8/05/2006

The secret behind the system

"The biggest secret about success is that there isn't any big secret about it, or if there is, then it's a secret from me, too. The idea of searching for some secret for trading success misses the point." Ed Seykota

So many of you are asking what is the secret of the system which makes market calls. There is absolutely no secret. It is based on several public domain systems. It basically uses a statistical tendency of mean reversion. Many systems like this have been discussed at various forums. You can find similar systems being sold as black boxes by several vendors.
If you want to put a similar system together here are some resources where you should find all that you need to build your own system like this.

Trading Blox: There is a forum on this site where you will find lot of discussion about such systems. Even more useful is under the 'Help and Support' find the Trading Blox users guide It has examples of trading systems. I picked up the central idea for the indexes system from those trading systems. I do not use that software and have not tried it so I have no opinion about it.

Chuck LeBeau's System Traders Forum
: There are lot of good systems on this forum but there is lot of junk also. If you can separate the good from bad you will find some very profitable ideas.

That was the starting point for me in developing the Index Price Direction Projection system. I added some more spice and few bells and whistles to it to reduce the number of signals. The system like any short term system can outperform the market for long duration and then go in to disastrous performance for some periods.
So now that's a free meal for lifetime. A weekends worth of work can get you a profitable system. What more you can also sell it as a fancy black box and there is no lack of sheeps who will buy it from you if you are good salesman.

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