I’ve came to a conclusion from several short term and long term systems that I know up to now.
Short term systems usually produce these outcomes:
- Many small profits, usually consecutively. They may come as frequent as 70-80%.
- A big losing trade will come occasionally, causing drawdowns. This is seldom, but alwas come and never can be predicted. Its just the nature of the system. This may as frequent as 20-30%.
- Equity curve profile looks like this red lines in the picture at the bottom of this post.
Meanwhile, long term trendfollowing systems have the opposite profile:
- Small losing trades usually happen regularly and consecutively. They are 60-70% of the total statistics. These are when cuting small losses.
- Big profit comes when the system ride trends. They are seldom. And hardly are consecutively. We can not predict when it’ll come, but it is promised by the nature of the market.
- The equity curve profile looks like the blue lines in the picture below.
Short term systems includes the bolltrade, the multilot systems, the short term breakout systems, etc.
Long term systems includes the turtles, the aberration, and several others.
They all pretty consistent with those profile I mentioned.
Any other system developers here observe the same situation ?