A member of the BabyPips forum asked the other day “If a system works why share it with the world?” This question comes up a lot, though probably more often in the private thoughts of traders rather than in public discussions.
My take in the question is this:
The only way letting loose a system on the world is going to impact its performance is if a whole lot of money starts using it. Notice I said “money” not “people”. Ten thousand small retail traders all trading the same system probably won’t move the needle very much (unless we’re talking a very thinly traded market), but a group of big hedge funds could.
Beyond that, most people cannot trade most systems effectively. This is why I have long argued against buying trading systems and have written about the lack of a secret. A trader needs a system that works for them, not just something off the shelf. As a result, even if a system is used by a whole bunch of people, chances are they will “tweak” it along the way to suit their own individual needs.
Consider the CANSLIM methodology introduced in How to Make Money in Stocks. That book has been read by millions of people yet as best I can tell it still works. Why? Because some people toss it aside right away because it requires some work or doesn’t produce instant results they way they expect. Others don’t actually implement it as laid out (for better or worse). Also, there will be variation in which stocks traders may focus on at any given time.
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About the Author
John Forman, author of this blog, has traded for more than 20 years, is a professional market analyst, and authored The Essentials of Trading. He is an active participant in trading forums, consults for trading related businesses, as published literally dozens of trading articles, and has been quoted in a number of books and in the media.
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