Does anyone have any suggestions on any DON"T DO lists for trader?
Thanks in advance for any suggestions
Any DON"T DO lists for trader?
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rhc - what about on #7 if you use some underwear as a "stop loss"?
oem - onto your request, one that many have heard of is not to significantly change (or modify at all) your system in the midst of a (large) drawdown. It is a play on that our human emotions get us to do things at exactly the wrong time and one should be contrarian, i.e. screw with the system when making new highs! Seen a few CTAs blow up this way, i.e. lose faith in a system during a large drawdown, scrap it and never recover with the new system when sticking with the old system they would have recovered nicely.
Of course the above assumes the original system was good in the first place but if you use any of the robust trend following systems discussed in these forums you'll run into this issue when you hit the MaxDD that is 1.5-2.0x larger than your backtest. What do you do?
oem - onto your request, one that many have heard of is not to significantly change (or modify at all) your system in the midst of a (large) drawdown. It is a play on that our human emotions get us to do things at exactly the wrong time and one should be contrarian, i.e. screw with the system when making new highs! Seen a few CTAs blow up this way, i.e. lose faith in a system during a large drawdown, scrap it and never recover with the new system when sticking with the old system they would have recovered nicely.
Of course the above assumes the original system was good in the first place but if you use any of the robust trend following systems discussed in these forums you'll run into this issue when you hit the MaxDD that is 1.5-2.0x larger than your backtest. What do you do?
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