How to Prolong Your Account

Trader's Mindset

Jul 10

There are three things you can do to prolong your account that don’t depend on your performance:

  1. Reduce trading frequency
  2. Reduce trading costs
  3. Develop techniques to mitigate the risk of correlated losses

There is a relationship between trading cost and trading frequency. The higher the trading frequency then the lower the trading costs must be.

However, as one decreases trading frequency then one typically will need to risk more per trade to achieve the same return. Another negative for very long holding times is that it tends to be more difficult to forecast markets farther out in time.

On the other hand, it is more difficult to backtest very frequency trading systems as small testing discrepancies can yield incorrect results, and regime shifts are more likely to trash systems.

As traders, the key is to find the dominant wave lengths where we can perform well.

About the Author

The author is passionate about markets. He has developed top ranked futures strategies. His core focus is (1) applying machine learning and developing systematic strategies, and (2) solving the toughest problems of discretionary trading by applying quantitative tools, machine learning, and performance discipline. You can contact the author at curtis@beyondbacktesting.com.

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