Tweaking Systems That Aren’t Broken, by Ken Long

Van PhotoDr. Ken Long, a VTI senior trading systems instructor, shared this recent email dialogue with another trader. We thought our readers could benefit from this email content as well.

Hi Ken,

I have been looking back at a number of market and trading factors to see if I could improve the expectancy of your 551W system by narrowing/selecting what trades to take and when to take them. During the process, I serendipitously discovered that a 541W setup delivers better results than your 551W setup. After reading your one hundred trading essays and watching your video on the “House of Trading” concept, I realized that changing parameters slightly may deliver an extra edge.

If I apply this philosophy to your washout system, where would your spider sense tell you to look first? For example, I could lengthen/shorten the 52 week look back period, lengthen/shorten the 10 day time frame, or combine some variation of both parameters. Would I be better served by using my time to look at different exit methods? This appears to be another high pay off study area.

More importantly, I’m wondering if you think it is wise to muck around at all with tried and true winning formulas. “If it’s not broken, don’t fix it” is an adage that works well for me in real life situations.




Ken’s response –

I’d recommend this list for self-study and for helping to develop “systems that fit you”. The order of the list reflects acquisition of common, hi-priority tasks of successful trading.

  1. Proper trade framing in both directions with decision rehearsal.
  2. Trade management between entry and moving to no lose and/or strike exit for capital preservation.
  3. Achieving a zero-state mental/emotional state after each decision.
  4. Rehearsal of your battle drill when you have reached +2R.
  5. Situational exit strategy refinement that includes market and sector behavior to inform decisions on tactical trade target.
  6. Mastery of multi-timeframes, multi-lens, swing trade framing.
  7. Error-free performance of your after action review/assessment, one of the top tasks of trading.
  8. Parameter tweaking for individual systems.
Tweaking individual parameters on systems is important self-work because researching “nudge improvement” areas develops YOUR spider sense. Cultivate these learning & adapting skills and they will move you towards self-sufficiency. I suggest spending two hours a week on this function – that’s time well spent. You are working in your own learning lab and you are developing a habit for performing your own R&D on other traders’ systems. It’s the only way I know to become a true critical thinker.

My spider sense on the washout pattern: look at extreme cases (30 day negative stretch + widest Bollinger Band “river” + strongest adverse ADX + Winter MACD) as candidates for washout improvements.

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