TradeMachine's Strategy Development Philosophy
In the process of creating a rule-based trading strategy, having a solid mental framework is no less important than technicals and fundamentals. Let's outline some of our general guidelines:
Mechanical > Discretionary
Rule-based trade management > Emotional trading
Relying on research, academic papers, and well-documented market inefficiencies > Trading based on a gut feeling (or technical analysis)
Making money > Being smart
Making money > Being right
Making money > Feeling comfortable
Writing your own backtests > Relying on other people’s backtests
Simple and profitable trading systems > Complicated and overfitted systems
Compounding > Leverage
Trading multiple markets > Trading one market
Trading multiple strategies > Trading one strategy
Continuous development > Set-and-forget
Finally, we believe that the true holy grail in algorithmic trading is not in a single strategy but in trading a portfolio of multiple, profitable, uncorrelated strategies that allow for fast capital compounding.