It is the same question that newbies ask over and over: I would like to trade systematically, I am not a programmer and I do not have a clue about trading systems development, where could I buy some good systems ? It is the same you ask: I am 41 years old, I would like to have a 21 years old girlfriend, good looking and very passionate, where and how could I meet her without spending a penny ? Once I was much polite and I replied to all those silly questions about trading systems, now I start to be fed off and I do not reply.

Trading systems development is a very difficult job, you need both fantasy and experience and some luck is well accepted too. But as I repeat every time I can it it not and impossible task. There are out there many good books and many viable commercial trading systems that are sold open code, no mystery, no secrets, just a cost of some hundreds of dollars.

With a student of the University of Bologna who is writing his doctoral dissertation with me we are adding up all the good open codes we found in books and surfing over the internet. For every code the student is writing down the hypothetical historical results on many markets and many time frames so that we can have a full idea of what the code can do in real trading. Some useful and interesting considerations can be drawn.

The first is that in the last 30 years new markets emerged, or better to say the same markets evolved because of the increased liquidity caused by electronic trading. So that an open code in a book of 20 years ago will no way work on the today markets it was aimed to in those times but probably will work on a different time frame and on a different markets.

Yesterday me and the student we were amazed looking at the results of an intraday system programmed more than 30 years ago on the SP500 futures. This system still goes ahead in making money month after month even if the electronic trading has completely changed the shape of the market on the old pit trading SP500 futures. This is a rare case, seldom it happens that something is so efficient that still goes ahead decade after decade in making money.

Another example is a trading systems that was launched in 2001 on the US stock indexes. In those years liquidity moved from pit trading to the electronic market place so that that code lost hit shirt in a few months on the markets it was designed to. But today the same system makes a fortune on Crude Oil, softs, colonials and other uncommon markets. This is the normal case: the market changed and the system too started to lose money. But a new market emerged and that system was discovered to grasp the full spirit of the new market and it went ahead in making a fortune.

If someone of you dare to say that no open code will work before opening your mouth please take one full year and test 24 hours per day as we are doing all the codes the industry provided so far: you will change your mind and you will start to respect those that by venture, chance or will are publishing an open code.

The real fact is that it is not the code which makes money, it is the experience about how to adapt it to the current market conditions and over all the understanding that everything under the sun is not stable and trading systems too. So do not worry if a system will start making losses, just change the time frame and the markets and if the logic is sound profits will start again to grow day after day.

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About Author

Emilio Tomasini is Chief Editor of the Italian edition of TRADERS’ MAGAZINE (www.traders-mag.it), the leading monthly publication in Europe for trading and investment, and since 1999 he organizes the TRADERS’ CUP the most important real money European trading competition (www.traders-cup.it). His personal weekly free newsletter L’Indipendente di Borsa (www.indipendentediborsa.it) is one of the most reputable Italian financial media and counts more than 100.000 readers. His website in English is www.emiliotomasini.com

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