The biggest problem with trading an off-the-shelf system is that if it doesn't suit your psychology, you will give up on it,......
MichaelD, good posting, most of which I agree with.
Just one point that I think can further contribute to the thread and that is this question of whether it is the system that needs to suit the trader's psychology or the trader's psychology that needs to suit the market?
I believe that it is the traders psychology that needs to suit the market. We are all programmed to live and prosper in society from the day we are born.
The lessons that we learn to achieve this do not translate into successful trading in the markets. This is one of the major reasons why most don't succeed in the markets in any timeframe of trading whether or not they use a system and whether that system is homegrown or bought.
It's not until they become empathetic with the market and think from the perspective of market price action that they start becoming successful on a consistent basis.
If a mechanical system is not used to trade the market then, by definition, the trader is a discretionary trader. A discretionary trader uses the decision support systems (DSS's) that emanate from their societal programming (deeply seated in their subconscious). These DSS's override the TA patterns and signals that they compute with their logical mind. The question is, does the trader's discretionary decision support systems have an edge in the market? How do they know or find out? A leading question........
A mechanical system emanates from market price action. It's edge is known before the trader starts trading.
At first, any beginnner trader (discretionary or mechanical) will have difficulty turning a profit in the markets. There are many reasons for this including lack of knowledge and familiarity with the environment etc but that knowledge eventually comes and most still continue to lose. At this stage it is not knowledge that is holding them back but their psychology. (I truly believe from years of feedback and coaching that the mechanical beginner will do far better than the discretionary beginner for one main reason - the limiting of large loss trades by the mechanical trader.)
They need to find a way to match their psychology to the market not find/build a system that matches their psychology. By definition, the latter will never work because any system that has an edge (sufficiently positive mathematical expectation to cover transaction costs and slippage and still make a profit) emanates from the market and has the market's perspective (let's call it the market's psychology) built into it.
The challenge is for the trader to change their psychology to match the market and this is done by trading a mechanical system that emanates from the market. The mechanical system is the major part of the process of transitioning the trader from trying to trade with a societal paradigm to trading with a market paradigm.
Trial and error discretionary trading may eventually help the trader make the mindset transition but it could take many many years, if they have the perseverence and the capital to keep going. Mechanical trading is a high probability short cut method of making the transition.
If you are looking for further evidence to this thinking have a look at the exercise on page 189 of Mark Douglas's book Trading in the Zone. I know from surveys (and other sources) that very very few ever start let alone complete this exercise. The reasons why are for another day.
I trust that I have been able to convey a complex subject is a few words.
On the journey