Hi all as a newbie, i'd like to ask this question: is a backtested mechanical system the cure-all and ultimate answer to "how to trade successfully and make consistent money"? any inputs much appreciated Ken
Maybe that was an answer too You should read "High Probability Trading" and "Trading in the Zone". Whether mechanical or discretionary - there is no way around taking responsibility and managing your risk. If you're looking for certainties, you're in the wrong business, pal.
I know this is not the answer you're looking for, but here are some hints: - Discretionary vs. automated/mechanical depends on your skills and personality. Are you a guy who's a good poker player (discretionary/day trader) vs. a lab rat who loves to tinker with a system (programmer) for two months and go through 1000 test runs - Both discretionary and mechanical traders do experience periods of losses and drawdown and utter dispair. Neither is better than the other. Both require constant learning, refinement and adaption to market conditions over the years. - Mechanical system trading does not mean you can lean back and just watch how your systems print money. Once you have something that runs you will still spend half (or all) day researching, validating your ideas or looking for new one. It never ends. You have to find out which of the two styles enables you as an individual to make more money. Neither one approach is better for all traders in the world.
You should always analyse the big picture, IMO. This will give you the basic trend direction. Once you have the main trend, yes, you may use a mechanical system.