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Rich said:
"Analyzing my trades, I once again realized how
hard it is to follow a trend. Much easier to hit and get out, hit and get
out."
Yes, and I've found that to be true in system development also! Which is
ironic given the constant propoganda to "follow the trend". I like the
equity smoothing that comes with >70% winners. Hard to build trend
following systems with that characteristic (LeBeau got some like that
for sale, debating with myself if I'll learn enough to pop for $250 but
it is tempting.)
And Edward said:
"Indeed, I find it easier and more profitable too in the system development
arena. Getting consistency of winners (>50 or 60%), having reasonably
low average loss sizes, and good overall profitability I find to NOT be
easy to achieve with trend following approaches. And I hate systems that
only win 30% of the time, because of the greater equity fluctuation."
Oh man, were truer words every spoken? How many traders have NO CLUE what
the expectation of their approach/technique/system is? (Remember, absolute
minimum is a need for 30 trades worth of history.) Most discretionary
traders, and that's most traders. We think it _should_ be a winner system,
so whats the need to measure our approach? My experience: my best ideas are
losers, only alot of work and study and refinement and try again work produces
winners, and few of those win alot. My conclusion: by far most traders are
trading what, if studied, are certifiably negative expectation systems. Which
means the longer they trade it, the more certain they will lose every cent they
own.
I hope everyone gets this, because its just so darn incredibly important,
IMO. Measure it before you trade it! Any only trade it if it proves
itself a money winner! I'm a zealot on this point.
-Kevin
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