Hence understanding your own bias can be a subtle yet critical element right from the core strategic approach to investing/trading.
So, going down the mechanical/back testing route in effect excludes a whole range of alternative approaches. Many that do this have not considered the trade off they are making.
Here’s my controversial perspective on technical analysis: I think that oscillators/moving averages actually obscure the individual’s capacity to really perceive the way markets trend. I would argue that by focussing on formulas and algorithms that a trader becomes reliant on automation, and may cease to really study charts and how markets trade.
I also think that there are discernable market patterns through the ages, and looking at interrelated markets (e.g. currencies and related commodities/indexes) is vital to developing a holistic approach to investment/trading.
There are tradeoffs adopting the mechanical/back test style though. In a way a trader going down this path is surrendering their own inherent direct analytical skills to a “black box (although the better mechanical people at least understand what is in the “black box”).
The problem I see is that the approach is only as good as the backward oriented analysis of a time in the past, and if the trader/investor is looking into the future while imposing their bias on the market (either by machine or by limiting their ability to perceive psychologically, or both), then they are resigning themselves to a limited ability to “see” the market. eddievanhalen made an excellent point on another thread which I fully agree with:
I am in agreement with this philosophy.