mike...
***Building an EMPIRE one pip at a time***
  • #3
  • Mar 19, 2006 11:21am Mar 19, 2006 11:21am
There can no "one" perfect system and to search for one is a futile quest.

In racing, you have to modify and set up your car for oval tracks in a completely different manner than if you are racing on a straightway.

Forex is absolutely no different.

The market is fluid and is constantly transitioning from trending to ranging and back again. No one system can out perform all others in those conditions.

The best advice I can offer as a professional trader, is not to search for a holy grail, but acquire and modify several systems to suit each transition of the market. Your goal shouldn't be to make money, but to be the very best trader you can be. Greed, like speed, kills.
Capital Preservation is key to long term wealth accumulation
  • #4
  • Mar 19, 2006 11:35am Mar 19, 2006 11:35am
Someone correct me if I'm wrong.

The longer term your trades, the more you make on average, but the more consequetive losses you have.

Cyclical and volatility traders tend to have a high winning percentage but don't make much per trade. Trend-based systems tend to get a lot of profit from a small number of huge wins.

I like looking at the systems on collective2.com to get an idea of the characteristics of different kinds of systems. If you do that, make sure you look at all the stats before you take a system seriously. For example, you can get 100% win rate by simply not closing your losing trades. Also, I try to ignore systems that don't have a large trade history.
  • #5
  • Mar 19, 2006 4:05pm Mar 19, 2006 4:05pm
Quoting ManInBlack
I want to be as good as the best trader in the world. What is that trader's average pip gain/loss per trade? What is thier percentages of wins/BEs/losses? What is their record for wins in a row?
Read "Market Wizards" and "The New Market Wizards"...Those 2 books contain the answer to your question and to even more questions that might arise in the future...

By the way, the 2 books are cheap, you can find both on Amazon for less than $30 both...


Thanks,

Nader
  • #6
  • Mar 19, 2006 8:11pm Mar 19, 2006 8:11pm
Quoting Gyva
Grab a cup of coffee and start back testing...

Mike...
LOL, well that certainly has helped me develop the strategies are currently wroking for me, and I intend to develop better and better systems on my own over time, I'm just looking for some of the best.

I keep a close watch on this chart of mine...
  • #7
  • Mar 19, 2006 8:14pm Mar 19, 2006 8:14pm
Quoting MuddBuddha
There can no "one" perfect system and to search for one is a futile quest.

The best advice I can offer as a professional trader, is not to search for a holy grail, but acquire and modify several systems to suit each transition of the market. Your goal shouldn't be to make money, but to be the very best trader you can be. Greed, like speed, kills.
I agree with you 100% That is exactly what I am looking forward to doing, trading at the peak of possibilities. Sure greed kills, but you know "go forth and multiply!
I keep a close watch on this chart of mine...
  • #8
  • Mar 19, 2006 8:21pm Mar 19, 2006 8:21pm
Quoting Mike Jolley
Someone correct me if I'm wrong.

The longer term your trades, the more you make on average, but the more consequetive losses you have.

Cyclical and volatility traders tend to have a high winning percentage but don't make much per trade. Trend-based systems tend to get a lot of profit from a small number of huge wins.
I would say that you are more or less right, that trading systems in general tend to behave like that. But it is not a hard and fast rule, that is to say, it's possible to trade high probability trades, and take home huge gains.

A perfect example would be the Vegas 4 hour. Where it is said that at least 25 000 pips a year are possible. I'm not sure what people's winning percentage is, but it seems to be high.

When a guy is batting .350, he doesn't say, "well I'm doing good, I think I'll just maintain" if he is good, he continues to develop, so that he can hit .400 and increase his RBI's and HR's. That's what I'm thinking. There has to be always a better way. Like it has been said before, if your strategy can be changed to net an average of 2 extra pips per trade, that's big gains over a year.

So I am more looking to discover not a "holy grail" but a really high batting average, because there is no logical reason not to.
I keep a close watch on this chart of mine...
  • #9
  • Mar 19, 2006 8:22pm Mar 19, 2006 8:22pm
Quoting narafa
Read "Market Wizards" and "The New Market Wizards".
Thanks man I am starting the first one so far it is mostly about fund managers etc... very good though, thanks!
I keep a close watch on this chart of mine...
  • #10
  • Mar 19, 2006 8:31pm Mar 19, 2006 8:31pm
Ok, a lot of systems use discretion. What I really want to look at is what is the best trading system out of the box?

There are many many systems, but some are better than others, we can all agree. One has to be better than all of the others. This system would have to include different market conditions to be considered to be versitile enough to be the (best)

One system that I have seen that has turned many a trader profitable is the "bunnygirl cross" under wma cross at moneytech.

Ok, thanks for the replys, now, what is your best trading system?

Thanks
I keep a close watch on this chart of mine...
  • #11
  • Mar 20, 2006 8:47am Mar 20, 2006 8:47am
I believe what you're looking for are specific numbers well, the best trading system can mean different things to different people. I personally like return on account and profit factor. I believe fire horse once told me he liked low drawdowns. For some it might be net profit.

And then there is the time that a system has been in that market is one year trading satisfactory to you or would you rather a system that has been trading for five.

I believe a portfolio of different systems is best. Breakout systems do well sometimes and trend following systems do better, other times, they can balance each other out.

Over the years I have personally tested literally hundreds of systems. Out of these. There are 36 systems that meet some certain criteria that I have. And only seven that I would personally use in my portfolio.

And out of those 7, I've modified everyone of them to meet my specific trading comfort zones.

So which system is the best it is an impossible question as I do not know everybody else's systems.

But if you do want to know the systems that are currently on the market. There are several places you can check, and I am talking only third-party watchdogs who keep a track record of systems. Such as

collective 2
future truth magazine
Striker securities
Attain
Trade center

Since I do not know your exact criteria for what is the best. You can simply look at all the sites and judge for yourself.
A truly wise man, always has more questions than answers.
  • #12
  • Mar 20, 2006 9:28am Mar 20, 2006 9:28am
Thanks claude those are some great links I'll be checking out.

I agree with you 100% on all that you have said.

I have been toying with this idea of dynamic mechanical. Where you change your system to meet the market conditions, but the signal to change strategy is mechanical as well. Of course, if discretion was unnesessary, we would all be making 100% a month with our expert advisors.

Another theme i have been interested in that I wonder if anyone knows about, is the software that some of the big banks supposedly used in order to make moves. I think that they probably have custom software. But it is something that is profoundly interesting to me.

Thanks again and may the market always move with your position...
I keep a close watch on this chart of mine...
  • #13
  • Mar 20, 2006 11:07am Mar 20, 2006 11:07am
Hi ManInBlack. I think there is a danger of getting just too complicated here if you continue the quest on the outside, rather than sorting out what is going on inside. I think we all know that there is no 'perfect system' out there, because if there was, we would hardly be bothering with this forum, and all the 'imperfect' systems wuld have fallen by the wayside long ago. True security in trading is something you have to develop inside, and that is what so many of us avoid because it's easier to read books, follow gurus, learn ever more clever techniques and effectively hope that someone else can do it for us. They simply can't!

I find that trading is one of the most graphic and immediate personal development courses on the planet. Once you are in the right place, you can trade perfectly (waits for the shouts of derision from all the other traders in the forum!). Keep it simple, work on your own issues, what ever they may be, be truly present and use the simplest system you can find.

The framework is there; we just have to work on our frame of mind.
  • #14
  • Mar 20, 2006 11:27am Mar 20, 2006 11:27am
I agree with you, and I was interested in your comments about trading being a deeply personal and "present" experience. It's pretty cool how it seems you are talking about a meditative or "spirtual" approch.

I am very aware that over complicating matters can be counter productive. I have been working with Rob Booker, and there is no doubt that I am already set up to do very well with the simplest most effective style of trading there is. And I am disciplined enough to follow it.

But in the same vein I am at risk of getting bored. this morning I listened to GG. Allin, Mozart, little richard, miles davis and then some slayer. I keep my passion alive in music by opening up to everything that is possible. I know people who get bored with music, and I just can't imagine that.

Of course, here I am learning to fish. Something I will do on my own no matter what, I'm not looking for something that doesn't exist, I'm looking for the best, and ideas on what is the best.

I'm posting here to ignite some discussion on performance. Pure pips. Pushing the envelope. Vegas system says it could net 25000 pips on GBP alone a year. Is that the limit on a trading? is there a limit on how many pips you can get? Why not push the envelope? Just because some guy somewhere is averaging 50 000 pips a year, doesn't mean i cant make 70 000. I think that there is a real split in this business, between people who are conservative, and like getting to a place where they are happy, and others like me who will never stop.

My buddy says he will stop trading after he makes a few million. I will never stop, and I will never stop trying to do more, in every kind of money making scheme, trading and otherwise, because it is my passion. It's fun.

So the whole point is that there is a guy out there making more pips than you. What can you do to be better? Why woulnd't you want to?

Thanks again for your posts on this interesting (for me) topic
I keep a close watch on this chart of mine...
  • #15
  • Mar 20, 2006 1:30pm Mar 20, 2006 1:30pm
Quoting ManInBlack
I agree with you, and I was interested in your comments about trading being a deeply personal and "present" experience. It's pretty cool how it seems you are talking about a meditative or "spirtual" approch.

I am very aware that over complicating matters can be counter productive. I have been working with Rob Booker, and there is no doubt that I am already set up to do very well with the simplest most effective style of trading there is. And I am disciplined enough to follow it.

But in the same vein I am at risk of getting bored. this morning I listened to GG. Allin, Mozart, little richard, miles davis and then some slayer. I keep my passion alive in music by opening up to everything that is possible. I know people who get bored with music, and I just can't imagine that.

Of course, here I am learning to fish. Something I will do on my own no matter what, I'm not looking for something that doesn't exist, I'm looking for the best, and ideas on what is the best.

I'm posting here to ignite some discussion on performance. Pure pips. Pushing the envelope. Vegas system says it could net 25000 pips on GBP alone a year. Is that the limit on a trading? is there a limit on how many pips you can get? Why not push the envelope? Just because some guy somewhere is averaging 50 000 pips a year, doesn't mean i cant make 70 000. I think that there is a real split in this business, between people who are conservative, and like getting to a place where they are happy, and others like me who will never stop.

My buddy says he will stop trading after he makes a few million. I will never stop, and I will never stop trying to do more, in every kind of money making scheme, trading and otherwise, because it is my passion. It's fun.

So the whole point is that there is a guy out there making more pips than you. What can you do to be better? Why woulnd't you want to?

Thanks again for your posts on this interesting (for me) topic
Wonderful! I think there are so many parallels to trading in life. It's as if every film, story, religion etc., is trying to drop the hint, but most of the time we just don't get it. Just one that you can relate to, I'm sure: it was only when Johnny gave up his dependency on things he thought were helping him, and became truly empowered, that he was able to enjoy life and be successful in every way.

And yes. Why put limits? You're a man after my own heart!
The framework is there; we just have to work on our frame of mind.
  • #16
  • Mar 20, 2006 1:37pm Mar 20, 2006 1:37pm
LOL. I always parrellel trading to life.

In life, there are many held beliefs such as religion, that people hold to no matter what.

People generally do what other people do, and feel uncomfortable doing otherwise.

People always, ALWAYS make mistakes.

People always end up dead.

and many more


Thanks for the good posts. I ought to have a look at your book.

Trading can be addictive.... put down the crack pipe!
I keep a close watch on this chart of mine...
  • #17
  • Mar 20, 2006 1:49pm Mar 20, 2006 1:49pm
Quoting ManInBlack
LOL. I always parrellel trading to life.

In life, there are many held beliefs such as religion, that people hold to no matter what.

People generally do what other people do, and feel uncomfortable doing otherwise.

People always, ALWAYS make mistakes.

People always end up dead.

and many more


Thanks for the good posts. I ought to have a look at your book.

Trading can be addictive.... put down the crack pipe!
Don't talk to me about mistakes! Aargh! If only I could rewind sometimes!
But as long as you learn, they've served their purpose.

OK, must leave the addiction for now - you to your music, me to my art. See you later.
The framework is there; we just have to work on our frame of mind.
  • #18
  • Mar 21, 2006 10:10pm Mar 21, 2006 10:10pm
Quote
I am very aware that over complicating matters can be counter productive. I have been working with Rob Booker, and there is no doubt that I am already set up to do very well with the simplest most effective style of trading there is. And I am disciplined enough to follow it.

I'm doing pretty well with the Vegas stuff. I've overcome most of my initial confusion and it all seems pretty simple now. However, I really have the urge to figure this stuff out.
Quote
I'm posting here to ignite some discussion on performance. Pure pips. Pushing the envelope. Vegas system says it could net 25000 pips on GBP alone a year.

Quote
But it is something that is profoundly interesting to me.

The intellectual challenge of this stuff is why I can't tear myself away. Mathematically, it's got it all: Waves, chaos, fractals, statistics, game theory, you name it. A few weeks ago I posted something about going for that 100% win rate, along with some of the nontraditional kinds of analysis I've been trying (they each explain a lot of market behavior). I've been checking out cool stuff like:

 

  1. Signal analysis (waveform, spectral, harmonic, filters)
  2. Chaos theory (attractors, bifurcation, Poincaire sections)
  3. Currency triples, one pair as indicator for another pair, overall market as a ball-and-spring system
  4. Hard constraints on price change over time
  5. Momentum-based position stacking

My latest (tentative) finding is that given any bar chart and MA period, if you plot the price change for each bar against the change in the MA for the same bar, the data points bounce around inside a hard boundary with what appears to be an attractor at the center. I'm thinking this could explain the success of tunnel methods and also much of price action analysis. I should be able to use this to predict slowing momentum 100% when the boundary is hit, but this doesn't make me money. I'm now working on how to predict crossovers between positive and negative price change.

Sorry, I'm excited about this stuff. I feel like an idiot for putting my money in mutual funds and crap all these years. It doesn't happen often in one's adult life for something this big to come into focus.

  • #19
  • Mar 22, 2006 8:26am Mar 22, 2006 8:26am
Mike you have touched on a theme I have been singing.

"traditional" Technical analysis obviously still works, is simple, and is enough for many people. But guys like you and me aren't happy with pips in the bank. We want to go to the extremes and focus on performance.

The main goal I have been talking about from the beginning is this. If your trading system has a reasonable SL, and you have a win percentage of never less that 95%, you could dramaticly increase your position size.

To some people, the concepts in trading are hard enough without fractals etc...

Simple works and should be how you learn to trade at first. But don't listen to the naysayers, the market changes behavior over time, sure. But who says you can't figure that into your analysis? we're not looking for an easy way, we are intuitively realizing there is a better way to trade than the way the majority of people are trading.

You gotta do the time... the legwork

good night and good luck
I keep a close watch on this chart of mine...
  • #20
  • Mar 22, 2006 9:26am Mar 22, 2006 9:26am
Quoting ManInBlack
Mike you have touched on a theme I have been singing.

"traditional" Technical analysis obviously still works, is simple, and is enough for many people. But guys like you and me aren't happy with pips in the bank. We want to go to the extremes and focus on performance.

The main goal I have been talking about from the beginning is this. If your trading system has a reasonable SL, and you have a win percentage of never less that 95%, you could dramaticly increase your position size.

To some people, the concepts in trading are hard enough without fractals etc...

Simple works and should be how you learn to trade at first. But don't listen to the naysayers, the market changes behavior over time, sure. But who says you can't figure that into your analysis? we're not looking for an easy way, we are intuitively realizing there is a better way to trade than the way the majority of people are trading.

You gotta do the time... the legwork

good night and good luck
Quite right! I really like your thinking ManInBlack. I think you'll be a realised soul of trading soon!

But there's actually less figuring out than you think. So many of us over-complicate our trading in the search for that mythical 'security' out there. With my system you can simply see when the market changes behaviour....and get that 95%.
The framework is there; we just have to work on our frame of mind.
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