Battered & Bruised: Systems Trading School of Hard Knocks

Cartoon figure lying prone at the bottom of a down-trending chart

Every trader has at one time or another dreamed of having a fully automated trading system that is profitable—effectively a money printing press in the basement. I know I did—and I have the scars to prove it. I barely remember the day I woke up, not realizing I was about to embark on a trip that would lead me into an abyss. But I do remember what the goal was—to create an automated trading system that would print me money and lessen the emotional toll that is common in trading.

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The Impact Of Systems

Vector stock diagram, business graph.

Most readers have probably seen at least one of the movies in the Arnold Schwarzenegger trilogy of Terminator movies. These movies have machines fighting machines with humans slightly in control of one side. These days, it feels as if trading the markets is just like that – machines against machines with humans barely in control. It’s this feeling and conversations with a number of experienced traders about the radical changes they’ve observed in price action over the last three years that formed the genesis of this article.

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System Traders: Don’t Just Overcome Obstacles, Curtail Them

Vector man with suitcase falling from side of cliff

Many traders think that simply creating a profitable trading system is all that is necessary to be successful at mechanical trading. Those traders are wrong. Assembling a portfolio of profitable trading systems is just half of the battle. The other half involves executing and monitoring the systems. Therefore, the success of any mechanical trading program depends heavily on execution environment in which a trading program is conducted.

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