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adcall wrote:
> Hi Tom,
>
> Ric Ingram wrote:
> >the purpose of this post is to suggest that
> >the system is not the source of profits, the trader is.
>
> I suspect that Ric was referring to a system trader who blindly follows
> the signals given by a 'computer programmed trading system' rather than a
> discretionary trader who may follow a set of rules that together form a
> 'system'.
Here's my spin on this. I rely fairly heavily on computer automation to
trade - while the signals it generates for me do not fully capture the
criteria I use, perhaps a very sophisticated program could be set up to
encompass this, with some future software. Now, do I use discretion here? -
depends on what you mean by this. I wouldn't consider myself to fit in this
category - I'm still using a set of clearly defined rules, and I find that
whenever I deviate from them to make "discretionary" calls, my results suffer
on balance. In fact, I feel that the worst time to contemplate altering
one's technique is while trades are in progress, and I confine this to after
hours, where I can be more objective. What I do insist on, though, is to
avoid guessing, whether educated or not.
Every trader has a certain set of rules he or she uses - although one may
choose to deviate from them to a greater or lesser extent. He or she may
rely on software to an extent, but this would be for the most part a
mechanism of efficiency, often allowing much more to be accomplished than
humanly possible, especially with more complex sets of rules and if numerous
issues are followed. Most often, I take it, the trader will play a central
role in designing and optimizing the trading criteria, especially if they are
to be successful. This can be a very demanding task in itself, and probably
is the most significant measure of one's trading talent, whether it be
computer aided or otherwise. Depending on what's being traded, filtering can
also be a fundamental talent, such that one can seek out the most promising
opportunities in order to focus one's trading approach on. As well, there is
the actual placing of orders, which is by no means an insignificant part of
trading, and requires a fair degree of skill to be accomplished properly -
and regardless of how automated the process has been thus far, one is left to
one's own devices in this task. Lastly, and certainly not least, one has to
have the psychological fortitude to trade the system properly, placing one's
financial well being on the line day after day without succumbing to the
pressures that can accompany this undertaking. Selecting and timing good
plays is one thing - executing these ideas properly can be quite another.
Although there are indeed naive souls who think that trading can be a
"business in a box," purchased for a rather small fee, they are sure to find
that this business isn't quite so simple - and instead requires a great deal
of talent, effort, and commitment in order to master. Congratulations are in
order to those who are able to climb over the heap and manage to be
successful in this business, regardless of the particular approaches and
techniques used.
Regards,
A.J.
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