A trading system is a tool used by traders that uses objective entry and exit criteria based on parameters that have been determined by historical testing on quantifiable data. Systems are run on computers or servers and linked to an exchange for trading. Developers will send systems revisions (updates) as they see fit. Revisions can be instant messaged to Striker as developers modify stop orders as well.
Trading the futures and equity markets using a trading system provides the discipline to overcome the fear and greed that in many cases paralyzes a trader and prevent making timely decisions. Each order placed is governed by a pre-determined set of rules that does not deviate based on anything other than market action.
Like all kinds of tools, trading systems if not used properly, can be dangerous
to the trader's economic health. The trader should evaluate tolerance to high-risk
futures trading, risk capital and the ability to withstand equity draw-down as
well as the cost in terms of both time and money to trade in the futures markets.
One of the key elements of a trading system is the ability to be back-test for
hypothetical performance using quantifiable data. Recognizing that hypothetical
results have not been market-tested and that they are usually provided by the
system vendor who is in the business of selling trading systems, the trader can
some idea as to the trading systems characteristics. However, the only true test
of a system is to see how it performs in actual trading where market slippage
and trading cost are a part of the record. As a result, there can be a significant
difference between hypothetical and actual results and neither is any guarantee
of future trading results.
The minimum deposit to open a futures trading account varies by the broker. In addition, the prospective trader should only consider opening a futures account when the trader has sufficient risk capital, due to the leverage in futures trading.
The first step is for the trader to talk to one of Striker's brokers in order to understand the risk as well as the rewards of futures trading using trading systems. If the trader is comfortable with the program then the next step is to open a trading account and select the trading system(s) that best fit the trader's personal risk tolerances and trading objectives. If the trader is not comfortable in operating the selected trading system(s), Striker professional brokers will "auto-trade" the system(s) in the traders account for the traders benefit.
Any one system may be subject to market specific, system specific, or complex
specific risk. By trading multiple systems across
different markets, one may reduce market specific and complex specific risk.
By trading systems with different entry and exit strategies, the trader may reduce
system specific risk.
However, the risk of trading can be substantial and each investor and/or trader
must consider whether this is a suitable investment. Past performance, whether
actual or indicated by simulated tests of strategies, is not necessarily indicative
More System Trading FAQ
It's come to our attention that a number of our clients and other interested persons may have some questions regarding systems trading at Striker, and systems in general. While we have covered some of the following topics in the past, we feel that given the increasing interest in the systematic approach to trading futures and trading in general, it is only appropriate to revisit some of these themes.
Is system trading a valid approach to trading futures?
We feel certain that it is, and that it is reasonably safe to say that most professional
traders will trade using a system of some sort in trading the futures markets.
A system in this regard can be any strategy ranging from simple entry and exit
criteria, money management rules, the use of stop losses to protect positions
or lock in profits, to the more complex use of technical indicators and mathematical
formulae. A system provides a consistent and logical approach to trading. Whether
simple or complex, a trading system is usually most effective when implemented
consistently. One problem frequently encountered by individual traders is the
difficulty in following a system, whether their own or a professional developer's.
Sticking to a system requires discipline, and discipline is often difficult to
maintain in the heat of live market action, where emotions can rule the day,
and a trader may be tempted to second-guess his or her system.
I have purchased a system which is currently being traded at Striker. What is the relationship between Striker and the system developer?
One of our goals at Striker is the unbiased reporting of system performance.
Our independence allows us to be objective
in running systems. The leasing or purchasing of proprietary systems is a
matter between the client and the developer. While we strive to work with reputable
developers of robust and legitimate systems, we see our role as primarily one
of service, execution, and the accurate reporting of information. To this end,
we do not tamper with system signals, but faithfully strive to execute them in
a timely fashion. We then report the actual trading performance at striker.com
for day and swing systems. We do not report performance for multi-commodity systems,
since customers can have different settings or instructions, and thus, different
Help! The system I'm trading isn't doing as well as I thought it would. What can I do?
While it is always preferable to see winning trades in one's account, the fact
remains that the futures markets, like other markets, tend to fluctuate. Futures
markets can also be more volatile than equity (stock) markets. Trading futures
using a systematic approach offers specific advantages (such as establishing
rules of risk and money management), but does not guarantee success. Nevertheless,
merely because a system is struggling at the moment does not mean that it will
not offer positive returns over the long run. A number of systems traded at Striker
have gone through periods of “draw downs”, but have gone on to make money for
our clients. For example, the Compass S&P day trading system, which trades the
S&P futures on $30,000 has returned over 408.14% since January 2000 as of September
2008. However, the system, which can also trade the e-mini S&P on $5000, actually
lost money in 2004, but went on to continue to return profits in 2005. In its
trading life at Striker, it has averaged over 42% a year, as of September 1st,
2008. In other words, patience and an accurate assessment of one's financial
are key factors in systems trading. However, Striker's professional staff is
happy to work with clients in terms of discussing alternatives if a system
appears to be underperforming.
Why are Striker's results different than the developer's?
Striker reports only actual trading performance, where a number of developers
report hypothetical performance. The difference is that hypothetical reports
do not represent actual account activity, but rather represent a computer generated
snapshot of the system's trading signals. In the case of systems traded at Striker,
these signals are generally identical to those generated in our operations center,
but where a hypothetical report begins and ends in the computer, Striker takes
these signals "live", and in to the hurly burly of real market trading conditions,
where they must compete with other traders' orders. Market conditions can change
very rapidly, and even with Striker's superior execution and expertise, fill
prices can vary depending on the market. The difference between an ideal price
and the actual price fill is known as "slippage", and is an inevitable component
of futures trading. Nevertheless, Striker's experienced team works hard to get
the best price fills for our clients, and our results always reflect any slippage.
I've been looking at systems on the Internet. There are quite a variety
of them. Can Striker recommend one in particular?
In the client section at www.striker.com, we keep actual trading performance
records for many (day and swing) systems that have traded or are trading at Striker,
included. These records represent real trades for our clients' accounts. We feel
these records can be highly useful in evaluating and choosing a system. However,
we are aware that there are many programs available for sale or lease on the
Internet and elsewhere that have not been traded at Striker, and we recommend
that you engage in careful due diligence in evaluating these systems and their
For example, it is important to do your homework in looking at the developer's
background. What is their trading and business history? Are they registered with
a regulatory body such as the NFA? Do they have a good business record? Have
they had complaints registered against them with the Better Business Bureau,
or other consumer protection agencies? These are all questions to consider when
investigating a system developer.
There are a number of important questions to ask when evaluating a given program's
trading record. Are the trades shown actual, or hypothetical? If they are hypothetical,
what methodology was used in implementing the hypothetical model? Has the model
attempted to accurately reflect a real trading environment, with slippage and
commissions factored in?
Finally, if you are looking for a specific idea when looking at systems traded
Striker, don’t hesitate to contact system specialist Dan Neenan.
I see some of the systems traded at Striker are struggling. Do systems ever completely fail?
The systems you see at Striker are not "ours"; we do not sell systems. These
are third-party trading programs for our clients which we are doing the execution.
In many cases, they are systems that clients have purchased on their own, and
that they prefer to have Striker execute the trading for them. We only show trading
performance for day and swing systems actively traded at Striker. Should a system
show little or no promise at all over a period of time, our clients are likely
it, and the performance record for the system would end. So to answer the second
qustion, systems do on occasion chronically underperform. Futures trading is
inherently risky, and while systems in general are developed in order to manage
risk and improve a trader's chances of obtaining a successful outcome, traders
should nevertheless trade using only risk capital and be warned that systems
My system is losing money. What should I do?
At Striker, our priority is your comfort in trading. While we don't advise that
clients abandon a system merely because a series of losing trades, we are here
to take your direction in trading your account. If you feel uncomfortable with
the direction of your current trading approach, we recommend that you stop trading,
take a deep breath, and look at your options in terms of exploring an alternative
or more conservative strategy.
For more information regarding futures markets and systems trading, please visit www.striker.com, and click on the link entitled: Educational Resources.