A few years ago, I noticed a phenomenon on Twitter.
A well-known trader was posting his results and described a recent change he had made to his rules that improved his strategy.
Shortly after that, in the replies, another trader chimed in, “Wait, that sounds like curve-fitting to me!”
Don’t worry guys – everyone was safe – the “curve-fitting police” had arrived on the scene.
Here’s the thing about curve-fitting: you always sound smart and prudent when you point it out.
Remember back to when you first learned about curve-fitting.
In that moment, you probably thought the person who pointed it out was one of the smartest guys in the world.
He had enough experience to know about the monsters lurking around the corner that you didn’t realize existed.
Because it sounds so prudent and smart, you give it a little more weight than you probably should.
When you have a strategy that’s working, the “curve-fitting sounds smart” bias, along with the “if it ain’t broke, don’t fix it” bias, is what starts to calcify traders in their status quo.
It’s a big reason why so many traders get stuck with one working strategy and not more.
Remember – you are the only one responsible for your trading results.
When you make a boatload of profits from your strategy and wire money out of your brokerage account, there’s no checkbox requiring you to certify that there wasn’t any curve-fitting involved in the making of that money.
There’s a question I like to ask traders who get themselves stuck in the curve-fitting morass.
Do you want to be statistically perfect, or do you want to make money?
-Dave
