Complete System Trading

"If there are gaps in your method,
- fill them in as you go along."

There are two types of commodity traders. There are system traders who trade complete systems that cover any event that might occur.

Then there are all the other traders, who are known as discretionary traders.

Discretionary traders put off deciding what they will do in certain situations until they have to decide - then they 'exercise their discretion'.

Perhaps they have a market entry rule but no predetermined exit rule. Exit from the market will be decided according to ‘circumstances’. (This may include taking into consideration how other trades have gone or how the trader's instincts guide him at the time.)

Such a system could not be delegated to run on a computer because there are loose ends that prevent a complete process being set up.

Discretionary traders lack a complete method - they just trade their ideas. They have no way of evaluating any proposed strategy and no way of knowing the level of risk they will be running. They can obtain no idea of the return their 'ideas' might be capable of producing.

Trading in this unsystematic way, it is not possible to learn, understand and build on experience. The opportunity to repeat successful strategies is destroyed by the unpredictable nature of discretionary trading.

To succeed as a systems trader, you have to produce complete systems that can be delegated for running on a computer without interference.

Then, there will be no gaps. How could you evaluate any system with gaps in it?

If you are a discretionary trader, the odds against your prospects of success are high. You should consider studying the methods used by successful traders before continuing your trading.

 

Modus Trading
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Copyright David Bromley 2006
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