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At 7:48 AM -0400 7/23/99, The Omega Man wrote:
>I was really amazed by this when I first came to this list! Every time
>someone would ask a question or raise an issue that brought a system into
>question (as you did yesterday) many folks on this list would respond that
>they had not been affected by the issue because they had overridden their
>system signals! This is exactly the response you received to your post
>yesterday.
>
>My friends, if you are overriding your system you cannot be said to be
>system trading.
>
>Newer traders take note! The folks here are not trading systems the way you
>think they are!
At 6:55 AM -0500 7/23/99, Robert W Cummings wrote:
>I had to change a spell checker error and to repeat what Chuck Le beau said
>once about a system. He said a pure system is not made from an indicator
>another thing I believe most semi system traders use. My purpose here is to
>attack systems very few people use them and very few people know what they
>are. Unless you have a real understand about how markets trade and then
>have the program skills to write a system not solely based on a indicators
>you should abandon system trading development. Its my experience systems do
>not make money.
At 7:32 AM -0500 7/23/99, Robert W Cummings wrote:
>Hypothetical examples have zero influence to any argument the fact that you
>ignored your system means your interjecting human reasons thus your not
>trading s system. You've got programmed indicators is all instead of just
>watching them yours produce signals, that is not a system.
I am afraid I disagree with these comments. They seem to imply that a
trading system is something that you are supposed to blindly follow,
no matter what. And that there is no point in using them anyway
because "systems do not make money". Nonsense.
I often use an analogy to describe this. To quote one of my previous posts:
You can build a computer program to fly an airliner, the autopilot. It does
a pretty good job and is programmed to handle most, but not all, of the
situations it will encounter. Hopefully, when it encounters something it
has not been programmed to handle, it sounds a warning.
Now you can use it several ways:
> You can turn it on and walk back to the passenger cabin and let it
fly the plane. Normally, you would only do this when the weather
is clear and you are in the middle of "normal situations".
> You can put it on autopilot and read a book. Flying a plane for
hours on end can get pretty boring. The alarm will alert you if
something strange happens and you can deal with it with your
judgement (which may or may not be up to the challenge). As time
goes by, the programs get better and better and can handle more
and more of the unusual cases, requiring judgement less and less
often.
> You can turn it off and fly the plane yourself. Most pilots love
to fly so they do, so even if the autopilot could do it perfectly
well. In fact, most autopilots can fly the plane much better
than the average pilot can in "normal situations".
The problem with most programmed trading systems designed by individuals is
that they are programmed to handle only a small number of cases, "normal
situations", requiring you to break in and use your judgement frequently
when the market stops being "normal". The good ones have more and more
complex code to handle more and more of the special cases.
A "Greenspan moment" is one of those cases that probably isn't worth
writing code to handle.
And there are many very profitable trading systems in use. The
problem is that they take advantage of some characteristic of a
market that is not widely known or understood. You never hear much
about them because if the developer disclosed much about them, other
people would begin to take advantage of the characteristic and it
would stop working.
Bob Fulks
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