Words to Profit By

With today’s post, I am going to introduce a new category:  “Wisdom.”  I do a lot of reading and occasionally I come across a quote or passage that really rings true with me or seems to be of great significance.

Just because something sounds good does not mean it has any necessary relevance at all.   This is my grand disclaimer.  Some people make a habit of collecting “great quotes,” posting them, and including them in e-mail signatures.  Some people think just reflecting these “great quotes” makes them look all educated and brilliant.  I believe what makes you brilliant is not the “great quotes” themselves but critical evaluation to determine whether they can be applied to you or anyone else.

This echoes an interesting concept in the world of trading systems.  Upon first glance, many ideas for trading systems make good technical or fundamental sense.  When you backtest them, though, you’ll find their performance to be in the toilet.

Just because something sounds good does not mean it is actionable or will lead to consistent profitability.  We need to differentiate between the two in order to be successful traders.