Systematic trading is the ticket.

When Futures asked me to discuss the evolution of my trading strategies over the years to what they are today, it gave me the excuse to reminisce about years of personal development. With numerous acquaintances in the CTA community, I've been able to observe the development of many other traders,

both discretionary and systematic, in our industry. It doesn't make a difference whether trend followers are "in" or "out" with the asset allocators in a particular year. I admit to being a systematic long-term trend follower, and I remain a strong supporter of systematic trend-following trading techniques.

Most of the good returns for the industry come from those times when there are large volatility and trends. Usually, during these highly profitable periods, you'll find all traders, discretionary or systematic, having their best months. For anyone to make money in a market, there has to be a trend to exploit.

Trading is managing information flow

When you break down everything to its smallest function, every trader in the futures industry spends most of his/her time managing information flow. It matters not whether the trader is a fundamentalist or a technician; the trader could believe in Elliott wave, Gann or see some other form of order in the universe. The trader could rely on government reports, analyst's opinions or the advice of a friend. Whatever the approach, information processing is at the heart of it.

So what's the most efficient way to manage information flow? The answer is to computerize it, of course. That now puts you squarely into the realm of the systematic trader and is the major reason why Trendstat is systematic.

Before you computerize your approach...

The first issue you have to deal with before automating your trading strategy is why you are in the business of trading. Are you simply trying to manage client assets efficiently? Are you trading for the thrill of trading? Are you trading for the money you hope to make from successfully trading, or do you love the challenge of solving the riddle of trading well?

If you are seeking any thrill or excitement from trading, you'll have a hard time becoming a systematic trader. You may automate pieces of trading, then overlay some discretion on the system's decision. You may invest with more leverage if you feel good about a signal or stay a little longer in a position that is not hurting you badly. In my own development, when I concluded that I didn't need or want the excitement of trading, I had arrived at a good mental state to automate my trading style.