SPA3 - Can it be that easy?

[pennywise75]

Where to start with this comment. No offence but this shows a clear lack of understanding about CFDs and the market in general.

Potentially any time is a bad time in the market with CFDs, just because you can go long or short with CFDs it doesn't stop the market moving against you.

Thanks for the advice, I quess what I was trying to say. Wouldnt a trading system that can pick buys also be able to pick a short trade?

If so then there would not really be a good/bad market condition.

And I am also aware the CFDs are a leverage product and need to add the level of risk to my managment system (when i get around to designing one)

I am still learning, if you think I am wrong in my thinking I will not take offence.

Thanks for your time

 

[nomore4s]

Thanks for the advice, I quess what I was trying to say. Wouldnt a trading system that can pick buys also be able to pick a short trade?

If so then there would not really be a good/bad market condition.

And I am also aware the CFDs are a leverage product and need to add the level of risk to my managment system (when i get around to designing one)

I am still learning, if you think I am wrong in my thinking I will not take offence.

Thanks for your time

What you need to understand about trading a system is that they are generally built with certain market conditions in mind, as soon as the market condition changes so to does the performance of that system.

Just because you can go short doesn't mean you will make money in this market. Alot depends on how the signals are generated to go long or short, how the stops are set, etc etc. You could get whipshawed in & out of positions very quickly in this market, therefore losing money.

I know alot of mechanical traders have turned thier systems off in the last few months because the current conditions do not suit.

It is good that you want to learn and ask questions before jumping in. I personally think you are better off learning and understanding why a system makes money before buying a system off the shelf, it will stand you in better stead for a long time over differenet market conditions.

The fact that Gary Stone has posted on here in reply is also somewhat of a good sign imo, he seems quite upfront and open which is quite rare for people selling trading systems.

 

[pennywise75]

Thanks for your advice
I would rather design my own trading system, but to be honest with all the information out there on this subject, i have been bombarded with information

Candlesticks, support resistance, FA, MA, MACD, GANN,flagging patterns, throwing darts at list of company names (altho fun, not a good method)

Most these strategies have good results (from the charts the authors print) I am currently paper trading some of these strategies in search of a trading system.

But as i stated in my first post, I am time poor. The reason I joined this site was to see if an of the shelf mechanical system that had a reasonable profit and didn’t take to much time was anygood

I think experienced traders really need to think back to when they started out, and the bs they had to sort through to get to where they are now.

Maybe these traders could give me an alternative path

 

[MichaelD]

But as i stated in my first post, I am time poor. The reason I joined this site was to see if an of the shelf mechanical system that had a reasonable profit and didn’t take to much time was anygood

I think experienced traders really need to think back to when they started out, and the bs they had to sort through to get to where they are now.

Maybe these traders could give me an alternative path

My after lurking on this thread for a while with great interest. Just some random thoughts.

Note: I trade systems I have developed myself and continue to develop systems. I find the development cycle intrisically interesting (the actual trading I leave to my wife since I find that boring). Despite this I have entertained thoughts of purchasing an off-the-shelf weekly long term trend following system since I've already created a long term trend following system based on daily data - so I've been there, done that. My development time is spent on other time frames and other markets these days - long term systems for trading the ASX are all basically the same at heart, so there is nothing much new for me to learn by developing a weekly system from scratch.

The biggest problem with trading an off-the-shelf system is that if it doesn't suit your psychology, you will give up on it, usually at just about the time when it is about to turn around and start making money.

Very few off-the-shelf systems are any good because 1/ they don't suit your psychology, and 2/ they are black or grey box systems that are overpriced and underperforming (or just plan bad). This leads to extreme cynicism on forums such as this one (and fair enough too).

The way to tell the good from the bad is to find out whether they cover risk management, money management and psychology. The ones that do are more likely to be good than bad.

The good ones won't promise you 100% winning trades (or even 80% winning trades). 40-50% is just fine.

The good ones will disclose the system to you rather than just providing entry/exit signals.

One MAJOR advantage of rolling your own system is that you will understand how it trades. You will have faith in it when it goes into drawdown.

One other thing to consider is whether or not you want to put in some time backtesting and paper trading an out-of-the-box system. If you do not want to do this, you are entirely reliant on the system developers doing the right thing and actually designing a system that works. If you do your own backtesting and paper trading - well, that's quite time consuming. An off-the-shelf system requires either great faith on your part to trade immediately with real money or pretty much the same amount of time as a roll-your-own in pre-testing.

Something that has occurred to me over the years is that those that sell systems (or tip sheets) market their entry to you. Novices buy entries. In the case of SPA3, it is the semi-mysterious SIROC indicator that piques interest. However, the good systems/tip sheets will perform a bit of a sleight-of-hand trick to get you to actually couple the correct exit and money management techniques to the entry (and it's the latter that actually makes you profitable).

Based on the posts here, SPA3 appears to be a robust trading system. What you must decide is if you can handle how the system trades; can you handle the initial string of losses; can you handle a 20% or more drawdown (start with $100,000 and see $20,000 of losses before you see any winning trades - entirely feasible with SPA3 [and my system, too]); can you handle 10 losses in a row? All of this WILL happen at some point in time whilst the system is "doing its thing" - can YOU cope with this?

 

[Gaz]

The biggest problem with trading an off-the-shelf system is that if it doesn't suit your psychology, you will give up on it,......

MichaelD, good posting, most of which I agree with. Just one point that I think can further contribute to the thread and that is this question of whether it is the system that needs to suit the trader's psychology or the trader's psychology that needs to suit the market?

I believe that it is the traders psychology that needs to suit the market. We are all programmed to live and prosper in society from the day we are born. The lessons that we learn to achieve this do not translate into successful trading in the markets. This is one of the major reasons why most don't succeed in the markets in any timeframe of trading whether or not they use a system and whether that system is homegrown or bought.

It's not until they become empathetic with the market and think from the perspective of market price action that they start becoming successful on a consistent basis.

If a mechanical system is not used to trade the market then, by definition, the trader is a discretionary trader. A discretionary trader uses the decision support systems (DSS's) that emanate from their societal programming (deeply seated in their subconscious). These DSS's override the TA patterns and signals that they compute with their logical mind. The question is, does the trader's discretionary decision support systems have an edge in the market? How do they know or find out? A leading question........

A mechanical system emanates from market price action. It's edge is known before the trader starts trading.

At first, any beginnner trader (discretionary or mechanical) will have difficulty turning a profit in the markets. There are many reasons for this including lack of knowledge and familiarity with the environment etc but that knowledge eventually comes and most still continue to lose. At this stage it is not knowledge that is holding them back but their psychology. (I truly believe from years of feedback and coaching that the mechanical beginner will do far better than the discretionary beginner for one main reason - the limiting of large loss trades by the mechanical trader.)

They need to find a way to match their psychology to the market not find/build a system that matches their psychology. By definition, the latter will never work because any system that has an edge (sufficiently positive mathematical expectation to cover transaction costs and slippage and still make a profit) emanates from the market and has the market's perspective (let's call it the market's psychology) built into it.

The challenge is for the trader to change their psychology to match the market and this is done by trading a mechanical system that emanates from the market. The mechanical system is the major part of the process of transitioning the trader from trying to trade with a societal paradigm to trading with a market paradigm.

Trial and error discretionary trading may eventually help the trader make the mindset transition but it could take many many years, if they have the perseverence and the capital to keep going. Mechanical trading is a high probability short cut method of making the transition.

If you are looking for further evidence to this thinking have a look at the exercise on page 189 of Mark Douglas's book Trading in the Zone. I know from surveys (and other sources) that very very few ever start let alone complete this exercise. The reasons why are for another day.

I trust that I have been able to convey a complex subject is a few words.

On the journey

 

[MichaelD]

They need to find a way to match their psychology to the market not find/build a system that matches their psychology.

Garry,

A very good series of points. I know from my own personal journey that it has gone like this so far;

1. Resolution Made: I will become a full time trader. Note that I *hate* to be wrong about anything I resolve to do.

2. Initial Belief System: I will achieve my goal by using charting to predict winning trades. I will take $100 profit out of every trade. I will hold onto unprofitable trades until they make $100. Basically - I will be right 100% of the time.

3. Belief System Modified By Actual Trading Results: Lots of $100 profits...but look at those retained losses. This is not working out as I expected. Time to re-evaluate.

4. New belief system: I will become a full time trader by taking lots of small losses and some very large wins. Despite the fact that this means I will "lose" most of the time, at a level above this I will "win", and this will satisfy me.

 

[Dine]

SPA3 Share trading system

I am thinking of buying this package. Has anyone used it and what do they think of it? I would really appreciate some feedback.

 

[Aussienam]

SPA3 Share trading system

I am thinking of buying this package. Has anyone used it and what do they think of it? I would really appreciate some feedback.

Hi, 11 yrs on I read this post and wondering you went ahead with SPA3 and if so how did you go?