Isn't it better to just copy someone else's system? | Forex Factory

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Isn't it better to just copy someone else's system?

  • #1
  • First Post: Jul 24, 2006 9:12am Jul 24, 2006 9:12am
I think indepenent, discretionary traders who just follow their own system are barking up the wrong tree. Say you know someone that runs a hedge fund or you know a trader with a great track record. You're bound to find someone much better than you. Isn't it better to just replicate whatever they're doing instead of trying to come up with trading ideas yourself? Assume you want to be 100% mechanical, that is, there is no discretion involved at all. You learn their method, you set up parameters to generate a signal and you have precise targets, all established already through backtesting by the system creator. You already know the probabilities of your trading setups' possible outcomes. Other than just being comfortable with the actual risk, the idea that you should find a system that suits your personality seems sort of meaningless to me if you're just going to be totally mechanical. Isn't this a much better way to become a successful trader? Why not just copy?
  • #2
  • Jul 24, 2006 9:23am Jul 24, 2006 9:23am
Quoting raschwebel
I think indepenent, discretionary traders who just follow their own system are barking up the wrong tree. Say you know someone that runs a hedge fund or you know a trader with a great track record. You're bound to find someone much better than you. Isn't it better to just replicate whatever they're doing instead of trying to come up with trading ideas yourself? Assume you want to be 100% mechanical, that is, there is no discretion involved at all. You learn their method, you set up parameters to generate a signal and you have precise targets, all established already through backtesting by the system creator. You already know the probabilities of your trading setups' possible outcomes. Other than just being comfortable with the actual risk, the idea that you should find a system that suits your personality seems sort of meaningless to me if you're just going to be totally mechanical. Isn't this a much better way to become a successful trader? Why not just copy?
first the author of the system has to be willing to give it or sell it to you. then you have to be certain that his system works and that you do everything as he does. usually the system will evolve and you have to be certain that you always are on the same track as the "real" trader. then yes, it can work for you.
  • #3
  • Jul 24, 2006 10:04am Jul 24, 2006 10:04am
I can't quite agree with you. What you are suggesting is similar to use a managed account. If you are willing to go through this road it might be better to try a reliable mutual fund which is less risky and probably even more profitable.

Technical and even Fundamantal analysis are two subgective approaches to markets. I've seen so many wrong commentries by experts and many that are in contradiction with each other. Why you decide to rely on people who can't do much better than you. In this way you just need to spend money on not much useful advice.

YOU are the person who clearly knows about your financial situation, your abmitions, your limitations, etc. It is you who can decide what is best for you.

I know that building a reliable approach to be a successful trader takes time and effort but it worth it. I personnaly attended a professional TA course (not one of those useless seminars), studied a couple of books, read several articles, back tested several systems, attended some webinars (free ones), and ran demo accounts for a few months. The result is beyond my expectations. I've now built my own approach to market and I'm making money. I don't need to rely on somebody else's words as I'm making money. Is my approach practical for others? I can't guarantee that. I built it based on my own situation.

My recommendation to you is don't rely on others in this risky market. I'm not saying they're all cheeters. That's not true. The truth is that this market is so volatile and risky that you're chances between being a winner or looser is sometimes less than a minute, so nobody can really be a help other than you.

Quoting raschwebel
I think indepenent, discretionary traders who just follow their own system are barking up the wrong tree. Say you know someone that runs a hedge fund or you know a trader with a great track record. You're bound to find someone much better than you. Isn't it better to just replicate whatever they're doing instead of trying to come up with trading ideas yourself? Assume you want to be 100% mechanical, that is, there is no discretion involved at all. You learn their method, you set up parameters to generate a signal and you have precise targets, all established already through backtesting by the system creator. You already know the probabilities of your trading setups' possible outcomes. Other than just being comfortable with the actual risk, the idea that you should find a system that suits your personality seems sort of meaningless to me if you're just going to be totally mechanical. Isn't this a much better way to become a successful trader? Why not just copy?
  • #4
  • Jul 24, 2006 10:21am Jul 24, 2006 10:21am
The turtles showed that even a successful system can fail, why? because of the individual, the system was taught to the selected group, yet only a few were successful, why? Those that that really followed the system were profitable, the others even though the system was sound, failed to follow it and made little changes that affected the outcome of their trades.
Same Whore .... Different Dress
  • #5
  • Jul 24, 2006 10:41am Jul 24, 2006 10:41am
When they build car they don't re-invent the wheel again and again. They take some things that allready exist and try to improve others.


So it'e better to have a good start ( like a succesfull trader's strategy) and learn it, apply it, master it, improve it.

We all do the same thing, in one way or another. We all try to improve a strategy, something that we had read somewhere. So nobody is inventing nothing, we all steal somthing from somebody when it comes to forex strategies.

Why are you here on this forum? Only to share with others what you know? Or you want to improve what you have?
Try hard, think fast, die young
  • #6
  • Jul 24, 2006 11:03am Jul 24, 2006 11:03am
Quoting raschwebel
Other than just being comfortable with the actual risk, the idea that you should find a system that suits your personality seems sort of meaningless to me if you're just going to be totally mechanical. Isn't this a much better way to become a successful trader? Why not just copy?
If I'm a left-handed golfer, I cannot just copy a successful right-handed player. I must adjust his program to fit my personality. If I can shoot three-pointers as good as Jordan, but can only jump 2 feet high, then I must adjust my game to my personality. If my personality (and stomach) can't accept the risks in this game we calll Forex trading when real money is on the table, then imitation, though the sincerest form of flattery, is simply out of the question.

My point is this: there are many trading systems and styles; no one size fits all. Each trader must find a system or combination of systems then tailor it to fit by developing his/her own trading style depending on a host of personal characteristics (risk aversion, bank account, motivation, psychological fitness, trading history, general outlook on life, fundamentalist, technician, arithmetically inclined or challenged, short-term or long-term perspective, day trading, overnight trader).

At most you can initially imitate a successful system but at some point, the embryonic successful trader must adapt that system to his or her own peculiar character traits in order to grow and develop.

As Darwin said, "Ya gotta be fit to get outta here alive!" or something to that effect.
  • #7
  • Jul 24, 2006 11:37am Jul 24, 2006 11:37am
...and just to segway off of MM's post, I could give ten traders my two strategies which are simple, profitable strategies, and eight of them would still lose money because they don't have their head on straight or they'll try to hack the crap out of it to make it better.
Mr. Trend
  • #8
  • Jul 24, 2006 2:38pm Jul 24, 2006 2:38pm
Quoting Mr Trend
...and just to segway off of MM's post, I could give ten traders my two strategies which are simple, profitable strategies, and eight of them would still lose money because they don't have their head on straight or they'll try to hack the crap out of it to make it better.
I dunno...I think three out of ten would be successful traders, not just two. One who follows your system to a tee, and two who took your systems and tweaked them to their own trading style. However, I do agree that the ones that simply hack away at the system because they're trying to reinvent the wheel will fall down on their faces.
  • #9
  • Jul 24, 2006 4:18pm Jul 24, 2006 4:18pm
Quoting Hollis
I dunno...I think three out of ten would be successful traders, not just two. One who follows your system to a tee, and two who took your systems and tweaked them to their own trading style. However, I do agree that the ones that simply hack away at the system because they're trying to reinvent the wheel will fall down on their faces.
I tend to disagree. If 90% of traders don't make money in the markets, it's because 90% don't have their heads on straight. With that high of a percentage, I'd bet on the fact that eight out of ten won't be successful in six months.

...and that's being generous... I'm giving them a 20% success rate. The numbers are probably more like, 5% would be successful. Which basically means one person out of the ten.

Regardless... There's a heck of a lot more losers than winners in the market out there... heh heh.
Mr. Trend
  • #10
  • Jul 24, 2006 6:49pm Jul 24, 2006 6:49pm
Quoting raschwebel
I think indepenent, discretionary traders who just follow their own system are barking up the wrong tree. Say you know someone that runs a hedge fund or you know a trader with a great track record. You're bound to find someone much better than you. Isn't it better to just replicate whatever they're doing instead of trying to come up with trading ideas yourself? Assume you want to be 100% mechanical, that is, there is no discretion involved at all. You learn their method, you set up parameters to generate a signal and you have precise targets, all established already through backtesting by the system creator. You already know the probabilities of your trading setups' possible outcomes. Other than just being comfortable with the actual risk, the idea that you should find a system that suits your personality seems sort of meaningless to me if you're just going to be totally mechanical. Isn't this a much better way to become a successful trader? Why not just copy?
Why don't you give it your best shot and let us know how it works out.
  • #11
  • Jul 24, 2006 6:49pm Jul 24, 2006 6:49pm
Quoting Mr Trend
...and that's being generous... I'm giving them a 20% success rate. The numbers are probably more like, 5% would be successful. Which basically means one person out of the ten.

Regardless... There's a heck of a lot more losers than winners in the market out there... heh heh.
As usual Mr. Trend, my friend, you are correct. I keep asking this question: if most traders lose money in this business, why continue doing what most traders do? No one has answered that question yet - perhaps it sounds rhetorical. But it seems that most people take the road most traveled and most people are falling off the same cliff. Or maybe they all like the same cool-aid.

As I just wrote in another thread: the definition of insanity is continuing to do the same thing while expecting a different result. Even though wheels on cars aren't reinvented tires improve, someone invents "spinners" or 22" rims and when sales fall off something must change or else that carmaker will fall out of the market.
  • #12
  • Jul 24, 2006 7:00pm Jul 24, 2006 7:00pm
Quoting MoneyMa$ter
As usual Mr. Trend, my friend, you are correct. I keep asking this question: if most traders lose money in this business, why continue doing what most traders do? No one has answered that question yet - perhaps it sounds rhetorical.
Because everybody gets what they want out of the market...
Mr. Trend
  • #13
  • Jul 24, 2006 7:04pm Jul 24, 2006 7:04pm
Quoting Mr Trend
Because everybody gets what they want out of the market...
Dude, that is profound...
  • #14
  • Jul 24, 2006 7:15pm Jul 24, 2006 7:15pm
Quoting MoneyMa$ter
Dude, that is profound...
Gotta love ole' Ed... one of the greatest Trend Traders out there...
Mr. Trend
  • #15
  • Jul 24, 2006 10:44pm Jul 24, 2006 10:44pm
Quoting johnedoe
The turtles showed that even a successful system can fail, why? because of the individual, the system was taught to the selected group, yet only a few were successful, why? Those that that really followed the system were profitable, the others even though the system was sound, failed to follow it and made little changes that affected the outcome of their trades.

The turtles that failed just forgot the old trading mantra that a hard trade is usually the better one, this is why I feel pretty strongly that having any discretion at all is a huge mistake.
  • #16
  • Jul 24, 2006 10:50pm Jul 24, 2006 10:50pm
Quoting Mr Trend
...and just to segway off of MM's post, I could give ten traders my two strategies which are simple, profitable strategies, and eight of them would still lose money because they don't have their head on straight or they'll try to hack the crap out of it to make it better.
EXACTLY. This totally proves my point, when you start trying to 'fit it to your personality' you destroy it. This game is pure math, is it not? If you can't quantify a particular pattern or setup, it's worthless. If something is too ambiguous, there is too much room for error. You have rules and you follow them, that's it.
  • #17
  • Jul 24, 2006 11:45pm Jul 24, 2006 11:45pm
the first problem is if someone is selling your a system that makes $10,000 a year how much should they sell it for (nevermind 1000pips)? if some one sells you a system for $500 it is probably worth $500

the 2nd problem is the more a system is used the less it works. when you have a successful system you are *taking* money from other people. Everyone else in the market is trying to take your money. The more money people are losing in a certain way (how ever the system works) the more people will try to resist it with their trade plans. It is not that they are singling your system out its just people tend to try to make money. Going public with a working system destroys it.
  • #18
  • Jul 25, 2006 12:04am Jul 25, 2006 12:04am
Quoting raschwebel
EXACTLY. This totally proves my point, when you start trying to 'fit it to your personality' you destroy it. This game is pure math, is it not? If you can't quantify a particular pattern or setup, it's worthless. If something is too ambiguous, there is too much room for error. You have rules and you follow them, that's it.
Only Partly. The Rest [majority] is psychological [i think].

It doesn't matter a rats fart what You think. Only that what You think is in tune with the majority.
  • #19
  • Jul 25, 2006 4:51am Jul 25, 2006 4:51am
Personality and finding a system that is a hand-in-glove fit, is critical.

Take a look at a classroom; teacher teaching the same thing; some kids get 100% on their test, some get an F. Same teacher, same material, same text book. The PERSON has more profound influence on winning or losing than the system.

I can give you an EA and you will still lose money on it. Why? Because you are not me.

You think that's stupid, because when it says "buy" i just click buy and when it says "sell" i just click sell; but the truth of the matter is, forex is a 50/50 game (less bid/ask) and 90%+ lose money. If it were that easy, I can just sell a EA and be rich and all of you would be rich also... But that isn't the case.

Mr. Trend, you are optimistic; 100 traders, I'd give about 8 of them hope.. (eek.. I hope I'm one of those 8!!)
google:
  • #20
  • Jul 25, 2006 5:15am Jul 25, 2006 5:15am
Just want to share a quick real life story. Few years ago done an advanced FX course (meaning all the people attending had previous exposure to FX trading). Last day after lunch (on our side of the world that is New York open) the instructor handed out a simple, basic trading system with clear rules. He projected a chart on the wall with an overhead projector and we started trading. Now for the reality part, after three days in the same course, trading the exact same chart at the same broker with the same trading rules there were three groups of results. First the people who did not see a signal and done nothing ie breakeven, secondly a group who’ve made money and lastly a group that have lost money. In a way this was to be expected, the unexpected part was that the people who were losing on average lost much more than what the winners win.

So to answer the original question - it can turn into a long search .......
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