The unholy war of System V’s Strategy

A question comes in from a reader:

Aren’t you contradicting yourself when you’re dissing off the peg “forex systems” at the very same time you’re promoting the use of them?

It’s a fair point, and one that probably needs a bit of explanation. It’s easy to miss the subtle difference between ‘system’ and ‘strategy’ when it comes to trading.

I suppose my outlook can be stated like this:

System = closed-book (bad)

Strategy = rule based, open (good)

But let me tell you more about what’s going on in my head with this…

Systems Vs Strategies

In my mind a ‘system’ is a closed circuit. It is what it is and allows no further user input.

When trading a system the trader stumps up his money, holds on for the ride, and awaits his fortune. The trader may not even know the structure and reasoning behind the trading decision he is supposed to put his faith in (these are called ‘Black Box’ systems).

The ultimate expression of the trading system is the trading ‘robot’: a preconfigured piece of software that makes all decisions and places trades on autopilot.

I’ve never trusted them. Heard too many tales of them trashing accounts when the algorithm encounters something a bit out of the ordinary in the markets, or where there was a bug in the coding to begin with.

The other common feature of ‘systems’ is that they tend to focus on near term market loopholes or tactical gains.

‘Strategies’ on the other hand take a more robust approach.

They give the user a proven logical approach to the markets – a rule-based approach – but the trader remains firmly in the driving seat.

He applies his strategy according to market conditions. And he may choose not to trade a particular strategy a particular time.

For me, a critical part of a ‘strategy’ is a full disclosure of the rules and decisions that make it up.

By sharing the full picture of what drives the strategy along you empower the trader.

And through knowledge comes confidence: if he knows why something works he’ll find it so much easier to put his faith in it (this is a massive factor to consider when it comes to developing self-discipline in trading).

So just to be clear, I believe open and rule-based trading ‘strategies’ are the key to long term success.

And if you’d like to learn a proven, robust, long-term strategic approach to your trading, then step this way.

The Forex Breakthrough Academy will give you a proven strategy that you can take into the markets with you for years to come. And there’s no cloak-and-dagger ‘Black Box’ system stuff to hold you back.

I’ll tell you more about how to get involved in the coming week or so.

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