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Hi Brian,
Sunday, November 7, 2004, 6:53:05 AM, you wrote:
B> Ah. Big Ego speaks. Bold words. Empty words.
Hey *all* you guys . . . (Fred, you too). We don't want this list
ending up like every other list eventually ends up, right?
Just imagine you are writing to a cute Japanese woman and see if it
feels right before letting fly. ^^_^^
FWIW, I can weigh in here with an argument or two (as opposed to
unprocessed testosterone). Brian, you said, "I've gotten excellent
results in backtesting only to find I did not trust the system and
couldn't trade it." Perhaps. I'm sure some systems deteriorate; I'm
sure some systems simply stop working. But perhaps the excellent
results were not over a sufficient time frame to be reliable. Or
perhaps there were hidden draw downs in the system that whatever back
tester you were using at the time did not reveal. Or perhaps . . .
The fact is, AB's back tester gives you a *lot* of information about
what is happening to your equity over the course of time, and a lot
of statistical tools to help you evaluate whether you would have
confidence trading a particular system. A quick glance at only a back
test's bottom line might give unwarranted confidence. But if all the
gauges are better than satisfactory, it's hard to imagine losing
confidence in the system without a real workout.
I will allow that you might have been unlucky enough to find a great
system at precisely its breakdown point, but that would be like the
haystack needle I suspect -- very bad luck. I will also allow that
system trading, of any kind other than "never loses" (a dream of
course) might not be for you. Some people cannot "let go". There is
also the problem that a back test can be created for a system that
cannot actually be traded according to the back test. So, you have
to know what you are doing, what you are looking for, and what you
can stand emotionally. There are a lot of pieces to the puzzle. And
while there are undoubtedly back test engines that are "essentially
worthless", AB's does not fall into that category at all.
I agree with you that patience is very important, and that pouncing
at the right time is critical, of course. But I don't use any of the
limited set of indicators you mentioned, and I feel that back testing
is *essential* for giving me the confidence to put a system on live.
The testing, however, has to be done properly and analyzed
thoroughly.
Yuki
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