Adrian Reid explains that trading systems can move between markets, but they need testing and tweaking. Markets differ in company sizes, participants, and rules, so his "freight train" trend-following system, for example, requires different settings for each one. Backtest with local data first.
The freight train system.
And let me generalize this question. Say can I take a system that I use in this market and apply it in that market, is that possible? The answer is yeah, it's possible. But you need to test it and see how well it performs, see if you're comfortable with it. Because different stock markets have different personalities and they move differently. And the reason they do that is because there's different types of companies, there's different sizes of companies, there's different market participants, there's different exchange rules, there's different cultures in the countries, many different things. And so a strategy that works really well in one market may or may not work in a different market. So the key is, as always, test first. So if you've got a trend following strategy for Australia and you want to go trade a European exchange, get the data, download it back, test the strategy in Europe, you'll probably have to fine tune that strategy to work in that market. And if it does work, if you can get it to be sufficiently profitable, then trade it. But taking the one strategy and blindly applying it across many different markets won't work. Because I know I've got one system, the freight train system, which is a very solid trend following system, just grinds out profits from big long trends. That system works in Australia and the US and in the Philippines and in Malaysia and in Hong Kong and in South Korea and in the US and a few European markets and in London. But, but the settings for each one is a little bit different. So make sure that you test it first and take those rules and fine tune them, optimize them for your market, otherwise you'll be leaving a lot of money on the table. Some markets have longer trends than others, some markets move a little bit more explosively than others. So backtest your system and see if it works in that market. If it does, trade it. If it doesn't, find another system. So just whatever you do in the financial markets when you're trading stocks, don't do it blindly. Do it with data, do it with back tested results to support the decision.
