Reasons from David Hightower, a principal of Hartfield Management Inc.
- They have inadequate capitalization.
- They are using someone else’s system.
- They lack knowledge of the system’s performance.
- They are unable to sit through flat periods or drawdowns.
- They are unable to handle stress.
- They lack commitment.
- They experience drawdowns that are greater than their hypothetical testing.
- They override the system’s signals.
- Their ego prevails.
- Their system is overoptimized; they make additional rules to take out losing trades.
- They lack parameters for spike performance in markets.
- They lack diversification between systems and/or markets.