You know what grates? We’ve bought a ton of books over the years, attended another ton of courses, bought quite a few systems (in the days of Future Truth magazine), tried trading with nearly every indicator known to mankind, and attended more than a few conferences / trade fairs (remember that was a thing a long long time ago…).

And all of them promised you The Holy Grail, the one and the only, that will make you rich.

But none delivered that killer knock-out solution! Mostly, they don’t ever deliver and almost none work long term (think decades).

But we tried them all out. One at a time. Often with our hard earned coin. But the out-of-sample real-life trading sucked. That’s technical for severe drawdown. (We’ve had a few of those too.)

And when we got sick of testing systems the hard way with real money, we bought testing software like TradeSim, and later TradingBlox. These allowed us to test systems ahead of time before committing capital. So we learnt to code, occasionally paid computer programmers for help, and tested some more.

However, we basically found out that some systems work some of the time, but none work all of the time.

And if they work at all in the long term you need to be able to survive through some pretty significant drawdowns to get to the other side. And that’s a tough gig for most people. And what they don’t tell you ahead of time is when they’re going to go into a significant drawdown, or worse stop working altogether.

Sometimes “the system” didn’t work because it was probably based on over-zealous data mining. Sometimes it probably used cherry picked data or only worked on a certain instrument for the so-called “optimised” well marketed results. And sometimes they were just plain lies by spruikers…

But fundamentally, most systems will not work because what you paid for isn’t compatible with the shit between your ears. It may have worked for the guy who sold it, and/or it may have worked for his “in-sample” system test and statistics in the glossy advert, but to work for you personally, in synchronous with your personality, and within the confines of your personal and unique set of cognitive biases, well, it probably won’t work so much, if at all.

And worse, after a couple of consecutive losses, you may not even be able to follow it without you “tampering” with it and “over-riding” it.

So we’re not going to sell you a damn thing.

All we’re going to do is provide our thoughts via our blog as we travel our trading journey. And we’ll try to show you a few things that appear to be working for us along the way.

We’d also encourage you to seek out monte carlo simulation to develop your own personal risk management system, unique to you and your personal trading results. Our bible for this was Howard B. Bandy’s book “Modelling Trading System Performance”. Click here for the Goodreads reference to the book.

And if you have a system that’s working for you that’s great. (and no - we don’t want to buy it). However you may still want to consider Howard’s thoughts on how to keep an eye on system performance to get some warning of when its “broken”, perhaps before you take on that 40% drawdown (DD) on the way to that money back guaranteed 30% compound annual growth rate (CAGR) you’re chasing. Just saying, beware what you wish for.

More later.

Trade small to survive.