I think that everyone is looking for the holy grail (well except for those that believe it don't exist, and they are probably the proiftable traders!). But how do you know when you have hit upon a system that actually works?
I think you can draw a comparison with Elliot waves, regardless of what happens, you can zoom out on a chart and see that it is following that particular pattern. If I can explain:
You could have a system that is a total fluke, and for 10 trades it has 10 wins. It profits (for extremism cases) £10 million. However, subsequently you make 100 trades with it, and it loses £100k each trade - leaving you break even at the end.
Likewise you could have a sysemt that has only one win and a 1000 loses, and yet you end up being +1 pip on the system.
Zoom in on these, and the 1st example would be the better system, zoom and out and the 2nd would be considered better (assuming that you stayed with the systems - after all this is all hypothetical)
This can be replicated for any system, over any amount of timeframe over any amount of trades. You may think that you have a winner, but if you could see in the future, you may see it losing millions...
Is a system only as good as it's last trade, last 10, last 100 etc?
What testing would prove to you that it is good ong term/short term? What is more important?
I think that the people who have not stumbled across something that works for them, expect to find diamonds, probably do find them, but toss them aside because they have a bit of dirt on them... they are not shiny like we expect them to be.
A bit of a rambling post, but I am actually interested to hear some answers or thougts on the original question!
I think you can draw a comparison with Elliot waves, regardless of what happens, you can zoom out on a chart and see that it is following that particular pattern. If I can explain:
You could have a system that is a total fluke, and for 10 trades it has 10 wins. It profits (for extremism cases) £10 million. However, subsequently you make 100 trades with it, and it loses £100k each trade - leaving you break even at the end.
Likewise you could have a sysemt that has only one win and a 1000 loses, and yet you end up being +1 pip on the system.
Zoom in on these, and the 1st example would be the better system, zoom and out and the 2nd would be considered better (assuming that you stayed with the systems - after all this is all hypothetical)
This can be replicated for any system, over any amount of timeframe over any amount of trades. You may think that you have a winner, but if you could see in the future, you may see it losing millions...
Is a system only as good as it's last trade, last 10, last 100 etc?
What testing would prove to you that it is good ong term/short term? What is more important?
I think that the people who have not stumbled across something that works for them, expect to find diamonds, probably do find them, but toss them aside because they have a bit of dirt on them... they are not shiny like we expect them to be.
A bit of a rambling post, but I am actually interested to hear some answers or thougts on the original question!