In the last post, I found that my contest account is underperforming, and is close to the area where I might have to make some tough decisions/changes.
For reference, below is an example of another of my systems (Full disclosure: I sell this particular system on my website). It is behaving pretty much as expected, although currently below the average line. So, I wanted you to see what a "typical" performance chart looked like.
To answer the question, I create similar charts for every system I trade, although usually I just have the average line and actual line on the chart. That way I can easily see how things are going!
Given that the year is half over and the performance is poor but within bounds, do you think one of the problems is that there are not enough trades? Has emphasizing leverage created a situation where the sample size is too small and thus vulnerable to departure risk?
ReplyDeleteThanks for the comment!
ReplyDeleteCan you explain "departure risk?"
Yes, you are right, a small number of trades definitely makes the randomness a bigger factor. Right now, randomness is working against me.
As I've said many times, anything can happen over a short period of time. I would guess over a year or 2 this system should get close to average. But that is a long time to wait!
"Departure risk" to me is exactly what you described. The smaller the sample, the more likely it is to vary from the average expected results.
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