Meet The Systems Trader

Greetings! I'd like to take this opportunity to introduce myself. My name is Dean Hoffman, and I have been involved with the futures industry for over 15 years now. I started in the late 80's as a commodity broker and eventually ended up running my own brokerage firm in the heart of Chicago's financial district. Unfortunately, during my many years of dealing with customer accounts, I witnessed the vast majority of futures traders losing money. Some have put the figure as high as 95% and my experience would tend to confirm this. Because my livelihood was very tied into the success that my clients experienced, I decided there must be a better way.

As a result, in the early 90's I began what ended up being a full-blown 10-year research project into commodity trading systems. Over the years, I completely immersed myself in every aspect of system trading and development. I started out by developing simple single market-based systems and then evolved to more complex portfolio-based systems and system combinations. I tested much of what was available in the public domain (without satisfaction) and then created my own proprietary indicators and methods. I also did extensive research into the critical areas of money management and position sizing.

If you think about it, the Turtles were the first mechanical system traders. For those who may not know of them, they were a small group of individuals that were trained by legendary traders Richard Dennis and William Eckhardt. Dennis and Eckhardt had a bet about whether or not they could train somebody to trade just as successfully as they could. Keep in mind, Dennis is reported to have made several hundred million dollars starting with less than a few thousand dollars. Furthermore, what the Turtles were taught was a very specific mechanical trading system, developed by Dennis and Eckhardt.

The experiment was an overwhelming success! Many of the Turtles went on to become some of the world's most successful and sought-after traders. In fact, many of them are now in the public spotlight far more than their mentors, Dennis and Eckhardt. In the minds of many, this proved that it is possible to develop and be successful with mechanical futures trading systems.

In the weeks and months to come, I will be presenting valuable information about system design and related concepts. Here are just a few things we'll be looking into:

Thank you for taking the time to get introduced to both the new column and myself. I hope you will find it extremely informative and interesting. Feel free to start asking questions right away. E-mail me at deanh@tradingmarkets.com.