Hi Kevin,
Welcome to the community! And thank you for your contribution here. The observation you made is a real challenge for many traders, transferring their knowledge to being profitable. While traders may be very knowledgeable, other aspects could become a challenge; in other words, psychology.
In my experience and opinion, people lack the understanding that an individual trade will not matter in the context of a method. This means that while you may have several consecutive losing trades, it does not mean that the process is “bad.” So instead of writing a method off, one should try and test it back as far back as possible and see what up and downs the method/system experienced. This could give you a better outlook of what the method does. For example, suppose a system did not show consecutive losses, very few drawdowns, and an almost “perfect” like uptrend. In that case, the developer should examine if the system is overoptimized or hasn’t considered things such as the cost of transactions and/or assumes fills on every order (all limit orders filled). Typically, we would see it in systems where the developer seeks to get a tick or two out of the system. In such instances, it’s not that the system is flawed, but rather the equipment and execution cost.
Some have suitable methods but always try to make it “perfect” or better. They try to max out the method to make the maximum amount of profit. This can cause two things:
- Postponing your trading and not taking advantage of the market for years, convincing yourself that you did not finish your method.
- Taking what could be a simple method and overcomplicating it to make it better, yet in reality, they add more variables that will cause more doubt when it will be an opportunity for a trade.
The above is my opinion, and it is based on conversations I had with traders about their habits and psychology. But, of course, every trader has their own experience and risk tolerance, and they do things to maximize their needs, which does not always coincide with what a trader needs to do.
Matt Z
Optimus Futures
There is a substantial risk of loss in futures trading. Past performance is not indicative of future results.
