System Trading FAQ
It's come to our attention that a number of our clients and other interested persons may have some questions regarding systems trading at Striker, and systems in general. While we have covered some of the following topics in the past, we feel that given the increasing interest in the systematic approach to trading futures and trading in general, it is only appropriate to revisit some of these themes.
Q. Is system trading a valid approach to trading futures?
A. We feel certain that it is, and that it is reasonably safe to say that most professional traders will trade using a system of some sort in trading the futures markets. A system in this regard can be any strategy ranging from simple entry and exit criteria, money management rules, the use of stop losses to protect positions or lock in profits, to the more complex use of technical indicators and mathematical formulae. A system provides a consistent and logical approach to trading. Whether simple or complex, a trading system is usually most effective when implemented consistently. One problem frequently encountered by individual traders is the difficulty in following a system, whether their own or a professional developer's. Sticking to a system requires discipline, and discipline is often difficult to maintain in the heat of live market action, where emotions can rule the day, and a trader may be tempted to second-guess his or her system.
Q. I have purchased a system which is currently being traded at Striker. What is the relationship between Striker and the system developer?
A. One of our goals at Striker is the unbiased reporting of system performance. To this end, Striker has no financial ties to systems developers, nor does Striker have any in-house systems. Our financial independence allows us to be objective in running systems. The leasing or purchasing of proprietary systems is a matter between the client and the developer. While we strive to work with reputable developers of robust and legitimate systems, we see our role as primarily one of service, execution, and the accurate reporting of information. To this end, we do not tamper with system signals, but faithfully strive to execute them in a timely fashion. We then report the actual trading performance at striker.com for day and swing systems. We do not report performance for multi-commodity systems, since customers can have different settings or instructions, and thus, different results.
Q. Help! The system I'm trading isn't doing as well as I thought it would. What can I do?
A. While it is always preferable to see winning trades in one's account, the fact remains that the futures markets, like other markets, tend to fluctuate. Futures markets can also be more volatile than equity (stock) markets. Trading futures using a systematic approach offers specific advantages (such as establishing rules of risk and money management), but does not guarantee success. Nevertheless, merely because a system is struggling at the moment does not mean that it will not offer positive returns over the long run. A number of systems traded at Striker have gone through periods of "draw downs", but have gone on to make money for our clients. For example, the Compass S&P day trading system, which trades the S&P futures on $30,000 has returned over 423.23% since January 2000 as of Oct 31, 2011. However, the system, which can also trade the e-mini S&P on $5000, actually lost money in four years during this history. In its trading life at Striker, it has averaged over 36.35% a year, as of October 31, 2011. In other words, patience and an accurate assessment of one's financial situation are key factors in systems trading. However, Striker's professional staff is happy to work with clients in terms of discussing alternatives if a system appears to be underperforming.
Q. Why are Striker's results different than the developer's?
A. When a system goes "live" Striker reports actual trading performance, where a number of developers report hypothetical performance. The difference is that hypothetical reports do not represent actual account activity, but rather represent a computer generated snapshot of the system's trading signals. In the case of systems traded at Striker, these signals are generally identical to those generated in our operations center, but where a hypothetical report begins and ends in the computer, Striker takes these signals "live", and in to the hurly burly of real market trading conditions, where they must compete with other traders' orders. Market conditions can change very rapidly, and even with Striker's superior execution and expertise, fill prices can vary depending on the market. The difference between an ideal price and the actual price fill is known as "slippage", and is an inevitable component of futures trading. Nevertheless, Striker's experienced team works hard to get the best price fills for our clients, and our results always reflect any slippage.
Q. I've been looking at systems on the Internet. There are quite a variety of them. Can Striker recommend one in particular?
A. In the client section at www.striker.com, we keep actual trading performance records for many (day and swing) systems that have traded or are trading at Striker, with commissions included. These records represent real trades for our clients' accounts. We feel these records can be highly useful in evaluating and choosing a system. However, we are aware that there are many programs available for sale or lease on the Internet and elsewhere that have not been traded at Striker, and we recommend that you engage in careful due diligence in evaluating these systems and their developers.
For example, it is important to do your homework in looking at the developer's background. What is their trading and business history? Are they registered with a regulatory body such as the NFA? Do they have a good business record? Have they had complaints registered against them with the Better Business Bureau, or other consumer protection agencies? These are all questions to consider when investigating a system developer.
There are a number of important questions to ask when evaluating a given program's trading record. Are the trades shown actual, or hypothetical? If they are hypothetical, what methodology was used in implementing the hypothetical model? Has the model attempted to accurately reflect a real trading environment, with slippage and commissions factored in?
Finally, if you are looking for a specific idea when looking at systems traded at Striker, don't hesitate to contact system specialist Dan Neenan.
Q. I see some of the systems traded at Striker are struggling. Do systems ever completely fail?
A. The systems you see at Striker are not "ours"; we do not sell systems. These are third-party trading programs for our clients which we are doing the execution. In many cases, they are systems that clients have purchased on their own, and have decided that they prefer to have Striker execute the trading for them. We only show trading performance for day and swing systems actively traded at Striker. Should a system show little or no promise at all over a period of time, our clients are likely to stop trading it, and the performance record for the system would end. So to answer the second qustion, systems do on occasion chronically underperform. Futures trading is inherently risky, and while systems in general are developed in order to manage risk and improve a trader's chances of obtaining a successful outcome, traders should nevertheless trade using only risk capital and be warned that systems can fail.
Q. My system is losing money. What should I do?
A. At Striker, our priority is your comfort in trading. While we don't advise that clients abandon a system merely because a series of losing trades, we are here to take your direction in trading your account. If you feel uncomfortable with the direction of your current trading approach, we recommend that you stop trading, take a deep breath, and look at your options in terms of exploring an alternative or more conservative strategy.
For more information regarding futures markets and systems trading, please visit www.striker.com, and click on the link entitled: Educational Resources.
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, www.striker.com. 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.