Sometimes, too many times, a tennis pro won’t stop talking.

They see a kid hit a big forehand, and they get all excited. They start babbling about “open your stance here” and “follow through there”, and the big forehand immediately gets confused.

Then pros see the same kid miss a forehand and it’s “turn your shoulders here” and “bend your knees there”, and now the big forehand is gone. It’s buried in an avalanche of muddy nonsense.

If one tip is good, twelve tips must be better.

If simple works, then complicated must be better.

It’s the same for trading.

So often we take a simple, profitable system that’s based on sound principles, and we start piling on more rules.

We can get rid of the drawdowns if we add more filters!

But can we?

Should we?

In our last Newsletter, we looked at a simple system on the E-Mini Nasdaq (NQ.D). It had a massively negative reward to risk ratio and tried to piggyback on the idea that the market goes up over time.

That simple idea created this hypothetical Curve from 2001-2024:

But why buy on Monday blindly? Why not make sure we’re in an uptrend before buying? Surely, that will be better.

Let’s find out.

Here’s that same system on the NQ.D if we only buy on Monday if price is above the 50-period SMA:

It got worse. Trying to get cute caused more severe drawdowns and created less profit.

The desire for extra coaching ruined something fun.

But that doesn’t mean coaching is bad. It’s just that the more simple the coaching, the better.

For example, the most benign filter to use is the 200-period simple moving average. It catches most trades while only filtering out anything when things are dramatically bad.

If we use simple, good coaching, here’s that Equity Curve:

Much better. Not as good as our original from a profit or drawdown perspective, but definitely interesting. Here’s the Report for the 200-period filter system:

Not bad.

Filters don’t always produce better results. Many times filtering ruins it entirely.

But a little coaching and some simple, logical filters can do quite well.

Talk to you soon.