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The 3 (main) reasons that most if not all "system" vendors are scams

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Fortitudo et Honor
Austin, TX
Trading Experience: Advanced
Platform: TradeStation
Favorite Futures: Futures
Posts: 882 since Mar 2011
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Also bear in mind that there are other aspects at play.

Someone here on (formerly BMT) pointed out, and it was poignant, that if you started with 1000 financial advisors, all with a 50% (neutral) edge and they either made their profit for the year on one move, or lost for the's what it would look like,

Year 1, 500 profitable, 500 in the red.
Year 2, 250 profitable, 500 neutral and 250 in the red.
year 3, 125 profitable, 250 somewhat profitable, 250 even, 250 slightly negative and 125 completely negative...
year 4, 62 profitable, 125 fairly profitable, 125 slightly profitable, 125 even, 125 slightly negative, etc.

By year 5,
There's still 31 firms who haven't lost yet,
Year 6, 15 firms,
Year 7, 8 firms,
By year 8, there's still 4 firms that haven't lost a year yet and a whole barrage of firms that are above .500 (and below 500).

So in essence, if you want to make a pile of money, start 2 firms and simply have each take opposite (hedging) positions, chances are, one of them will end up profitable and able to sell a boatload of commissions and the other you just chalk up to being sunk cost....after a few years, you start the whole process over.

Combine this with the what I call the "Barry Switzer" phenomenon. Barry Switzer won a Super Bowl with the Dallas Cowboys. With little exaggeration, you or I or anyone with a basic knowledge of football could have won the Super Bowl as the head coach of the Cowboys that year. He inhereted a team with MULTIPLE hall of famers on offense and one year, they had 8 (EIGHT) pro bowlers on defense.

This is also what garnered Clinton so much misguided fame as an economic genius. Anyone could have been President during the technology/communications revolution of the early-mid 1990's and had virtually ANY policies and still looked like a hero, the markets and the economy and jobs growth with new products, productivity, etc were just that strong. This is why I always tell some idiot liberal who likes to quote Clinton era policies....if you can guarantee the next cellular/communications/internet revolution will accompany it, most people are all in favor of raising taxes.

In some markets, it's difficult to impossible to be a loser. There were periods during the .com boom that you'd be hard pressed to end up a loser.

The real difficulty is finding traders and people who have been successful in all weather, all conditions. Finding a vendor/stragey/approach for sale that's able to show you decades worth of back history and a tried and true track record for most of the years/ a unicorn among vendors.

"A dumb man never learns. A smart man learns from his own failure and success. But a wise man learns from the failure and success of others."
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