Different types of trading strategies

I know most of the readers (not everybody) are starting his browser everyday opening pages on different forums TSD, FF, Trade2win, and browsing also the new stuff in stevehoopwood and even here with the idea that today a new system is going to appear that will beat the market.

No that thing does not exist that will beat the market with just one settings, omething like set and forget.

No speculative trading is a process that does not stop.

I know several common but different frameworks that work, but they work as a process.

1. A system with high percentage of winners, that looses with big and sudden drowdowns.

This kind of system may be consistently profitable if you know at what conditions the black swan event will occur and take appropriate measures.

And that is a very difficult balance.

One of such systems is the Swissy system. We observed in real time how it was making money and at what conditions it was expected to loose money.



2. Second type of systems are when you expect a big winner but you are risking small amount of money. 

That strategy is having a very low percentage of winners but have a positive mathematical expectation. For example Nasim Taleb recommends this trading phylospophy when for example he bys options out of the money. That is how the extreme fortune of Soros has been made.



3. The third type of systems is where you really want to beat the market, by modeling the market and by adapting your system to the current market behaviour.

I shared this approach woth the elliotware and market state analysis and with several out of sample experiments using different software, neuroshel day trader and trading solutions.

Usually this kind of system need to have a very low drow down not more than 6 %.



4. Detecting a recurring market pattern.

For example series of tests proved that trading break - outs and if you try to do this in GMT "the european afternoon" you are not going to make it. This is the pattern recognition scanner, if you trade chart patterns you absolutely need to dig into it.

And it is interesting that the traditional 9 o clock fails too.



5. I won't talk about stat arb because I have a remote idea about it.