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“Those who have been around the markets awhile realize that there are many potentially profitable trading systems. The problem is that there are very few traders who can trade them. By this we mean that traders spend too much time searching for that perfect system and far too little time working on their discipline.
To trade a system successfully, you must be prepared to take every signal and stay with the system when it has that inevitable string of losses. There is no system, no method and no trader who does not have strings of losses. The laws of probability insure that even the best systems must, at some point, have significant drawdowns. You should be prepared to keep trading the system through the losses or you will spend your entire trading career going from one system to another.
Always test your system historically so you know its characteristics. Before starting to trade a system with real money, you should be prepared to trade through the largest drawdown which has occurred in your testing. The more money you have in your account, the more likely you are to be successful.”
You may be right. I do believe, though, that system traders also need to really appreciate the vagaries of their system, in terms of how they trade day-in and day-out, in terms of what market conditions are best and which are more problematic, before they start to trade a system. That's why it is probably best to do a "real time walk forward" test of a system, to truly understand how a system works, instead of risking money simply based on what a backtest shows.
