Joe DiNapoli contends that all mechanical trading systems eventually fail. It seems that someone will stumble onto some combination of indicators that works for a while, but DiNapoli asserts that, in time and inevitably, it will blow up. I have noted that some system sellers include the London Rush free now — a clear indication that it has lost its usefulness.

DiNapoli’s contention is disheartening for the noob, because it means you simply have to last through enough experience (and losses) to be able to trade markets successfully. However, he does not discourage using effective mechanical systems in the meantime. He just wants us to be aware that they will “wear out,” and often suddenly, with unpleasant results.

Of course, DiNapoli sells a system, too. His copyrighted book can be found as an illegally free pdf file various places on the internet. His primary tools — not in the book — are proprietary and must be bought from him or leased from GFT. But he seems to rely on experience as much as indicators in his trading, e.g., on a 5M chart of EUR/USD, his indicators will give a range of 10 pips or more for an entry point, same for an exit point, leaving lots of room for error. Many folk swear by his system, though, and it impresses me that GFT leases it to their clients.

Joe W