Don't Override - Grow Your Strategy Instead
By Dave Mabe
In the last two posts, I've outlined how overriding your strategy during a trade is actually punting on a real way to improve.
When you feel the need to override your trading system in real time, something is blocking your path to confidence in the strategy.
Dig deep and understand what about this trade feels unique compared to the overall strategy.
Is that uniqueness covered in a column in your backtest?
If not, quantify the situation and add columns that describe it.
For example, you're long a stock according to your plan, but when you look at the daily chart, you notice the stock is just below its 50-day moving average.
Instead of getting nervous and bailing, check your backtest.
Do you already have a column for distance from the 50-day MA?
If not, add one and re-run the backtest to populate it.
You can then analyze that column in Excel or use the Cruncher, restricting the report to just that column.
Instead of having a hunch or fearing the unknown, you now have hard data.
You go from anxiety during the trade because you're unsure to confidence knowing that your system is doing the most profitable thing across a large number of trades.
Once you get into this workflow, each moment of indecision becomes a way to make your strategy more profitable.
Your anxiety turns into opportunity.
-Dave
P.S. Do you wish you had a column library that would tell YOU how to make your strategy profitable? My column library is now included with MabeKit Get Instant Access