Your own trading system or rely on 3rd party alert services
Something which I find myself pondering is whether I should trade my own system or just rely on someone elses alerts. I’m in two minds about this…
I list my pros and cons of each below:
Your own Trading System
Pros
- It works with your personality, your risk ratio, the style of trading you like etc. You designed it, it is tailored for you
- It is satisfying to have designed your own system
- It’s your systems to keep… you will always know how it works and can always trade it
Cons
- It takes a lot of time and backtesting to build your own system
- It can cost you a lot of money to test it live
- A lot of disciplined is required as there is a greater element of subjective trading
3rd Party Alert Services
Pros
- You simply choose one that works for you
- No time wasted in testing it – most give you a performance record
- If you’re not happy with one, you can find another service quickly
- You are ‘hiring’ experts
- Nothing subjective – you know exactly when to enter and exit your trades
Cons
- You don’t know their system – they just tell you when to buy and sell – it’s a black box
- If they decide to stop their service – you no longer are able to trade, you don’t know their system
- Chances are you’ll be paying a charge to receive their alerts
- You assume that the performance records are correct and that they’ve not been providing you false information
- You may not always receive the alerts at a time that is convenient for you
- You’re relying on/trusting someone else
- If email or SMS fails, you may not get your alert
At the end of the day, it really is down to you which route you go down. For me, trading is also a mental challenge.. it’s not just about the money. I want to know that I can do it for myself and understand why exactly I’m buying and selling. However, that’s not to say that I don’t look at third party services, sometimes they are very good and can be another form of cash flow.
If you’re looking for a great site where you can get 3rd party alert services with full history of trades, then I do recommend Collective2, they can be found here: http://bit.ly/e8LBnj. What’s particularly nice is how you can select a trading system that suits your personality – ie scalper, position trader, long term investor or whether you’re only interested in Forex, Stocks or ETFs.
If you’re looking to find your own trading system, then a good place to start are the forums, my favourites are: Fx Fisherman, Baby Pips and Forex Factory. Yes, they are all Forex forums (that’s what I mostly trade). However, other notable mentions are: Trade2Win and Elitetrader.
