Telling ordinary variance from a strategy that has genuinely stopped working.
3 articles
Recent and vivid events dominate judgement out of proportion to their weight. What that does to strategy assessment, and the sample sizes that actually mean something.
The strategy is fine and the account is down. What that period does to judgement, and the decisions that turn an ordinary drawdown into a serious one.
Every strategy has losing runs. Telling an ordinary one apart from a genuine failure is the difference between abandoning something that worked and persisting with something that stopped.
Cognitive biasTrading journalRisk managementTrading emotions