Buy Good Proven Algorithmic Trading Systems

To be honest it is really quite difficult nowadays to buy good proven algorithmic trading systems. If we go back 10 or 15 years it was relatively easy to buy quite effective commodity trading systems that would work well and give us good profits and not cost a fortune to buy. Sadly those days have more or less passed.
One of the earliest systems that I purchased was Aberration which traded a basket of commodities using a simple channel breakout method. This worked very well for a good many years and in fact there are very well documented instances of individual traders making well in excess of $1 million just trading this system. 

As with most fields of endeavour it has to be said that trading becomes more challenging every year and whilst a simple system such as aberration does still offer positive expectancy it is also the case that performance has been poor of late. 




Much of the blame for this has, rightly or wrongly, been laid at the door of central government where it is claimed there has steadily been more and more intervention and manipulation of the markets since around 2007. This has made it more and more difficult for longer term traders to keep their edge. 

Probably the most notable example of this was John W Henry who closed his fund in 2012 citing exactly these factors as one of the main reasons.

Consequently over the last 10 years more and more traders have moved from longer term trading to trading over shorter timeframes and especially day trading where results have been much more satisfactory. 

Algorithmic trading systems tend to work especially well over the shorter timeframes and of course using automated algorithmic trading systems in day trading allows us to trade many more markets at the same time than would ever be possible if we were using discretionary trading systems and manual orders.

But markets march ever onwards and with the advent of 24 hour trading many of the earliest day trading systems tended to either stop working or lose a lot of performance compared to when they were first introduced. However as one door closes another always opens. 

For home based traders short term trading the overnight markets in recent years has become very profitable. This allows us to reinvent many of the original pre-2008 algorithmic trading systems and apply them to the overnight sessions.  It is also the case in recent years that mean reversion systems have tended to perform exceptionally well in markets such as the indexes.

With the current S&P now in one of the longest  bull markets in history it is perhaps hardly surprising that a simple automated strategy of buying dips would have made traders a small fortune over this period of time. This buying the dip’s strategy has worked well on shorter term day trading systems as well and also yielded quite exceptional profits when applied to swing trading the indexes.

 As with commodity traders prior to 2008 many traders using this very simple buy the dip’s strategy have made fortunes  by just applying this simple strategy with consistency.

The lesson really from this is that markets do constantly change and what made money 10 years ago may not make money today whereas what was not making money 5 years ago may be doing very well indeed now. Therefore we must keep moving with whatever the current fashion is and if you like attempting to catch the crest of the most profitable wave. 

Probably the most successful traders over the next 5 years will initially address this question of what is the next big wave that is approaching and then try and formulate a simple strategy to take advantage of this.

For instance many index traders may believe that markets could fall perhaps 50% in the next few years. In which case they may be looking at trading short only strategies in anticipation of capturing gains from those falls in the markets. 

Others may believe that markets will continue to perform in the future as they have done over the last 5 or 10 years and they will continue to buy the dip’s. Those that can correctly call the bigger picture will, as always, make the most money. 

For more details visit our website at: http://pro-trader.co.uk

Location: International House, 24 Holborn Viaduct, Holborn, London EC1A 2BN, UK

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