Before you have a system for something, I believe you really need two crucial pieces that most of us never really contemplate because they are hard to think about and the answers are often mushy, but they are the necessary foundation to a system (in anything)

1. A criterion you seek to satisfy (what is it, specifically, you are trying to achieve — it may be more than one thing, or, often, it may be something that you have no business doing given the potential risks)

2. A paradigm or "template," a "model" of how things work from which to craft rules (a system) to satisfy #1.

Lastly, a quick golf story: 

In the 1973 PGA Championship, as an adolescent, I got a job retrieving balls that were hit over the fence at he far end of the driving range, onto the 14th fairway. Two guys were teeing it up and hitting it over the fence routinely, out of the entire field. A guy name Tom Weiskopf, and an old geezer named Sam Snead. I remember being amazed at how Snead, 300 yards away, as taking this seemingly effortless swing, and just firing missiles seemingly right at me, when all these other fellows, younger and stronger than him, weren't even coming close.

Incidentally, Jack Nicklaus won that tournament, and the $32,000 first place price. About an hour after receiving the trophy, I was (on the wrong end) of a 3 on 1 fight in the bagroom when I saw my assailants fleeing, looked up and saw a now-well-showered Nicklaus, tell me in that high-pitched voice of his how much I appreciated the work, and he duked me a hundred bucks. Quite the generous guy.

Craig Mee writes: 

Thanks, Ralph.

What you say in point #2 is very true. People are looking to trade systems for "something", without understanding the price action or what market price represents. Instead they just focus on the next contract.

Point #1 sounds to me like it goes back to your criteria of time horizon…and if you haven't thought the whole procedure through, and if you keep chopping and changing and being undisciplined and inconsistent, you are going to be forever with your back to the wall.

That's only my interpretation of this, please correct me if I'm wrong. 

Ralph Vince replies:


Pretty much. I think the "Criterion" aspect is troubling to many. People want to "make money" but with respect to what? If someone is truly looking to simply maximize profits, f = p/2 gets the job done but I don't know too many willing to endure that — or, as I have said, everyone wants to wrestle the gorilla till the door opens.

Many, I find, when you boil it down, are NOT in it to really satisfy any criteria other than "entertainment," a very dangerous proposition.

And yes, that criterion/criteria is nearly always a function of horizon, something which needs to be defined in defining horizon. Some people do all of this reflexively, and, in my observations, tend to be the most successful. 


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