Full Show Transcript

So I’m just going to have a little quick rant here as I cook risotto in the RV in my humongous cooking space that we’ve got going on. So I’ve been playing with some new trading system ideas. And I got a system out of a book that I bought on my Kindle just the other day. And I coded that system exactly as it says in the book. And I tested the system on the instruments that the book talked about trading with that system.

And you know what I found? The system loses money consistently over the last 20 years. Consistently. Not only does it not make money, but it’s a consistent loser. And I double check my code and I ran the system again. I even tried the system on some different instruments, but the system is an absolute dud. It loses money, it’s complete rubbish.

And the thing that frustrates me is that it’s published in a book written with such confidence and look, I’ve designed this system, and it makes money because of these factors. But of course the author didn’t present any backtest results. All I did was talk about the rules and present the rules. And so, I mean this is one of the things that I hate the most about the finance and the trading industry. Because you can make all these grandiose claims about how amazing and wonderful your ideas are. But so many authors and so many people, so many websites don’t back them up.

And this is why I teach trading system development and backtesting rather than just promoting systems in isolation. Because what I really want you to do, the trader, is to understand how to validate trading system ideas for yourself. Because I can’t tell you how many times I’ve picked up a book and I found some system rules and I’ve backtested them and they just don’t work.

So if you’re going to succeed, if you’re going to make money trading, then you need to know how to backtest your trading system ideas and other people’s trading system ideas. Just because they’re in the book or on the website of some guru, does not mean you should trust them. You need to backtest them yourself. Because there is a lot of garbage out there that just doesn’t work. Okay.

This is my rant for today. I’m going to go back to cooking my risotto. But look, if you want to succeed, you need backtesting. Backtesting is one of the core tools in your trader toolkit. If you don’t have it, if you can’t backtest effectively, it’s really basically going to be impossible for you to succeed in the markets.

So if you need to learn how to backtest, private message me and let me know and I’ll point you in the right direction. I’ll tell you how I can help. But if you’re trading a system from a book or from a website that you have not backtested, then you need to stop now. Stop and learn how to backtest and test it to make sure it’s profitable. Because otherwise you could be risking your hard earned money on a system that is just a losing proposition.

So private message me if you need to know how to backtest. Comment below, let me know if you found any other dud systems online that just don’t work. And let’s continue the conversation down below in the comments. So comment below, let me know what you think. Have you found any other dud systems? And do you need help backtesting? Let me know.

This is Adrian Reid, Enlightened Stock Trading. Cooking risotto in an RV in Boise, Idaho for the next couple of days on our way between Yellowstone National Park and Crater Lake. See you next video. Bye for now.