The biggest scam in the trading industry:
"You just need ONE perfect strategy."
It's marketed to retail traders as the key to profitability,
But hedge funds make BILLIONS doing the opposite.
Here's what they're not telling you (the "holy grail"): https://t.co/Zv9BM24XuU
1. The myth of the perfect strategy.
Most traders waste years looking for a single strategy that works in all market conditions.
This doesn't exist.
The real edge comes from a different approach entirely. https://t.co/PxLiE27GVL
2. What is the "Holy Grail"?
The holy grail isn't one perfect strategy, but a collection of uncorrelated ones.
When strategies are uncorrelated,
While one struggles, others thrive, creating a much smoother equity curve. https://t.co/SYvyso2QL4
If you are unsure of what correlation is,
Here is a quick recap: https://t.co/q90h2viCft
3. The power of reduced drawdowns.
By combining uncorrelated strategies, your max drawdown can be cut by 50% or more.
I've seen this firsthand in my portfolio of 10 automated strategies.
Lower drawdowns = more consistent compounding https://t.co/TxitKlgrJL
4. Types of diversification.
There are various ways to diversify:
Strategy type: Mean reversion + trend following
Timeframes: Intraday + swing + position trades
Instruments: Equities + future + forex + crypto
While negative correlation is rare, aim for low correlation levels. https://t.co/pPP7gwhu6v
5. The psychological advantage.
Trading a single strategy means enduring drawdowns with no other streams of returns.
With multiple uncorrelated strategies, you'll ideally have some still performing well.
This can make it easier mentally and avoid emotional mistakes. https://t.co/riizg8N8Ex
6. How to start.
You don't need 20 strategies to benefit. Start with just 2 to 3:
• Make sure they're uncorrelated
• Thoroughly backtest each
• Add more gradually as you validate
• Start with small size
Even two can dramatically improve your risk-adjusted returns. https://t.co/O2lMmOPWgV
If you find this type of content valuable & want more every week:
1. Follow me @GoshawkTrades for more.
2. Jump to the top & retweet.
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