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Re: [amibroker] Re: Drawdown increases as square root of holding period



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Hi Paolo --

Yes, there is a theoretical explanation as well.  A random walk diverges from its starting point a distance proportional to the square root of the number of steps.  The daily changes in the equities markets are close enough to random so that many random walk results apply, or apply near enough.

Thanks,
Howard
 



On Wed, Nov 5, 2008 at 1:32 PM, Paolo Cavatore <pcavatore@xxxxxxxxx> wrote:

Hi Howard,

thanks for your reply.

Page291 is were I saw that statement which is followed by a well
documented empirical evidence on NASDAQ and NYSE stocks from 1990 to
2006. btw I was referring to a more theoretic demonstration of that.
I could then expect it to be true even with other
samples/data/periods/markets. I can't see the reason why it should be
true.

Anyway I agree doing my own exploration is a good solution.

thanks for that,

p



--- In amibroker@xxxxxxxxxxxxxxx, "Howard B" <howardbandy@xxx> wrote:
>
> Hi Paolo --
>
> You have a copy of Quantitative Trading Systems. Read the text
starting on
> Page 291.
>
> Or --- Select a watchlist and do the research on issues that you are
> interested in.
>
> Thanks,
> Howard
>
>
>
> On Tue, Nov 4, 2008 at 11:12 AM, Paolo Cavatore <pcavatore@xxx>
wrote:
>
> > I've seen a statement saying that "Drawdown increases as square
root of
> > holding period" by Howard Bandy.
> >
> > Anyone has a demonstration of this...maybe Howard himself?
> >
> > thanks for any hints,
> >
> > paolo
> >
> >
> >
>


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