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Developer/CTA Interview
Dean Hoffman
Founder of Strategic Trading Systems, Inc
Program(s) Developed: Synergy and Checkmate Systems
Interview Date: July, 2005
Interviewed by John F. Gallwas, Founder of Striker Securities, Inc.
John Gallwas: Strategic Trading Systems, Inc., which you founded, is registered with the CFTC as an Informational CTA (NFA 265622) and one of the industries leading system developers. Could you give us a brief summary of your academic and business background and what led you to becoming a trading systems developer?

Dean Hoffman: I started out thinking I was going to have a career in the software industry (I studied computer science at Pennsylvania State University) However, when looking for my first job I was intrigued by an ad I saw to work for a Chicago commodity brokerage firm. I was always fascinated by the fast paced world of trading, and being a broker seemed like a great entry point. I did rather well and was a top producing broker for many years at some of the larger FCMs. I later ran my own brokerage firm at the Chicago Mercantile Exchange. Throughout most of this time I devoted considerable energy to researching and developing computerized trading systems. In 2001 I decided to start a research & software firm (Strategic Trading Systems, Inc.) exclusively devoted to computerized trading systems. In 2004 I added a money management firm (Hoffman Asset Management, Inc. CTA) that manages money for high net worth individuals.

John Gallwas: Define a “trading system” and what methodologies do you use to develop and maintain the systems you are currently marketing.

Dean Hoffman: A trading system is a set of rules that defines specifically when you buy and sell and also how much you buy and sell. I utilize many tools in my research including Trade Station, Rina Systems, Trading Recipes, Mechanica, Behold, Excel etc. I focus on robust, non-optimized portfolio based trading systems.

John Gallwas: Please summarize the points that you made in the informative article you wrote entitled “What Is a Robust Trading Systems”, that is posted on your website.

Dean Hoffman: It's easy to develop a back tested system that looks good; Mr. Hindsight is one smart dude! However, it is exponentially more difficult to develop a system that is robust and will continue to work in the real world. Some essential elements of a robust system are that it can:
  1. Trade a large portfolio of markets successfully
  2. Trade that large portfolio successfully over a very long test period
  3. Use the exact same rules for every market
  4. Use the exact same input values for every market even if the rules are the same
  5. Have the exact same logic and input values for initiating both buys and sells
  6. Factors in realistic transaction costs (slippage & commissions)
  7. Be tested in a way where the markets have been normalized for risk (not single contract)
  8. Doesn't use Static preset exits for all markets IE $2000 stop or $5000 profit target for all markets, but rather dynamically computed ones
John Gallwas: Do you personally trade any or all of your systems?

Dean Hoffman: Yes

John Gallwas: Briefly describe your current systems and which combinations (if any) would have produced the best risk/reward performance in a systems portfolio?

Dean Hoffman: That's a hard question because the combinations of systems and portfolios and money management schemes are endless. However, I can tell you that the combination of my 4 systems with specific money management rules has shown my own account increase over 100% in the last 19 months. People can contact me for the exact parameters, and portfolio etc. However, keep in mind that past results are not necessarily indicative of future results.

John Gallwas: Do you have any projects in the “what's new” department that you can share with us at this time?

Dean Hoffman: I have been busy with the expansion of my CTA money management firm Hoffman Asset Management Inc. Over time customers of mine have been interested in having me manage money for them.

John Gallwas: What would you advise an investor that is interested in “alternative investments”, but has never traded futures, about pros and cons of futures system trading?

Dean Hoffman: DON'T TRADE without a system! My experience tells me that you will lose every time without one. Of course you can also lose even when trading a system and that's why you still need to do your homework. A trading system removes the subjective and emotional mistakes that plague discretionary traders. The thinking and decisions have been made ahead of time. This is why pilots train in flight simulators, you don't want them having to figure out a life or death decision in the heat of the moment, it needs to be an automatic, predetermined response. That's what a system is to me.

John Gallwas: How can our readers get in touch with you with questions and do you have any special offers on any of your products at this time?

Dean Hoffman: I currently have a special offer that bundles my systems together with a state of the art portfolio level back testing & charting platform.

This interview is for informational purposes only and is not intended to be a solicitation of any kind. Trade only with risk capital. The risk of trading can be substantial and each investor and/or trader must consider whether trading systems are a suitable investment.
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There is a risk of loss in trading. It is the nature of commodity and securities trading that where there is the opportunity for profit, there is also the risk of loss. Commodity trading involves a certain degree of risk, and may not be suitable for all investors. Derivative transactions, including futures, are complex and carry the risk of substantial losses. Past performance is not necessarily indicative of future results. Please read additional risk matters on our web site, It is important you understand all the risks involved with trading, and you should only trade with risk capital. This communication is intended for the sole use of the intended recipient.

About this report The information and links on this website are for informational purposes. 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 historical tests of strategies, is not indicative of future results. Striker is a member of the National Futures Association ("NFA"), the Managed Funds Association ("MFA"), and the National Introducing Broker Association ("NIBA"). Striker is registered with the Commodity Futures Trading Commission ("CFTC"), and was formerly registered with the Securities Exchange Commission ("SEC"). Additionally, Striker is a former member of the Financial Industry Regulatory Authority ("FINRA"), and the Securities Investor Protection Corporation ("SIPC"). FINRA is the largest non-governmental regulator for all securities business in the United States. Please read Striker Disclosure Statement for the additional disclosure.

The trading performance cited throughout our web site is based on actual trading history, unless otherwise noted. The starting account balance is based on the system developer recommendation. Striker tracks actual performance by recording and maintaining each trade ticket for each system generated. The performance information assumes that no additions or withdrawals have been made. The rate of return for all systems disclosed in the Striker Report is cumulative from the day the system actually started trading at Striker. We maintain a "life" track for all 3rd party systems. We do not necessarily base our records on any particular client account. No one particular customer has achieved these results. The percentage returns reflect inclusion of commissions and fees.The actual percentage gains/losses experienced by investors will vary depending on many factors, including, but not limited to: starting account balances, market behavior, the duration and extent of investor participation (whether or not a client takes all signals for a system) in the specified system and money management techniques.

Striker is a revolutionary concept in action: an international, professional team of brokers dedicated to trading only for clients. It bears repeating: unlike most other brokers, Striker does NOT trade futures for itself or any of its employees. This policy has been in place from the start in order to guarantee that our entire focus remains on the interests of our clientele. Striker believes that when brokers are allowed to trade for themselves (or have in-house trading practices) there is a strong potential for conflict of interest, as the broker may place more importance on his own trading activities (or that of his firm's) than on those of his clients. Finally, Striker has no financial ties to system developers, so there no bias or pressure on how we report the actual trading results posted in our client section. This section is designed specifically for Striker's clients, so they may audit their results on a daily, weekly, monthly, or annual basis.