Quote from: Effingham Hoofnagle on January 05, 2019, 02:29:27 AM

In my experience, generally speaking, the simpler the system, the more robust it is. Beginning traders make the mistake of trying to develop a system that is rarely wrong. There is no Holy Grail of systems.
The Holy Grail of trading is inside of you, in terms of knowing yourself and your emotional weakness, and working to trade in a way to minimize harm from your weaknesses.

You can knock yourself out trying to create a system that is rarely wrong....you start with perhaps a pair of moving averages, then when it shows some promise but is wrong a few times in a row, you add some other indicator...then another and another. The result is, at best a system that has been "curve-fitted" to your test data and is not robust in real trading. The other effect is that your new super 5 layer indicator system
filters out too many trades.

Here's what I mean: Every trader using a mechanical system, which is what the "turtles" used, should know his/her system's "expectancy". If I have 100 trades, 60 of them profitable with an avg profit of
$20...and 40 losing trades with an average loss of $18, my expectancy is (.60 * 20) - (.40 * 18) = $4.80 / trade. The beginner mistake is to add layers of filters to the system to try to raise the expectancy
higher. In doing so, if they succeed it usually results in fewer trades, so even though each trade is more profitable than before the system was modified, they make less money because their new trade selection
parameters are stricter and gives fewer trades.

Example: I have system A detailed above: Expectancy of $4.80 / trade and with those selection parameters I get 100 trades/year....so I make $480

I then tweak system A and manage to raise its expectancy to $7.00 / trade. This new system (B) with stricter selection rules to filter out more losers only
generates 60 trades a year. Even though each trade makes more $, it only makes $420 in the same amount of time that system A made $480

Accept that losing is part of profitable trading. Casino's dont mind losing b/c they know that time is on their side. All they want is more chances to let their
statistical edge work for them and eventually/inevitably make them profitable.

As for what time frames to trade....day trade, swing trade, trend trade...that's where knowing yourself and your risk tolerance and ability to sit tight on a trade is critical. If you find a system that works on a daily chart using a 20 day indicator...but you know you are more risk averse and want a shorter horizon, test the system using the same number of chart bars(20 for the daily example that
I just mentioned) using 20 bars of an hourly/30 min/15 min/5 minute chart as a starting point for your testing.

great point! i totally agree! traders must have a plan, no matter what kind of trading method. take the risk you can bear, take the risk you can manage. everything else just let it happen.