Buying Trading Systems: The Impossible Triangle

I’ve been looking at trading systems for a long time.

From free forum discussions to $5,000 trading courses, I’ve gone through and tested countless of them.

And although most did not yield positive results, one quickly learns how to identify the quack systems from those that are potentially useful.

If you’d like to discover what I’ve learned, read on.

The 3 Considerations

In choosing a trading system, there are 3 major considerations:

  1. Cost – Is it cheap?
  2. Effectiveness – Does it work?
  3. Speed – How often can I trade?

Of course, we all want a trading system that is cheap, effective and works fast.

Realistically though, we can only choose 2 out of the 3.

You can find a system that’s…

  1. Expensive, effective and takes trades often
  2. Cheap, effective and takes few trades
  3. Cheap, ineffective and takes trades often

Now, it goes without saying that we only want to use a trading system that’s effective, so we can eliminate the third option.

  1. Expensive, effective and takes trades often
  2. Cheap, effective and takes few trades
  3. Cheap, ineffective and takes trades often

So it really boils down to whether we’re willing to pay for an expensive system that trades often, or a relatively cheaper system that takes fewer trades.

Avoiding Crap Courses

One of the first things I look out for in a trading system, is whether it claims to make money, do it quickly, and is selling for cheap. If it claims to have all 3 factors, I won’t even bother testing it – it’s probably no good at all.

Think about this: The smaller the time frame we’re trading in, the more noise we’ll observe on the trading chart.

So an effective system that takes trades often (in the small time frames) must necessarily be sophisticated enough to handle the infinite combinations of market noise to avoid false signals, while taking trades upon the valid signals… and you can bet that even if you were lucky enough to find such a system, its creator isn’t going to sell it for cheap. It just makes no sense to do that.

Put Another Way…

If you want to trade with an effective system, either be patient with it, or be prepared to invest a significant sum for one that trades often.

People who constantly look for for a low cost, fast profit, quick trading systems are the prime targets of marketers who sell dreams, not results.

So when someone claims to have a cheap, effective trading system that makes money quickly… beware!

What are your experiences with such Forex courses and products? Let me know in the comments below, I’d like to hear your thoughts.

By |2018-12-01T06:17:04+00:00December 1st, 2018|General, Philosophy|18 Comments

18 Comments

  1. Muraleedharan February 14, 2013 at 10:49 am - Reply

    I am yet to find a good system to trade currency pairs.

    • Chris Lee February 14, 2013 at 10:50 am - Reply

      Hi Muraleedharan,

      Consider checking out the Icarus method.

  2. Robert E. Russell February 14, 2013 at 10:55 am - Reply

    Hi Chris; It is a very good demonstration. And from such, I, as most, would choose the best – number one (If there is money to invest, of course; However, whenmoney to invest is not available, I would choose number two.
    our demonstrations and experiences are always very interesting.
    Thanks again for another “Eye Opener”.
    Roberte

  3. Gulbert February 14, 2013 at 11:56 am - Reply

    I believe another claim also immediately disqualifies a system – “it will work with as little as $100.”
    Even with FX, only a lot of money makes more money!

    • Chris Lee February 14, 2013 at 11:57 am - Reply

      Hi Gulbert,

      That’s an interesting point you’ve got there… I would say I agree!

  4. Tim February 14, 2013 at 11:58 am - Reply

    Hi Chris
    I don’t usually respond to marketing emails, but on reading your email on “the impossible triangle”, I took a look at your blog. Thank you for giving value to your readers. I’d like to add something about fx ‘robots’ if I may;

    Over the last 8 years, my business partner and I produced over 50 automated trading systems. None of them worked consistently well. Yet some of them should have. So we widened our search for the reasons behind our failure, and undertook a survey of retail forex brokers. We emailed and or called 41 brokers in the UK, Europe and USA and spoke to them in detail about their services, prices, fees, margins and the technical details of platforms they offered.

    I won’t mention names, but I can tell you that all of these brokers offer service on a particularly popular automated trading platform. Since this is and was the common denominator, we tested various robots and brokers, and compared results with other methods and platforms. The automated trading platform compared very unfavourably with those that offered fee-based market access using custom code and the brokers API for use on other platforms.

    The “reason” for this unfavourable comparison appears to be that price data is effectively manipulated by the clientserver timing, which it will not surprise you to learn, is partly preset-able in the server-side configuration for the platform.

    I am not suggesting that the system is ‘fixed’ or ‘rigged’.

    However I am saying that the system architecture is heavily weighted in the brokers favor because any trader, (manual or automated), can only see the delayed prices. Of course, a good manual trader who is able to interpret market fundamentals and correlate same with some technical analysis, may be able to avoid the traps created by the system (and of course aided by the market maker). However, no automated systems I am aware of (at least outside my own imagination), are able to collate and interpret fundamentals, and correlate these data with TA data in the price feed.

    What this really means is that the only ‘safe’ automated systems available to 99.9% of retail traders (i.e. those using this platform), are those that leave the ‘trigger’ in the traders hands. For example, a system that performs some number of calculations such as MA crosses, mean regression, candles, fibo’s etc. and then alerts the trader is ‘safe’. I say ‘safe’ because the trader can integrate the automated TA results with his own knowledge, experience and gut-feel about the fundamentals, before ‘pulling the trigger’.

    In summary, if you are a retail trader and you buy a robot, make sure you configure it only to alert you to possible trades. Then examine the alert in the light of current market conditions and your knowledge of them, before you place an order. In my experience, using the platform I described above, any robot able to generate signals on your favorite indicators (e.g. heiken ashi bars, ma crosses, gimme-bars/bolly bands etc), will serve you well, but you shouldn’t pay more than a few tens of dollars for it. No versions of the platform I alluded too above can support the kind of sophistication a true automated trading system requires – it doesn’t have the right kind of programming language, enough cycles, memory or server-side services such systems require in order to even compete in the markets.

    Cheers
    SL

    • Chris Lee February 14, 2013 at 11:59 am - Reply

      Hi Tim,

      Thank you for taking the time to share your experience!

      Your comments as a robot developer are invaluable. 🙂

  5. Kelvin February 14, 2013 at 12:45 pm - Reply

    Hi Chris,

    Gong Xi Fa Cai! Fellow Singaporean here. 🙂

    Yes, I agree with your analysis on the kind of trading courses/systems sold nowadays by savvy marketeers. I have personally invested close to SGD20k attending around 8 courses/workshops conducted locally and a few thousands in online courses/ebooks etc in the past 6 years. And in the end, I found that the most effective course/system (that fits my trading style) is also one of the cheapest! It makes money slow and steady but it works for me alright.

    Thanks for sharing your thoughts on this blog. Cheers.

  6. Terry February 14, 2013 at 1:42 pm - Reply

    Chris,
    Yes, that is my dilemma now, trying to find a system that is easy on my wallet and at the same time effective. I don’t need to trade so often, in fact the fewer times the better as I am a full time teacher and busy during the day and evening so a quick set up and execution to follow a long term trend is what I’m interested in. Got any good ideas!? Cheers and thanks for your thoughts, it gets mine rolling as well! 🙂 Terry W

    • Chris Lee February 14, 2013 at 1:43 pm - Reply

      Hi Terry,

      If you would like to learn to trade for yourself, check out the Icarus method.

      Disclaimer: I am directly involved in this program.

  7. Ken February 14, 2013 at 3:35 pm - Reply

    Hi Chris,
    I totally like your comments and agree 100%.
    Cheers,
    Ken

  8. wannabe winner February 14, 2013 at 5:39 pm - Reply

    I have been trading for 4 years, and I have yet to find or come across any systems out there that can fulfills all 3 criteria, but then again, I have not found any with 2 either.

    In other words, there is none out there, or at least, I haven’t seen one yet. Even those that are priced more expensive, and mind you, they are always marketed as highly effective in their own webpage, are just as doubtful, as a simple google search of these still revealed many forums labelling these systems as crappy.

    Don’t be hoodwinked by the price. This business is not in the same league as luxury goods, where higher costs indicates higher value.

    Tell me if there are indeed systems out there that can fill 2 of the 3 considerations. I would like to know.

    Otherwise, I am not convinced.

    • Chris Lee February 14, 2013 at 5:40 pm - Reply

      Hi Wannabe Winner,

      Personally, I wouldn’t trust reviews on the internet. There are definitely effective trading systems out there that get a bad rap because the trader(s) did not follow instructions.

      There will never be a trading system (or any other product) that appeals to everyone. There are trading systems that don’t work, just as there are traders who don’t follow instructions.

      My suggestion is to try them out yourself (especially if they offer a money back guarantee), before coming to your own conclusion.

      I’ve definitely purchased more than a few products with poor reviews that turned out to be useful.

  9. Robert February 14, 2013 at 6:04 pm - Reply

    To my fellow traders. Especially those of you seeking direction and a system or method of trading that will help you get where you want to go! Chris is right on target! This is an excellent analysis of how to pick or not pick a trading system that is being marketed to you. Most of us have been the victims of such marketing tactics at one time or the other. In my 15 years of trading, I guess I’ve seen it all, and like you, Chris, I have learned to steer clear of cheap, fast profit, quick trading systems. You are so correct because, indeed we become “the prime targets of marketers who sell dreams, not results.” Unfortunately, most of the time, we are fulfilling the marketer’s dreams and not our own when we buy this junk! Not only that, we’ve wasted time, money and effort to try one more thing that will NOT work! Chris, you know as well as I do, that in the hands of two separate traders using the same system, one trader can make money while the other trader blows out his account. The basic reason for this is because the one making money is the guy who knows how to manage his risk, follow his trading plan, has the ability to say “I was wrong” and get out of a trade before it destroys his account as well as other important factors. I have a friend who is learning to trade right now. I have been working with him personally. He’s using my system (a sound, proven system) and my coaching but he continues to self destruct his demo accounts because he can never admit he made the wrong choice concerning his trades. He will eventually learn this but it takes time. A lot of “newbie” traders are doing the same thing with these hyped up trading systems being sold on the internet. Show me a guy who is still buying these systems and I’ll show you a guy who has not developed the self-discipline required to be a successful trader yet. Some people buy these things because they just don’t have any idea where to begin to look for help. Others are looking for the fast, easy way. There are no fast, easy ways I know of to get you where you want to go. Yes, there are more streamlined ways and certainly after you get to the point where you are making money, it becomes easier because you learn to just keep doing day after day those things that made you successful. If, however you’re going to be successful in this business, you need to consider slow, methodical methods to get started. I have never taken your trading course Chris but I have both of your books on Candlesticks which are excellent! If I were new to trading, I think, knowing what I know now, I’d enroll in your trading course just because I’ve followed you long enough to know your not full of hype! Everything I’ve seen you produce has been first class and perhaps most important, HONEST. Your stuff is not the cheapest (nor is it the most expensive either) but right up there among the top for BEST VALUE! If you’re new to trading, I’d suggest you read Chris’ Retail Forex Manifesto. It’s free and in it you will find many keys to successful trading and some of the soundest advice for trading I have seen anywhere. Longer term charts is the key, I believe, to the success of a new trader. It gives one plenty of time to consider and analyze trades, it let’s one sleep at night and chances of success go way up using the longer term charts. And, as Chris mentions in his Manifesto, it will save you a ton of money in broker’s spread! That’s money for your pocket! Avoid the hype of these worthless, extremely, over-blown, marketed systems, find a good working system and then spend the time required and give 100% effort to learning to trade it correctly! All successful traders go through this process. For some, it just takes longer than others to figure it out! I know, I was one of the ones that it took a long time to figure it out! But I never quit and that’s another trait you must have to be successful. The day you quit is the day you fail! So, if you are serious about becoming a successful trader and you’re trying to make a decision on what system and where to buy it, listen to some sound thinking. I copied this from Chris’ website.

    “Trading is a way of being – the way you think, the way you feel, the way you make choices, your instincts and actions. Forget the hype and promises of easy money with Forex trading. Forget about the “secrets that will crack the Forex market”, forget about install-and-profit robots, and forget about getting rich quickly. Pip Mavens is about gaining the right perspective and making the right choices based on reasoned thinking. It’s about how to build a sustainable source of income over the long run.”

    That sounds to me like an excellent treatise for using Chris’ as a teacher and mentor. By the way, he didn’t ask me to endorse him and isn’t paying me to say this either. I personally am not selling my system or anything else. I am just tired of these guys preying off of good people who are trying to better themselves! I remember being where many of you are myself and would have appreciated someone who had been around the block helping give me direction and that is exactly what Chris is doing. (As a matter of fact, it was his Manifesto that helped me become much more successful by trading the larger time frames. I was successfully trading short term charts in a high paced environment but I was also totally burned out! Chris’ wisdom help me find success with the larger time frames. My trading is so much easier today and fun! Thanks Chris!) There are some of us traders out here that just honestly want to see other traders be successful and avoid the pitfalls we’ve been through! We know there are new traders as well as some who have been searching for years who have gotten caught up in these ridiculous marketing schemes to take your money. You are honestly looking for help to be successful but just haven’t found the right avenue yet. You’ll find a lot of help here with Chris, and most of it is free! Good luck! Oh, and be sure and tell your other struggling trading buddies where they can get some help too!

    As always, great, great article Chris! Some of the best advice I’ve seen for new traders (and old ones too who are still searching and struggling). I always enjoy reading your articles. Us “old” guys are still learning too! Thanks for what you give to others! You are a real and trusted asset to the trading community! Best wishes to you, my young friend!

    • Chris Lee February 14, 2013 at 6:05 pm - Reply

      Hi Robert,

      Wow! Thank you for the kind words, and for sharing your experience… I’m really glad to have made a positive difference to your trading!

  10. Mark February 14, 2013 at 6:35 pm - Reply

    FYI Chris, I tried to check out the trading signals site you listed above, “Planting Pips”. When you click on the link all you get is a page that says, SORRY CLOSED
    Might want to take that off your list of recommendations

    • Chris Lee February 15, 2013 at 6:36 pm - Reply

      Hi Mark,

      The Planting Pips program will re-open occasionally throughout the year – if it’s closed when you visit the site, it means that we are currently in what we call a “planting cycle”.

  11. Shawn February 16, 2013 at 11:50 pm - Reply

    Hello Chris:
    I have been a victim of many fake, phony charlatans out there that only want to steal our money because we have a vision to trade. I have purchased $45.00 systems all the way up to $3000.00 systems; most I returned within the refund period. I have 7 systems that I have kept but I am still struggling with my trading. I agree with you Chris; if it is said to be a virtual ATM machine that can trade on any time frame for the one time low price of $147.00 or less hit the delete button and save yourself some time and effort.
    I recently bought a system that a trader named Russ Horn marketed, “Rapid Results Method”; I am finding about a 50% win loss ratio. I read about the Icarus Project and I am saving my money. No indicators and clean charts is a refreshing idea. Price is the ultimate leading indicator anyway.
    Thank’s for taking the time to give back to struggling traders Chris; You will reap greater rewards helping others.
    Sincerely,
    Shawn Swilley

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