I received a great email about a week ago from a subscriber (let’s call him TF), asking my thoughts on the trading of systems. TF had viewed a number of webinars advertising various trading systems and was particularly interested in two. The first company trades a simple chart pattern combined with a proprietary indicator overlay on emini futures. They also offer ongoing trading room support (at a significant cost). The second is based on proprietary software and appears to be suitable for any market.

The cost of both seems to be dependent on the options chosen. Certainly, with addition of ongoing trading room subscription, the cost is in the many thousands.

Unlike most people investigating these types of systems, TF is actually approaching them with a very realistic attitude and mindset. He is not expecting some Holy Grail means of achieving profitability through no effort. Instead, sees them as an opportunity to ‘get his feet wet’ and learn within a live-market environment – a very refreshing attitude.

Some extracts from his email:

“On several forums, I have read that trading systems are not effective. I am wondering if you have an opinion on that. Also from the standpoint of "getting your feet wet" by actually trading, why wouldn't a simple system with instruction (as most systems provide help desks along with live trading webinars each week), while not committing a lot of money, provide a learning environment? I realize one may not make a fortune, but that would not be the point. The point would be getting a feel for trading.”

And later…

“I am aware that most of these systems are not "flexible" in the sense they do not perform as well in some market conditions as others.

The only reason I bring this up is because at this stage of my education, I don't feel I could outperform a canned system, and I'm just wondering if you see this approach making sense.”

The following is part of my response…

Response:

(more…)