SFO Magazine All About Trading Systems

Aug 3, 2008: 3:44 PM CST

August’s edition of SFO Magazine (Stocks, Futures, and Options) is entitled, “Battered and Bruised – Systems Trading School of Hard Knocks” and is available for your online or at home viewing.

If you’ve ever thought about systems trading, or are currently developing an automated or mechanical trading system, this episode was specifically designed for you.  In it, various authors share their experiences – good and bad – about what has worked for them and what has not, including key pitfalls to avoid and foundations from which to build.

My favorite article so far has been Nigel Bahadur’s “Battered and Bruised” title article, which discusses his multi-year experience from ‘wide-eyed optimist’ to current experienced systems designer.  Nigel runs the Research/Development group for Linda Bradford Raschke’s LBR Group and comes to them with a background in computer programming.

He figured initially that he could translate his programming skills into a virtual ‘money printing machine’ that ran in his basement each day – he describes how wrong his initial assumptions are and describes more about the realities of modern computerized system trading, and provides readers with twelve brief lessons or anecdotes that would be helpful for newer and experienced developers to study and memorize.

Lessons include, “Correlation matters; Risk-Reward matters; “Percent Profitable” is an illusion; and Don’t Be in a Hurry” among many others.

Later in the magazine, Matt Blackman interviews five trading pros in his article “Tips from the Pros.”  Blackman summarizes the responses from interviews with top traders, including John Bollinger (famous for his volatility bands) and Perry Kaufman, well-known for addressing comprehensive topics on system design in his books and articles.

Other interesting articles include, “Systems Trading:  Who is on the Other Side?” and “Make Your Systems Work in Tandem.

Check out the current issue (free online and by subscription) and see if the insights from the collective authors can dispel some of the myths you may have about systems trading (that it is easy, maybe?) and build your knowledge about this popular and growing discipline of the trading industry.

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