System signals and noise

Discussion in 'Strategy Building' started by andrasnm, Dec 14, 2005.

  1. I have a simple system and trading methodology for my Roth IRA. It has nothing to do with daytrading - more like market timing.
    I have been taking trades that contradicts or ignores my model out of shear stupidity and fear of missing some move. I call this "noise" (albeit the internal kind)
    My model does not even work well on the short side - so lately I have been experimenting going long gold - in lieu of shorting when signalling a top in the major indices. I have been short the maket twice due to my bias and opinion when I should have just followed my system. I have exited a long S&P position prematurely and to compound the error I went short.
    The bottom line of this post is - you can buy/invent a great trading system - but if you do not follow it in a disciplined fashion you will just agravate yourself. But I am sure I am saying nothing new here..
     
  2. I'll trade your system for you....Discipline is one of my greatest strengths as a trader. It's tough to learn it though, IMO.
     
  3. It took me two years before I finally realized I had to give up control to my system. It's still a daily struggle when I think I know better than the system (which is never true).

    One of the ways I actually got better about sticking to my system and strictly following signals was by defining a good day not by how much money I made, but by whether or not I stayed with my system.