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You might have heard that it is a good idea to let your profits run and keep your losses short. This is a very simple thing to understand, but in reality it is very hard to do. Moods are human, but I think moods are a big problem when it comes to trading.

 

Most people don’t even even have done a few hundred trades. They have an opinion that might be based on 17 trades or so. One of the main problems with trading that you will have is the fact that a strategy test needs to be defined with an end date. We have all certainly seen an optical illusion. A good example would be the heat flicker over the asphalt of a heated street on a hot day. Do you consider yourself to be a reasonable person? I do, at least most of the time. My current statistics solution is still not as good as it could be because from time to time the connection gets lost or the automated updates do not work. Trading should be about numbers and results, not about feelings.

 

Complex decisions can be made, but this is only possible if one is able to make such complex calculations. If I would show you a profit of $1,000, how much risk would you be willing to accept to make that profit? So what do you need to do to protect your trading system? Well, you need to build your trading ship in a way that you are able to face all weather conditions, not only the warm summer days with a light breeze. The strategy tester allows you to test your strategy with historical data to find out how your automated system would have performed in the past. Defined automated rules. That is why it is called a system. Emotional trading is what I call hope trading and that didn’t work very well for most of us. Or did it?

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