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ribau wrote (in part):
>I'm curious... How do other list members feel about buying systems from
>non-traders?
I would NEVER buy a system from a non-trader!!! This is first of my
TRADING commandments...THOU SHALL NOT BUY TRADING SYSTEMS FROM
NON-TRADERS...PERIOD!!! Etched in stone.
Would you buy an oil deal from a non-geologist or non-petroleum engineer?
Would you buy a computer from a vacuum cleaner saleman? How about a lawyer
performing brain surgery? (sorry, couldn't resist <g>) And so on. To claim
to only KNOW about trading is a poor excuse to justify selling systems. I
know about cosmology, yet do I claim to be a astro-physicist? Of course
not! To really KNOW trading one must be IN the trenches doing battle with
the markets and other traders on a daily basis...it's a whole different
perspective when you do. Little things, like the dreaded word UNABLE,
abnormal slippage, large never ending drawdowns, floor running stops out of
winning trades, is my broker front running my orders?, data failures, rain
fade, telephone lines cut by a guy digging fence post holes (this actually
happened to me last Sunday), self-doubt, fear, greed, why is market against
me? (it isn't), making monthly bill payments, and so on. These things are
not excuses, but realities in the life of a trader. Boy, isn't trading
sure macho and glamorous...Not! System vendors trading their own systems
and selling those systems to other traders have a unique outlook that
non-trading system sellers do not have because they are not in the market
trenches pounding it out day after day.
These are the rules / questions I use to evaluate whether or not to buy a
100% mechanical system (fully nondiscretionary):
0. Does the system that you are evaluating match your trading personality?
Why buy a day trading system if you are not psychologically able to day
trade? Or why buy an EOD system if you can't handle holding a position for
weeks at a time or trade 15 to 20 commodities in a portfolio? That's why I
call this rule the Zeroth Rule...you must know yourself and your trading
limitations BEFORE you evaluate any system!
if 0 is true, then
1. Does the system vendor use the system in his / her own trading? If not,
WALK AWAY!
if 1 is true, then
2. Will the system vendor release audited account statements documenting
the real time system performance? I require records for a MINIMUM of ONE
YEAR for day trading systems and THREE YEARS for EOD systems. Sounds
tough??? Well, so is losing YOUR MONEY trading a CRAPPY SYSTEM!!! If the
system vendor does not comply, then WALK AWAY!
if 2 is true, then
3. Will the system vendor provide a fully functional trial version for your
real time evaluation? Most vendors will gladly let you use a full blown
version (under lock and key, of course) for 30 days for about $100. Most
will credit the evaluation cost to the full purchase price should you
decide to buy it. Again, if the system vendor does not comply, then WALK
AWAY!
if 3 is true, then
4. Is the system BLACK BOX (code locked, no user input at all), GRAY BOX
(code locked, user input allowed), or WHITE BOX (code unlocked and user
available). This rule requires that you must make your "box" choice based
on your own personal perferences. My preference is for WHITE BOX systems
only...my reasoning is that since I bought the code, then I should be
available to look at it. Also, you might want to lease the system for a
monthly fee (should the vendor not be willing to release the code) if you
like the system and it passes the three tests above. That way, if it's
junk, you cancel the lease and go your way. If you intend to become a
serious trader (part-time) or full time trader, then only buy WHITE BOX
systems.
These opinions are based on over 12 years of full time trading and systems
evaluation. The rules were formalized when (in a former life) I sold oil
and gas prospects as a petroleum geologist. I made it a rule to purchase a
percentage of each deal that I sold. My reasoning was how could I expect
others to invest in my prospects / ideas if I didn't "put my money were my
mouth was" myself? That way, win or lose, we were in it together.
It's obvious that few systems will pass these tests. So be it. But I've
saved myself uncounted dollars and grief from systems that failed to
perform as advertised. I've looked at a lot of junk in all those years and
I feel that the best approach is to develop personalized systems based upon
personalized observations of market behavior. But that takes time...a lot
of it. System vendors succeed because of the human need or desire to take
short cuts in the trading process and the allure of unlimited profits.
Some system vendors also take short cuts in developing systems because of
that fact. They promote crap that they know is crap because they know
better than most that traders are attracted to sexy systems like moths to a
flame. Traders literally throw their money at the system vendors with the
snazzy ads giving little or no thought in the process. While not all system
vendors are bottom feeders, the scum bags ruin it for the decent and honest
ones. Unfortunately, the vendors with integrity end up getting screwed too.
I firmly believe that most traders would be better served by sticking with
their day job and learning the trading business in their spare time. Then
the trader wannabe could lay a solid foundation should they pursue full
time trading later. Taking trading short cuts will inevitably and
ultimately lead to disaster.
PS1: So as not to enrage any ORSP's that provide EL support on a per hour
basis, I'm not referring to you. I may have an occasion to use your
services to program trading ideas beyond my meager understanding of EL. I
would only require that you sign a nondisclosure agreement covering any
code you developed for me. This is a standard industry practice. If you
don't sign an agreement, I WALK AWAY.
PS2: So as not to enrage any ORSP's that provide TS add-ons such as
HashNums, etc., (no affliation or personal interest, first one that came to
mind), I'm not referring to you. Products that extend TS's capabilities
are welcome additions to most users.
PS3: So as not to enrage Pierre Orphelin, a very vocal ORSP on this list,
I'm not referring specifically to Safir-X or SirTrade. I don't consider
those to be systems per se, but more of a system development toolkit or
package (based on my preview of a downloadable version of Safir-X and
SirTrade several months ago). What I'm referring to in this post are fully
tradeable, out of the box, 100% mechanical systems...just plug into TS and
go. Pierre's neurofuzzy thingy requires a lot of thought as to the proper
inputs to get a desired output. I played with it for a weekend (about 30
hours) on intraday S&P data and was impressed. But not enough to shell out
4 grand now.
PS4: I purposely avoided talking about discretionary or
mechanical-discretionary hybrid systems. That's a whole other can of worms.
PS5: These opinions are entirely my own. I don't trade OPM (never have and
never will). I don't write a newsletter (ditto). I don't have a 900
number (ditto). I don't teach courses (ditto). And I don't sell systems
(super ditto!).
PS6: In the final analysis, let the buy beware!
Tony Haas
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The commodities market is that creation
of man that humbles him the most.
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