Quote from pfranz:
If you use words like "by far" you may have already done enough analysis, at least at an unconscious level.
Let me tell you my experience.I began with system trading because I thought I couldn't rely on my "impressions" for discretionary trading. I built my system, tested over thousands and thousands of trades on different markets,made sure it wasn't curve-fitted,then began trading it.
I made money at first,but then I began to lose and had to stop. After years I realized what happened: it was end of 2002 and my system relied on volatility. At that time volatility disappeared for good (till 2008) for the first time after many years.
I could have tested even more,I would have always found that my system was good.
What I learned was that there is always a discretionary component even in system trading,basically to understand what you mentioned, that is, when your edge (whatever it be) disappears.
Since then I traded looking at patterns or characteristics for a small period of time;we could say, without testing them. You would say that wasn't serious and was very risky.
Guess what? I don't recall a single time I lost money because I didn't enough testing.
I did lost money, but that has always been because I became totally unreasonable, irrational, incredibly emotional and did exactly the opposite of what was clear (even to a novice) it had to be done. In other words, a total idiot.
