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Old 05-04-2009, 17:45
Raskolnikov Raskolnikov is offline
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Join Date: Apr 2009
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Quote:
Originally Posted by ANDYfx View Post
Hey all.

I have been looking with concern at how many trading systems, even EAs, start out so good and profitable and then as soon as it becomes popular, starts diminishing in results till it dies out totally.

If you have spent time on a few forums, you would know of systems like: the only pivot; catfx; my simple 20 pips; and many others. Same thing seems to happen with EAs. I'm sure we can name them: Forex AutoPilot, FapTurbo, ...

What makes a good system go bad? Too many people using the same system at the same time? Brokers manipulation? (how true is this this myth anyway?) too many modifications? You know, i got to a point where i see much noise going on about a system and i back off, knowing it won't last more than a few months; maybe a couple of years at best - I am mostly proven right. I know there's no Holy Grail (don't we all?), but what about consistency?

Will systems last longer and be more successful if kept strictly within a few?

I know i am not the only one with this concern; Most of us are here because we have tried several methods and systems and are looking for something better

Your views anyone.
I'm an Economics grad student and I wrote an essay on this a few years ago, I reckon the simple explanation is the Efficient Markets Hypothesis. 'A Random Walk Down Wall Street' by Burton Malkiel explains it pretty well. The theory has few strong adherents these days (because of sustained asset price bubbles), but it does help to explain why EA's get exploited out of existence. Check out this article for a detailed examination of market 'anomalies' which disappear after they are made famous:

http://schwert.ssb.rochester.edu/hbfech15.pdf
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