Posts Tagged ‘Equity Curve’

Are you related to Perfect Profit?

October 9, 2009

Okay, by now you’ve probably discovered you are not the perfect trader. You are but a fraction (if that) of the money-banking machine. He is no longer your friend, this creature known as Perfect Profit is your competition. Now that you’ve formally met your competition, what is the family resemblance between your equity curve and Perfect Profit’s equity curve? Are you brother and sister, second cousins or do you need to go all the way back to Tiktaalik roseae to find a common gene? On the practical level, what is the correlation between your equity curve and Perfect Profit’s equity curve? (more…)

How close are you to perfect?

October 8, 2009

Becoming the perfect trader is no easy task, and I daresay that nobody has been able to achieve this great feat. The perfect trader buys at the absolute low of the day and sells at the absolute high. And depending on whether the high happens first or the low happens first determines if he is long or short for the day. It’s really easy to calculate this metric. It is simply the absolute value of the daily range or the high minus the low. (more…)

Trade your Equity Curve

September 24, 2009

System traders understand that their approach to trading requires nerves-of-steel patience while in a drawdown, gut-wrenching discipline in taking every signal generated by the system (and I mean every signal – no ifs, ands, buts or maybes) and cat-like reflexes in executing signaled trades before doubt can creep into the kernel regressing, quadratic equation. Whoever said that system trading takes the emotions out of trading doesn’t know the half of it. Doubters and skeptics of system trading recite the ‘past performance doesn’t guarantee blah, blah, blah’ mantra, refer to the perils of overfitting and data mining, and express a general independence from the enslaving nature of system trading. Well, you’ll be happy to know that you can be a system trader and not take every trade. How? Trade your equity curve. (more…)