Difficulty Analysis of Achieving Stable Profit with Freqtrade: Why Do Many Strategies Still Result in Losses? Is Quantitative Trading Like "Carving a Mark on a Boat to Retrieve a Sword"?
In recent years, more and more developers and traders have been turning to Freqtrade, an open-source cryptocurrency trading framework, to explore the possibilities of quantitative trading. With features like backtesting, strategy optimization, and automated trading, it seems to offer a promising path toward stable profits. However, reality often tells a different story: many users still suffer long-term losses despite trying numerous strategies.
This raises a critical question — is quantitative trading essentially like "carving a mark on a boat to find a lost sword"? Are we trying to find a static "optimal solution" in a constantly changing market, while the market is no longer the same river where we carved that mark?
Let’s explore this idea from technical, market, and psychological perspectives.
1. The Trap of Strategy Development: The Past Is Not the Future
1.1 Overfitting Historical Data = Carving the Boat
With Freqtrade, many traders optimize strategy parameters excessively to achieve "perfect" backtest results. This is just like carving a mark on a boat when a sword falls into the water — it may look accurate, but it won’t help when the boat has moved on.
Markets are dynamic and nonlinear. A “perfect” strategy on historical data may completely fail when real-time conditions shift.
1.2 Blind Faith in Backtesting = Ignoring the Current Flow
Although Freqtrade's backtesting tools are powerful, they are not a substitute for live testing. Many traders get lost in the illusion of high backtest profit curves, ignoring real-world factors like slippage, latency, fees, or exchange-specific quirks. Once deployed live, the strategy crashes — just like trying to retrieve a sword from the spot it fell, when the river has already moved on.
2. Ever-Changing Market Structure: A Moving River
2.1 The Market Is Not a Static Game
Quantitative trading assumes the market contains patterns or exploitable rules. But especially in crypto, the market is extremely volatile, often irrational, and influenced by unpredictable events (regulations, black swans, etc.). A single logic or strategy rarely works across all conditions.
2.2 Strategies Are Always One Step Behind
Most strategies are built based on past data — whether using indicators, statistics, or machine learning. They’re always chasing the known. But profitable trades often come from responding to the unknown. Without adaptability, your strategy is like an outdated map that can’t guide you through today’s terrain.
3. Trader Psychology: Constantly Changing Swords, Repeating the Same Mistake
3.1 Strategy Switching Reflects Anxiety
After a strategy fails, many traders quickly switch to the next one, or copy trending strategies from the community. But without a core logic or evaluation system of their own, they are simply repeating the same mistake — carving new marks on the boat every time the sword drops.
3.2 Doubting the Entire System After Losses
Long-term losses can lead to doubting whether quantitative trading works at all. But often, the issue isn’t with quant trading itself, but with how it’s applied — assuming that writing a script is enough to make consistent profits.
4. Conclusion: How to Avoid "Carving Marks on the Boat"?
Quant trading isn't doomed to failure. The key is continuous evolution — both in strategies and thinking.
✅ Suggestions:
- Diversify strategies to adapt to different market regimes — don’t rely on a single logic.
- Use adaptive parameters or models like ML or dynamic filters to allow real-time responsiveness.
- Prioritize risk management — stop loss, drawdown control, and capital allocation matter more than win rate.
- Maintain trade logs and post-trade reviews to build a feedback loop and learn continuously.
- Include macro, liquidity, and sentiment analysis — break out of a purely technical perspective.
💡 Final Thought:
Quantitative trading is not “carving a mark on a boat,” unless you make your strategies, thinking, and execution rigid and static.