Dave over at StockTickr posted 10 Ways New Automated Traders Get Tripped Up today. It’s a great post with a lot of very good insights, not just for those seeking to trade in an automated fashion. Any trader can get some value out of his comments. Here are the 10 “ways”:
- Trading Too Large, Too Soon
- Trading Strategies that Trade Too Frequently
- Doing No “Forward Testing”
- Blaming the Money You Lost on the Backtest
- Not Comparing Actual Results with Backtested Resultss.
- Using Market Orders for Entry without Reason
- Ignoring Slippage and Commissions
- Not Spending Time Learning Why Some Unprofitable Strategies Backtest so Well
- Manually Overriding Your Automated System
- Not Understanding that It’s a Marathon Not a Sprint
Go visit the actual post to read Dave’s comments for each of the points, and to see the bonus he tacked on as well. Very good stuff!