Crypto and Stock Trading: Should You Really Worry about Trading Strategy Profitability?

I said this before. Trading is probably the biggest lesson in patience that you'll ever have anywhere, even more than kids.

So this is something that we kind of have to get used to. The market doesn't give us the profits when we want it, the market gives us the profits. When the market gives us the profits. The market doesn't care whether we've had several losses in a row and we really want to win or whether we've been winning and we, you know, we want to keep winning. So.

We have to just follow the process of trading the system and make sure that we're taking the right trades at the right size and adjusting our capital and adjusting our position size day by day.

And over time it will build. If you run a backtest in Amibroker from 1990 today, here's a good exercise for you. Have a look at the chart of the equity curve. You know, how the equity curve grows like this. But don't look at the 30 years, look at month to month, how much it.

Fluctuates like this. And what you'll see is that over a period of several months, it's very common to go sideways or down or up a little bit, then down or whatever. Yeah. And that's normal. And the only way you make money from the system is by following the system, despite those short term periods where it doesn't make money.

Because the winning trade will appear probably when you're not feeling that great about following the system. Yeah. And even if you know you've got some open trades now that are in profit, you just haven't closed them. So you haven't compounded the profit into the next trades. Right. But those trades could grow and grow and grow and grow for months and still be open. That's still real money, you know, it's still profit. It's just not closed out and therefore not compounded into the next trade. So personally, I don't worry about what trades are open, what trades are closed, how much, you know, loss I've locked in versus how much profit I have or haven't locked in. I don't worry about it. I just look at the account balance. Because the account balance feeds the backtest to generate the position size for the next signal that I'm going to take.

And as long as I know that I'm following the process each day and I'm taking the correct trades, then over time I know it will build.

We don't want to get into the trap of thinking, okay, well I've, I've banked some losses I need a win now. I want to have a win to offset the losses because that will drive you to.

Modify the system or, you know, ruin the system. Bypass the system. Does that make sense? Yeah. So breathe. Remember, it's normal. Run the backtest, look at the equity curve and see what that does. And you might be a little nervous when you realize that there could be a period of months or years where that system doesn't do very much. That's not very exciting. You know, that's like going to work every day for six months and not getting paid because your boss doesn't feel like paying you. That sucks. But welcome to the market. Yeah. This is what happens is what happens. We have to discipline ourselves to follow the rules and then allow the money to come when it comes, not expect it to come because we traded today. Where's my money? Yeah, it's just this is the psychological game of it.