A New Way of Getting a Profitable Trading System
Generally I recommend that traders develop their own trading systems rather than buy one off the shelf. Why? When you build your own, you can tailor it to your own trading style, and test it thoroughly to make sure it works.
However, building your own trading system is not for the faint hearted. It takes time, inspiration and plenty of backtesting.
There is one other approach, and that is to find one through a site called Collective2 (www.collective2.com). Collective2 allows you to see the real life track records of trading systems designed by other people. If there is one you like, you can subscribe to it for a monthly fee. They have integrated execution for many of the systems so that your system can even trade your account, or you can simply place the trades yourself.
The main benefit of Collective2 over buying a trading system advertised on the Internet or through a magazine is that the site itself monitors performance over time. In fact, they trade each trade. You can search for a system that meets your risk profile. For example, you may wish to look only at systems with smooth equity curves. The search function will return these.
Users of a system can rate it. This allows you to see how other traders have fared with the system. Quite often a system will return good results, but these may require a huge number of very quick trades. Users will tell you if the system is untradeable.
Once you have found a system that looks like it is interesting, you can view the usual statistics - Sharpe ratio, win/loss ratios, average size of wins compared to losses and other figures. You should look for a system that has a track record - it is relatively simple to get a great performance over a short period by chance, then get hit by a string of losses. A good system will perform consistently over time. Beware of systems that have low Sharpe ratios, or where the average size of losses exceeds that of profits.
Collective2 is not a panacea for your futures trading. There is no perfect system, and even the best system will face substantial losses from time to time. However, it does give you the option of finding someone else’s system, and getting some insight into how it will perform over time. That said, if you can build your own system, you will be able to tailor the risk levels to your own tastes.