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Bob, I think you're missing it... The idea here is to inform newer traders
of the way the game's really played. The game is not "build a system and
trade it mechanically". You and I agree that that is impossible. The game
is "build some tools to help yourself then use your market experience to
help you trade". Don't we agree that that is really the way the game is
played?
And if we agree on this, what should our advice be to newer traders? If
every method is truly discretionary at root, then what should newer traders
be working to develop?
> I was driving to the local market, past the house of our local Market
> Wizard and I heard his voice in my head: "System trading is
> ultimately discretionary. The trader decides position size, which
> markets to play," etc. "These decisions are quite important -
> often more important than trade timing."
>
>This guy was using computerized trading models before many
> people on this list were born.
----- Original Message -----
From: Bob Fulks <bfulks@xxxxxxxxxxxx>
To: The Omega Man <editorial@xxxxxxxxxxxxx>
Cc: <omega-list@xxxxxxxxxx>; <TradeWynne@xxxxxxx>; Robert W Cummings
<robert.cummings@xxxxxxxxxxxxxxxx>
Sent: Sunday, July 25, 1999 11:16 PM
Subject: Re: Price shocks and money management
> At 10:14 PM -0400 7/25/99, The Omega Man wrote:
>
> >"System trading" is *impossible* because:
> >
> ><snip>
> >
> >System trading is a myth!
> >
> >The whole game is position sizing/money management! The entries and
exits
> >are going to be completely discretionary no matter what "system" you
*think*
> >you are trading. In reality, no "system" can really be traded due to the
> >factors listed above!
>
>
> Interesting debating technique. You define a "system trading" as something
so idealized that it can never be achieved and then conclude that it,
therefore, cannot exist.
>
> Read the Jake Bernstein definition you referenced carefully:
>
> "A trading system consists of specific signals, operationally defined,
> combined with a set of decision making procedures and risk management
> rules, all designed to make trading objective and mechanical."
>
> The way I read this it says "designed to make..." And cars are designed to
be safe but are they absolutely safe? Of course not. A great objective but
unachievable. So should we stop trying to make them safer? Should we give up
driving and walk everywhere?
>
> Ask Mr. Bernstein if he absolutely always takes every signal his trading
systems generate.
>
> It always seems that the people who say a profitable trading system cannot
be built never seem to be able to build one while those who do not know it
is impossible often seem to do OK.
>
> In a more pragmatic vein, I know a lot of traders who make a lot of money
using what they call their "mechanical trading system" and they do not take
every trade, use real data as it comes off of the feed complete with bad
ticks, sometimes take a day off, usually eat lunch, sometimes take their dog
to the vet, sometimes go to the head....
>
>
> Bob Fulks
>
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