By ProfessionalTradingSystems.com
Searching in Internet you can find a lot of algorithmic systems vendors who offer so called black box strategies. Black box means that the purchaser buys only a strategy code written for a particular trading platform. So during the trading you don’t know what is happening, why a trade has been opened and closed, you can`t set up the strategy parameters except for the Money management part in most cases.
On the other hand there are people who share their know how with the other traders. They reveal all trading rules and the concepts behind them. Buying this type of product a trader knows exactly why a particular trade has been opened and closed and more importantly he/she can make some changes in order for the system to fit his/her personality.
For example a trader with a short-term mentality can adjust the inputs so the system will produce more trades or change the Stop Loss size so that the strategy will become more aggressive or less aggressive.
I personally avoid buying systems which I cannot control during live trading that’s why our site offers know-how based Forex strategies and reveals all trading rules on the systems for sale.
Buying a black box you cannot verify the validity of any backtested results which is one more pitfall of blackbox trading. There are many examples of great looking backtest results and poor live results because of manipulation of the strategy code or curvefitting.
Free Reports:
Get Our Free Metatrader 4 Indicators - Put Our Free MetaTrader 4 Custom Indicators on your charts when you join our Weekly Newsletter
Get our Weekly Commitment of Traders Reports - See where the biggest traders (Hedge Funds and Commercial Hedgers) are positioned in the futures markets on a weekly basis.
Usually when a trader purchases a Forex mechanical system he/she eventually makes changes to the rules. It is a rare occasion when a trader trades exactly the same rules as the systems suggest. That is normal and it is OK because as the trader gains more and more experience with the rules he/she starts to have ideas for improving it.
All above mentioned options are impossible with black box trading. So as a bottom line conclusion: buy only systems with revealed trading rules. Black box is a very risky endeavor and should be avoided.
Article by Professional Trading Systems – Forex Mechanical and Automated Systems
