Laziness Dissected
Posted by Mark on October 18, 2012 at 11:50 | Last modified: January 14, 2019 10:38Back in Part 1, I described the SPY VIX trading system as having three variables. The system trades when VIX is y% extended from its z-SMA with an x-bar stop.
Full disclosure: I don’t want to consider the x-bar stop as a system variable. So the trade lasts five days. That seems routine and unlike a technical indicator I employ where I set the critical value to be tested. Why bother checking x for validity? Besides, I have already entertained y-values from 5 to 25 (five total) and z-values from 6 to 15 (10 total). Allowing x to vary from three to seven, for example, would increase the number of potential systems from 50 to 300. Furthermore, keeping one variable constant would now leave two to vary. This suggests employment of college Calculus rather than high school Algebra in order to study performance.
It doesn’t take much introspection to discover that this bellyaching is simply a matter of laziness. At some level, most people tend toward laziness. This may be the primary reason why most new traders fail in the first 1-5 years. They think this is an undiscovered country where hard work doesn’t exist. They are eager and willing to pay hundreds to thousands of dollars on trading books, investment webinars, or educational programs that promise consistent profits in 10 minutes per night or a couple hours per month. They are fertile ground for scammers and con artists, alike.
I have written this before and I’ll write it again: no free lunch is available in the world of trading and investment. I’m up against institutions with billions of dollars at their disposal and highly-educated quant teams with thousands of advanced degrees between them all focused exclusively on gaining the slightest bit of Edge. The easy way out is no longer a viable option. Screw the ego-laden label of “busywork…” when it comes to labor-intensive, painstaking tasks, I need to shut my eyes, puff out my chest, and rush headlong into the pile so I can get the job done.
The x-bar stop: in focus with my next post.
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[…] is to identify valid systems: systems that will make money in live trading. As was the case in http://www.optionfanatic.com/2012/10/18/laziness-dissected, I have now discovered another hidden personal bias. In addition to wanting a system that is […]
[…] each parameter space, the analysis can quickly get very complicated. I discussed this in a 2012 blog post. In Evaluation and Optimization of Trading Strategies (2008), Robert Pardo […]