Ok trend-followers, I could use your help. - Do I have to adjust my psychology for lots of small losses in order to make big gains when I'm trading trend? - What's a good psychological metric I can use for knowing the "stomachability" of a trade? What measures should I use? I've got a trend-following system on a stock that trades around 500k shares per day. This system doesn't use moving averages at all, and fades certain situations that tend to predict a movement to the other side -and- sustain the trend. I made the following assumptions in the backtest: - $1 per trade commissions (since I'm doing 100 shares at a time) - .05 cent slippage (intraday, the market depth book shows around a spread of 3-5 cents, and occasionally splits apart 30 cents) My first unoptimized backtest resulted in: - 39% of trades are successful - "Edge" per trade is about $9 Tradestation tells me the long side has a profit factor of 1.34, the short side has a profit factor of 1.71, the total profit factor is 1.54. Average long-side winner is $50.95, average long-side loser is $23.34. Average short-side winner is $70.38, average short side loser is $27.80. RINA index is 2252.86, and return retracement ratio is 2.49. The max drawdown is $312. I usually trade market-neutral, but I stumbled upon this trade by accident and started working on a model to capture it. The equity curve goes up, then goes flat for a long time, then goes up again. I'm not sure I can stomach the flat zones -- I'm looking to get opinions from trend-following traders on techniques to address flat-periods in the equity curve. The bursts clearly more than make up for flat-zones, but the flat zones can tend to persist. I'm going to go back and optimize this system and smooth out the parameters, but would like to avoid pitfalls as this is the first trend-following system I have ever considered running live.