Don’t Trade Garbage

Feb. 27, 2023

Here’s some good business advice.

If you’re not happy with how much money you’re making, get better clients.

What does that mean?

In tennis, it’s simple.

If you want to coach players who win titles and turn pro, don’t teach overscheduled, uninterested kids with psychotic parents who have a history of changing coaches every two weeks.

Instead, teach players who never want to leave the court, are complete sponges, and have the financial backing of supportive, mute parents.

In the first case, the coach looks like he isn’t very good. In the second case, he looks like a genius.

The coach is the same, of course. The clients are different.

The same goes for trading.

If we want our trading to make a lot of money and provide security, we can’t trade things that are lousy.

It’s the mantra that’s been repeated in this Newsletter many times: If you are a trend following trader, don’t trade things that don’t trend.

To wit, let’s check in on the 3 MA Crossover robot that was built so long ago, I can’t remember when.

Here are some recent trades on this pure trend following robot:

Here are all the details on this system: https://www.youtube.com/watch?v=wRxMDMEH-G4&t=2s

And here are the Annual Returns from the past five years trading THE GBPJPY ONLY:

Using a trend system on a trending instrument shows excellent hypothetical results.

So let’s trade it on everything!

Easy now.

Here are the past five years on, say, the CADJPY (using the exact same system):

This is what happens when you trade garbage.

Wait, that’s not very nice.

This is what happens when you use a trend following system on an instrument that doesn’t trend. And, as you know, anything with CAD on it does not trend.

Traders love to think about trading a system on everything. But you can’t get rich without good clients.

However, that is only one example. Maybe there are other pairs that would work just fine.

We’ll talk about that in the next Newsletter.

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Disclaimer:
It should not be assumed that the methods, techniques, or indicators presented in these products will be profitable or that they will not result in losses. Past results are not necessarily indicative of future results. Examples presented on these sites are for educational purposes only. These set-ups are not solicitations of any order to buy or sell. The authors, the publisher, and all affiliates assume no responsibility for your trading results. There is a high degree of risk in trading.

HYPOTHETICAL OR SIMULATED PERFORMANCE RESULTS HAVE CERTAIN INHERENT LIMITATIONS. UNLIKE AN ACTUAL PERFORMANCE RECORD, SIMULATED RESULTS DO NOT REPRESENT ACTUAL TRADING. ALSO, SINCE THE TRADES HAVE NOT ACTUALLY BEEN EXECUTED, THE RESULTS MAY HAVE UNDER- OR OVER-COMPENSATED FOR THE IMPACT, IF ANY, OF CERTAIN MARKET FACTORS, SUCH AS LACK OF LIQUIDITY. SIMULATED TRADING PROGRAMS IN GENERAL ARE ALSO SUBJECT TO THE FACT THAT THEY ARE DESIGNED WITH THE BENEFIT OF HINDSIGHT. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFITS OR LOSSES SIMILAR TO THOSE SHOWN.