choosing a trading system that actually works

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1、ChoosingaTradingSystemThatActuallyWorksBackgroundIbelieveagoodtradingsystemshouldbeconsideredforinclusioninone’sportfolioinordertopotentiallyenjoysuperiorreturns.*Findingagoodtradingsystem,however,canbeaverydifficultprocess.Soitbecomesnecessarytohaveawayofdistin

2、guishinggoodsystemsfromtherest.Fortunately,thereisawaytodothisbyusingademandingsetofcriteriathatIbelievemustbemetinorderforyoutoconsiderusingthesystem.BillPoulos,founderofProfitsRunThepurposeofthisreportistodefinethecriteriathatIbelievewillenableyoutoidentifythe

3、goodsystemsouttherefromalltherest.*Futurestradingisnotappropriateforeveryone.Thereisasubstantialriskoflossassociatedwithtradingfutures.Lossescanandwilloccur.Nosystemormethodologyhaseverbeendevelopedthatcanguaranteeprofitsorensurefreedomfromlosses.Norepresentatio

4、norimplicationisbeingmadethatusingtheInstantProfitsmethodologyorsystemwillgenerateprofitsorensurefreedomfromlosses.CriteriaListedbelowarethekeyelementsofthecriteriasetyoushoulduseinevaluatingatradingsystem.Agoodtradingsystemwillmeettherequirementsofeachkeyelemen

5、twhereasmanysystemswillonlymeetsomerequirements.Forexample,atradingsystemmaybeadvertisedashaving80%winningtradeswhichsoundsprettygood.However,thatsamesystem’slosingtradesmaybe5timeshigherthantheaveragewinningtrade,makingthesystemanetloser.MechanicalSystemThetrad

6、ingsystemmustbe100%mechanicalwithoutanyhumaninputoroverrides.Itmustalsonotbetweakedoradjustedastimegoesontofitcurrentdata.Also,thesystemalgorithmsorrulesmustnotbecurve-fittingortailoredtoshortterm,non-repetitivepatternsofpastdatathateliminateotherwiselosingtrade

7、s.Agoodwaytoscreenforcurve-fittingistolookforconsistentlygoodresultsoveraminimumof5yearsofpastThetradingdatathatmeetalloftheothercriteriaoutlinedinthisreportassystemmustwell.be100%mechanicalLiquidMarketswithoutanyThetradingsystemshouldbeaimedatliquidmarketswhere

8、humaninputsufficientdailyvolumeexiststoeasilyandconsistentlyexecuteoroverrides.ordersasintendedbythesystemwithaminimumofslippage.Forexample,theS&P500IndexFuturesMarke