Since we offer systems for sale one might assume that we would suggest that systems should be purchased rather than built from scratch. Actually we are very strong advocates of building your own system if you are capable of doing so.

One of the reasons that we make this recommendation is that we believe it is important that trading systems should fit the needs and preferences of the user. A system may appear to have excellent performance data but another trader may consider one trader's favorite system as completely worthless. It seems that everyone has a different level of comfort when it comes to following a particular system and the comfort level increases dramatically if you are personally involved in the planning and research that produces the system.

In addition to comfort levels and other psychological issues, preferences for systems may vary because the resources of traders will vary. For example some traders have very large amounts of capital to work with while other may have much smaller amounts to put at risk. Due to differences in capital or risk tolerances these traders may require different systems. In addition to the amount of capital available there are other resources that may influence the choice of systems. Some traders have many hours a day available and want to trade for a living while others have very demanding occupations and limited time to devote to trading. Many systems traders have extensive experience with computers and a great deal of knowledge about programming. But on the other hand, many of us will have little knowledge and experience in this technical field. Some systems traders have many years of actual trading experience and others are admitted novices. Some traders have access to the newest and most expensive hardware and prefer to receive real time price data while many traders will find they can trade well using less sophisticated equipment and simple end of day data.

We could continue with additional examples of important differences among traders that might influence their preference in trading systems but the point has been made. The advantages of building your own trading system might be compared to the advantages of owning a tailor made suit as opposed to buying one off the rack. If you build your own system you can tailor it to your exact specifications so it fits your
preferences and resources.

However, just as most of us would not consider making our own clothing, designing and testing a trading system is a task that may not be appropriate or realistic for everyone. Assuming that you have the necessary knowledge and resources to create your own system there are still many obstacles to overcome. For one thing there is the frustration of investing in equipment, software and data only to find that most of our best ideas don't work. It would not be an exaggeration to reveal that ninety nine percent of our research winds up in the wastebasket. Also keep in mind the value of your time because until a system is completed you will be working hundreds of hours for less than minimum wages. There are no shortcuts so you had better enjoy the entire process.

However the benefits of building the system yourself can be substantial and we think the benefits are worth the effort. You will know and understand the logic behind each step in the system. The knowledge gained in the testing process should give you confidence in the system so that you will have the necessary discipline to follow the system correctly when it comes time to start trading it with real money. The testing process should also give you a "feel" for the system that will help you to sense when it is not performing as intended. If necessary you will also have the ability to fine tune the system based on your real time experience. We believe that over the long run the discipline and confidence of the system operator have a great deal to with determining the ultimate success of any system. By creating the system yourself you are most likely to trust it and operate it correctly.

We suggest that you should seriously consider building your own systems if you can satisfy most of the following criteria:

1. You enjoy challenges and have a knowledge of the commitment required to excel at anything. If you have been an outstanding success at any endeavor then you already understand commitment. In particular we believe that success at competitive games like bridge, chess, backgammon, poker and other pastimes requiring discipline, patience and
strategy would be a good indication that you can build a good system and operate it successfully.

2. You own or are prepared to purchase a testing platform (like TradeStation or something similar) and will spend the time required to learn how to operate it.

3. You understand how to program the software you will be using or you are willing to pay a professional programmer to assist you. If you do not have a programming background you will find that there is nothing easy about Omega's so-called Easy Language. If you have no programming experience and decide to hire a programmer you should study enough about the programming to enable you to communicate with your programmer. As a minimum you need to be able to express your ideas in "if / then"
statements.

4. You need to have studied some basics on testing procedures and know how to analyze and evaluate the test results. Some training in statistical analysis would be very helpful.

5. You will need a source of clean historical data and the software to convert the data to the format that will be used in testing. For example you may want to convert the data to continuos back-adjusted contracts. There are other popular formats for historical data and you should know which format is appropriate for the testing and type of system you will be creating.

6. You have spent some time clearly defining exactly what you want from your system. You need to list and prioritize these desired characteristics because they will guide your research.

7. You must have an abundance of time and patience. Picture yourself as Thomas Edison setting out to invent the light bulb. Will you have the commitment and patience to keep trying one element after another to find the one that works? (As an example, we have been working on S&P trading systems for years and we have yet to come up with one that we would be willing to trade. We are still trying.)

8. Can you be truthful with yourself and analyze your test results without letting your natural optimism cloud your judgment. (However, if you are not an optimist you are automatically disqualified.)

If you feel that you satisfy most of the criteria listed above you can be confident that you are capable of building your own system. However, if you have any second thoughts about your qualifications and your enjoyment of the process of building a system, you might consider buying one of ours. At $250 each they may seem like a bargain.

Reprinted with permission by Chuck LeBeau at www.traderclub.com