|
PureBytes Links
Trading Reference Links
|
Gary,
> > How do you deal with a string of losses? I'm not talking about
> > filters. They are fine in testing but reality is another thing. At
> > what point do you say that the system has a problem.
>
> That's an incredibly hard question. Especially since you tend to be
> under extreme emotional duress when you have to answer it!!
Yeah, I know. It wasn't my intention to put you on the spot. Sorry.
I think that you have a start point in the concept of a stop. A stop
defines the limit of acceptable loss before the trade occurs. I think that
you must define acceptable system loss - absolute amount, relative amount,
consecutive amount - before you trade a system. It's not carved in stone
but, as with a stop, it shouldn't be adjusted in midstream without a very
strong reason (and even that's risky depending on how talented a
rationaliser one is).
Then if it occurs, you do the things that you outline. But you have to be
really disciplined. I'd suggest writing up an analysis as if you were
explaining the problem to a smart boss. That ought to keep you disciplined.
(g) The problem is that you are predisposed to continue trading the
system - it's your baby and how could you be wrong.
I agree with your comment about trading unrelated systems but you still have
to deal with the problem of is it broken or not. In fact, you'll have to
deal with it more often.
Regards,
Mike
|