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Some interesting thoughts here DT
One of the things I have noticed in backtesting
various systems, both longer and shorter term, is that neither really has an
advantage over the other for various reasons.
An early signal has its advantages and disadvantages.
Here are a few off the top of my head, doubtless there are many more
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earlier entry so you can gain a greater advantage of a trend
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earlier exit to protect your capital when the movement ceases
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more chance of whipsaw
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more trades therefore higher trade costs
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early exit could mean miss greater move
<span
lang=EN-AU >A later signal also has
advantages/disadvantages
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later entry gives more indication that a trend has started
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later exit could give you greater return from a longer trend
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less chance of whipsaw
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less trades on average therefore lower trade costs
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more chance of whipsaw
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later exit could mean greater chance of price slide
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later entry could mean you miss the early, and only part of the trend
In this I use the term trend very loosely and it
could be any movement in your trade direction over any period of time.
With trading there are no guarantees of price moving
in your direction after entry regardless of the types of signals used. Your
control of the trade is handed to the market after entry for others to move the
price. Your only control is your exit. Then, of course, the same applies after
your exit, the price can go in any direction. Your control is then your entry,
and so the cycle continues.
Using this as my basis, it matters very little
whether you get earlier or later signals, the opportunity exists with both to
gain a profit, or make a loss. But, because we are human, and can see the
charts of “what has been”, we need to have that competitive edge
over the others. It is this desire to be first that makes us strive to find a
better method or system. The holy grail if you like.
Good luck with your search, and all others. I am no
different to any other in this quest.
<span
lang=EN-AU >
<font size=3 color=teal
face="Times New Roman">Cheers,
Graham
<font size=2
color="#339966" face="Times New Roman"><font
color="#339966">http://groups.msn.com/ASXShareTrading
<font size=2
color="#339966" face="Times New Roman"><font
color="#339966">http://groups.msn.com/FMSAustralia
<span
lang=EN-AU >-----Original
Message-----
From: Dimitris Tsokakis
[mailto:TSOKAKIS@xxxxxxxxx]
Sent: Friday,
28 March 2003<span lang=EN-AU
> <font
size=2 face=Tahoma>5:58
PM
To: amibroker@xxxxxxxxxxxxxxx
Subject: [amibroker] Fast OR Slow
? [was TRENDING vs RANGING]
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<font size=2
face="Times New Roman">Here is my
basic thought on the well known delay problem.
<font size=2
face="Times New Roman">A fast [and
smart] indicator will catch the trend ASAP, but it will leave the trend
prematurely.
<font size=2
face="Times New Roman">Another slower
[and more wise] indicator will loose the early birds, but it will be
rewarded with the delayed exit
<font size=2
face="Times New Roman">and enjoy the
sweetest part of the movement.
<font size=2
face="Times New Roman">Both methods
have their plus and minus.
<font size=2
face="Times New Roman">The ideal
combination of two [or more] speeds would include all the advantages in one
strategy.
<font size=2
face="Times New Roman">Cond0 is a
fast trend detector and gives an entry at A0 and follows untill B0.
<font size=2
face="Times New Roman">Cond1 is a
slower detector, the entry is +1 delayed at A1, but the exit is +3 delayed
at B1.
<font size=2
face="Times New Roman">Which is better
?
<font size=2
face="Times New Roman">There will be
many opinions, but any conclusion is related to the time frame the market
moves.
<font size=2
face="Times New Roman">Trends
duration is not always the same and, unfortunately, nobody knows it in advance
!!
<font size=2
face="Times New Roman">Just after an
1-bar breath [the white dotted line], the market decides to move higher again
for 6 bars.
<font size=2
face="Times New Roman">My slow
indicator gives now a quick entry at A11, the "fast" is not that fast
anymore and begins at A00.
<font size=2
face="Times New Roman">[Fast and slow
are not absolute words, as you probably agree...]
<font size=2
face="Times New Roman">Both
indicators agree for a final exit at B00.
<font size=2
face="Times New Roman">What is the
optimal solution ?
<font size=2
face="Times New Roman">We often read
in various T/A books or articles that this is the destiny of <span
lang=EN-AU> any
T/A attempt.
<font size=2
face="Times New Roman">They seem to
agree that the "nature" of an indicator is covered by the postulate
"fast in/fast out OR slow in/slow out".
<font size=3
face="Times New Roman">
<font size=2
face="Times New Roman">I do not like
it and I will try to break it.
<font size=3
face="Times New Roman">
<font size=2
face="Times New Roman">I need a smart
trend detector and a smarter way to COMBINE the fast and the slow rate.
<font size=2
face="Times New Roman">Do I ask
something unrealistic ?
<font size=2
face="Times New Roman">I would
appreciate your opinion.
<font size=2
face="Times New Roman">Dimitris Tsokakis
<font size=2
face="Times New Roman">PS
<font size=2
face="Times New Roman">I think this
was the spirit of the beginning of this interesting thread :
<font size=2
face="Times New Roman">The
"eye" would decide immediately "entry at A0/exit at
B00".
<font size=2
face="Times New Roman">I will give it
a try.
<font size=3
face="Times New Roman">
<font size=3
face="Times New Roman">
<font size=2
face="Courier New">Send BUG REPORTS
to bugs@xxxxxxxxxxxxx<span
lang=EN-AU >
Send SUGGESTIONS to suggest@xxxxxxxxxxxxx
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