[kimchi]

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have you tried to backward test these systems if they wouldve worked in the past?

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I've backtested extensively. Backtesting has many flaws and you have to be careful not to curve-fit your data. Splitting data into 2 chunks and forward testing on a portion of your data can be useful.

Nothing can prepare you for live testing though.

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can you say how risky these systems are and if it quite surely works or you just got lucky?


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The system should be as risky as you want it to be. Risk is one of the few things a trader has some degree of control over. I risk between 0.5% and 1% (including spreads, commissions etc) on a single trade and never have open positions that risk more than 5% of my account should all my worst-case scenario stops be hit. I also use a monthly stop at which I suspend trading for the month.

If I doubled my risk I could effectively double my return.

There are methods to maximise your return and risk such as the Kelly formula, but I prefer to take tiny risks due to my inexperiance (ineptitude). There are also specific ways to measure profitability and compare systems such as measuring the % of profitable trades and average profit per trade. This allows you to measure the reward per unit risked.

Then there's the opportunity factor. MrBaseball probably gets many opportunities per day and thus can be profitable most days (or at least most weeks). A long-term trader's system can remain unprofitable for a year or more.