Trade Ideas Blog
2 Key Tactics to Know When Making Any Trading Transition
Feb 2, 2009
It is very easy to get excited about systems test results. We have fallen victim to that problem ourselves as we spend more time working with traders who have gone to automation. What happens and more importantly what do you do when your system is not performing as well as you would expect?
It is important to keep things in perspective. No matter how good you think the set up is in terms of back testing real live trading will be different. One danger that we have identified is the tendency for the human mind to attribute a lot cause it fairly random things. “Oh these numbers came out today and that’s what happened”, or something else. As people we really want to know the reason for everything.
The most important thing in trading whether you are doing it in automated or manual mode is to keep losses to a minimum until things straighten themselves out. There is not better way to keep losses small than to be smaller is size and less aggressive in entry.