Best Trading Software

Best Trading System

I am often asked by my customers “What is the best trading system?”  Unfortunately, they are almost always disappointed by my answer.  What they are really asking me is “What has been the hottest performing system lately?” 

The amateur trader always wants to follow performance.  That is why you often see developers and brokerage houses highlighting systems that have had a big gain over the last few months.  This approach has never worked and it never will.  In many cases the developer is selling a recently released over-optimized system that will not work going forward in time. 

Even the best systems will have normal cycles.  After a large increase in equity, it is probably not the best time to start with any system.  So, I have made some suggestions of what a professional trader would not trade but I have not answered the question, “What is the best trading system?”  In my thirty-seven years of trading experience I have learned to look for the following:

• I like to start trading systems that meet my goal and risk profile that have recently been underperforming their long-term projected equity curve.  It’s like finding an undervalued stock!  I expect the system to start an up cycle soon.
• The best trading systems display consistency of performance.  The systems that show consistent returns are much easier to stay with than strategies that have big losses and big gains.  I look for a low co-efficient of variance in monthly returns.  Some systems look good in their bottom line but when you look closely you will see that they made all their money on a few trades.  Usually these systems have been optimized to catch some historical event.  Since history will never repeat itself exactly these systems are of no value.
• Largest drawdown or DD is an important number to look at.  If the largest peak-to-valley open trade drawdown is too great for your personal risk profile you will stop trading it out of fear or because you don’t have sufficient funds to make the next trade.  Please note that many developers and brokerages show only the largest month end drawdown.  This figure has absolutely no value!  It is always much lower.  What difference would it make to you if the month end drawdown was only $5,000 if the drawdown during the month was $20,000 and it wiped you out?
• The best trading systems should recover quickly from drawdowns.  For over thirty years all of my income was derived from trading profits.  No one knows better than me that it is difficult to continue with a trading strategy that stays in a drawdown for a long time.  After a while the natural inclination is to start tinkering with the system which is just the wrong thing to do.
• I have found that in the long run simple systems are the best trading systems.  Everyone, amateurs and professionals alike, search for the perfect system, or the Holy Grail.  It does not exist and searching for it is counter productive.  A very good system developer once told me that no system would work over time if it had greater than 5 filters.  I think that number might be too high.
• The best trading systems have parameters that are very robust.  The best way to tell if the parameters are robust is to study a great many trades after the release date of the system.  How did the system fare in different market conditions?  If the system parameters are too optimized, or curve fit, it will not stand the test of time.  Worldwide Futures Systems has sophisticated in-house software that can “step test” systems to make sure robust parameters were selected.  Remember the developer makes his money by selling systems.  Many developers will select parameters that show the greatest profit for their system going backward it time.  They will try to catch historical spikes.  You want a system that is robust and will make money in most markets going forward in time.
• All things being equal I feel that the best systems generate a larger number of trades.  I feel much more comfortable when the system has had enough trades to prove that is robust and will work in most markets.
• I love systems that are so robust that they are successful on “out of sample” markets.  I know that these systems are not accidentally curve fit.  Let me give you a perfect example.  Impetus, ranked by Futures Truth Magazine as the #1 Multi-Market System since its release date, was originally developed to trade the E-mini S&P.  The volatility of the S&P market is at a fourteen year low so it is being traded in the Russell 2000.  It reached a #1 ranking while trading in an “out of sample” market.  That is impressive!
• In my opinion the best trading systems trade markets that have depth, reasonable volatility, and “trendiness”.  I am not impressed with systems that appear to make money trading thin markets.  Actual results will vary greatly from hypothetical results in these markets.  Systems that trade these markets may appear to be very successful in hypothetical results but may not make money at all in the real world.

Worldwide Futures Systems offers systems that meet these criteria.  They are hard to find and harder still to understand why they are much better than the latest “hot” system being marketed. We have done the research.  That is why we offer a limited selection of systems.  If we wouldn’t trade it, we won’t offer it to you. 

Contact Worldwide Futures Systems today at 888-989-WWFS for more information on how to best select a trading systems or your portfolio