Breaking the black box by Martin J. Pring is a useful book for traders interested building their own trading system for long term, low maintenance trading. The book explains what trading systems are and the benefits obtained through the use of mechanical trading systems.
Pring explores some basic guidelines for trading system development and trader psychology as it relates to strategy selection, however, these sections are brief and are better covered elsewhere (esp. Pardo; Van K. Tharp).
Breaking the black box then goes on to describe several trading systems that are applied to single markets to demonstrate their profit potential. It is tempting as the reader to dismiss the systems presented as too simple, however, this would be an extreme oversight! Despite their simplicity, many of the systems work surprisingly well and appear to have stood the test of time. When applied to a portfolio of multiple markets and tested using true portfolio backtesting software such as Tradesim or TradingBlox the reader may be pleasantly surprised with the results.
There is an excellent lesson from ‘Breaking the black box’ – simple trading systems work. In addition, long timeframes can provide excellent trading opportunities and profit potential. In the popular media high frequency and ultra short term trading systems are depicted as the money making machines – Breaking the black box challenges this indirectly by presenting some useable and profitable long term trading systems that require minimal effort to maintain…and this is what we are all about at Trading System Life – Trading profitably with the minimum time commitment possible so we can enjoy life!
If you are interested in developing intermarket trading systems which take signals from one market and apply them to another market there is an interesting section on these systems which will be of assistance to you provided again you are approaching it from a long term perspective.
Breaking the black box covers a number of useful system ideas, but focuses mainly on entry and exit signals for these systems. Risk management is covered lightly and money management/portfolio management are better covered elsewhere (esp. Van K. Tharp).
Breaking the black box is recommended for anyone interested in long term trading systems primarily of a trend trading / trend following nature. The systems presented will spark some useful ideas for your own system development and can also be tested as is or with minor adjustments for some very interesting results.
Overall well worth reading. Buy it now: Breaking the Black Box