Common Mistakes in Quantified Trading (Quantitative Trading): Trading Pitfalls and Errors

Automated trading has an almost endless list of issues that can turn your trading into a disaster. For automated traders, you face another issue in addition to the technicalities of trading: screw-ups with software and programs.

Automated trading has many advantages, but the main advantage is the potential mistake of the program sending many wrong orders. It can happen, unfortunately.

Thus, trading is about avoiding mistakes. How do you avoid mistakes? The most important thing is to run a checklist every day. Airline pilots “invented” the checklist almost 100 years ago – something that has made flying an extremely safe means of transportation. You can make your trading just as safe by implementing checklist procedures.

Trading involves anticipating the unexpected

Randomness is a big part of trading. The loopholes in the development process are many: underestimating commissions and slippage, curve fitting, and survivorship bias are elements many ignore or underestimate. Creating, building, and developing strategies is no easy task, and you are not out of the woods when you believe you have found a tradeable strategy.