The test that removes the best trades and the worst ones

[Amanhasnoname]

Robustness checks do not have to be complicated. Two simple ones can reveal a lot.

First, remove the best ten percent of trades and see what remains. If the strategy still makes money, the edge is spread across many trades. If not, it depends on a few outliers.

Second, remove the worst ten percent. If the result becomes spectacular, then a small number of bad trades are dominating the losses, and fixing them, perhaps through a filter or stop rule, could improve things materially.

Looking at what those worst trades have in common often reveals a pattern. They might cluster at rollover, around news, or on a particular pair.

Each check takes a few minutes with a spreadsheet and can redirect the work on a strategy substantially.

It also guards against self-deception. A strategy that looks good only because of a handful of trades deserves skepticism.

What do the worst trades in your history have in common?