It has always appeared very unusual to me that despite the fact that massive efforts towards the development of profitable trading systems have been carried out in forums none of them have been able to come up with a long term profitable community-developed trading system. The objective of today's post will be to analyze the reasons why this is not the case and why the development of a long term profitable system in a forum or community-like environment will most likely not happen.
I bet you have also seen the bast quantity of automated trading systems which have been developed in automated trading forums. However it is clear that there doesn't seem to be a concensus towards the development of a long term profitable system. Most of the time the development of systems in forums follows several stages of development which generally end up with a system which uses unsound trading techniques and is only short term profitable at best. The steps I have found out go on in system development on forums are the following :
- System proposal by a forum member
- very limited forward or backtesting from other members
- implementation of additional entry filters to counter short-term problems
- implementation of unsound trading tactics such as the use of martingale money management
- more extensive forward testing
- some very limited live testing which may end up in wipeouts or significant loses
- elimination of the expert or recycling with additional filters or logic changes
The consequence of this development cycle seems to be associated with the fact that people in forums are in general not very experienced traders or have not had significant experience in the development of long term profitable systems. The expert advisors developped in forums always have the problems of being overly focused on entries and paying little attention to money management criteria - exit plus lot size allocation - which is absolutely vital for the success of a trading system in the long term. These shortcommings are usually tackled by introducing unsound trading tecniques which increase the short term profitability of a trading system but end up increasing its market exposure to unlimited levels.
I believe that these improvements over short term profitability always seem more attractive to new and inexperienced forum members which start to further develop these concepts into even more dangerous expert advisors. It seems obvious that the problem is the general lack of knowledge about sound trading tactics and the lack of adequate analysis of price action in order to develop trading systems. There doesn't seem to be a good understanding of the math behind indicators and all systems which are proposed and developed seem to be merely based on some visual observations of indicator action without any analysis of the underlying meaning of the information provided by the indicators.
Since forums tend to nurture short term profitable systems (which often offer very high and unrealistic profit targets with uncapped market exposure) instead of the development of sound trading tactics it seems to be inevitable that there will never be a community-developed long term profitable trading system unless there is a massive change in the perception of automated trading by forum members. However it is very unlikely for this to happen since new forum members join all the time and these new members often have an unhealthy taste for unrealistic profit targets and unsound system development.
If you would like to learn more about sound trading tactics and how long term profitable systems can be developed with adequate analysis of price action 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 !
I bet you have also seen the bast quantity of automated trading systems which have been developed in automated trading forums. However it is clear that there doesn't seem to be a concensus towards the development of a long term profitable system. Most of the time the development of systems in forums follows several stages of development which generally end up with a system which uses unsound trading techniques and is only short term profitable at best. The steps I have found out go on in system development on forums are the following :
- System proposal by a forum member
- very limited forward or backtesting from other members
- implementation of additional entry filters to counter short-term problems
- implementation of unsound trading tactics such as the use of martingale money management
- more extensive forward testing
- some very limited live testing which may end up in wipeouts or significant loses
- elimination of the expert or recycling with additional filters or logic changes
The consequence of this development cycle seems to be associated with the fact that people in forums are in general not very experienced traders or have not had significant experience in the development of long term profitable systems. The expert advisors developped in forums always have the problems of being overly focused on entries and paying little attention to money management criteria - exit plus lot size allocation - which is absolutely vital for the success of a trading system in the long term. These shortcommings are usually tackled by introducing unsound trading tecniques which increase the short term profitability of a trading system but end up increasing its market exposure to unlimited levels.
I believe that these improvements over short term profitability always seem more attractive to new and inexperienced forum members which start to further develop these concepts into even more dangerous expert advisors. It seems obvious that the problem is the general lack of knowledge about sound trading tactics and the lack of adequate analysis of price action in order to develop trading systems. There doesn't seem to be a good understanding of the math behind indicators and all systems which are proposed and developed seem to be merely based on some visual observations of indicator action without any analysis of the underlying meaning of the information provided by the indicators.
Since forums tend to nurture short term profitable systems (which often offer very high and unrealistic profit targets with uncapped market exposure) instead of the development of sound trading tactics it seems to be inevitable that there will never be a community-developed long term profitable trading system unless there is a massive change in the perception of automated trading by forum members. However it is very unlikely for this to happen since new forum members join all the time and these new members often have an unhealthy taste for unrealistic profit targets and unsound system development.
If you would like to learn more about sound trading tactics and how long term profitable systems can be developed with adequate analysis of price action 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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