Friday, February 26, 2010

Profits for Today or Profits for a Lifetime... Think Differently

It is funny how the world of automated trading works and how most people view automated trading systems. In general I have found people view automated trading systems as a "way out" a way towards quick riches, stress-free money-making and a sure-way towards a life of luxury. I believe that my vision of algorithmic trading systems has developed to stand far away from the most common approaches to expert advisors and I believe that this is the reason why it is so hard for me to communicate my train of thought to new traders. On today's post I will try to explain to you why my vision about automated trading is so different and why I think it is the most sound and reliable approach to this topic.

How do people view automated trading anyway ? I have found that people around the metrader 4 scene are rarely experienced traders. Most people around this scene are either experienced programmers or inexperienced traders with the idea that trading is a way in which they can get a lot of wealth in a very small time frame. People truly believe that they can make a huge income if they could only find that "holy grail" that will produce a lot of profit with little or no draw down through an infinite period of time. People lack any knowledge about system development, trading strategies or trading in general for that matter. This makes people stimulate the development of systems which can deliver short term results to satisfy people's immediate need for reward (as I have mentioned on previous posts on this subject).

What you get from this mess is the actual state of automated trading and retail trading. You get people looking for a trading system "that just works" and getting their accounts wiped time after time after time when the trading system which has been giving results for 6 months or a year suddenly stops working and starts to bring the account into heavy draw down. Why ? - people ask - simply because they were using a system that had no possibility of being long term profitable. People generally use systems without ever thinking : Will this system be profitable in 10 or 20 years ? Is it based on sound trading tactics and principles ?

Here is where I believe that my way of thinking is completely different. The first thing I ask myself is that exact question : Will this system be profitable in 10 or 20 years ? Is there a high likehood of this being the case ? Since this is rarely the case for commercial systems I usually get into a lot of clashes with people who strongly believe that the system they are using is profitable (because it has been giving profits for 1-12 months) but they fail to grasp the fact that there is no evidence that points to the system being profitable through the next few decades. Moreover, they ignore the logic behind the system and they don't know if such logic uses sound trading principles or if it is bound to be rendered unprofitable as time goes on. The fact is that most systems use tactics that will inevitably lead to wipe-outs in the long term.

I am a trader, who thinks like an investor. When your living expenses depend on the money you generate with your automated trading systems, it not only becomes important, but vital, to develop trading systems you can absolutely trust and work with, with the confidence that everything that could be done to prove their long term profitability has or is being done. It is a matter of changing time frames. I am thinking : Where will my systems and trading be in 20 years ? Not, how much was the system's profit in February ? What I have tried to develop through time is the only reliable approach to trading I have been able to find, the design of systems with sound trading tactics that have the highest posible chance of standing the test of time.

If you want to learn more about my approach to trading and how you too can change your mind to start trading with systems that have a high chance of being long term profitable please consider buying my ebook on automated trading or joining Asirikuy to receive all ebook purchase benefits, weekly updates, check the live accounts I am running with several expert advisors and get in the road towards long term success in the forex market using automated trading systems. I hope you enjoyed the article !

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