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rudolf stricker wrote:
>
> Imo, there is an additional "frequency effect", especially when
> commission option is set to zero:
> If prices move up e.g. for 10 days, it might make sense to sell after
> 5 days and to re-invest the basic amount of money _plus_ the profit
> gained so far. (It is the same like an additional investment after 5
> days.) If commission is taken into account, things are a little more
> complicated, but there is also room for this "frequency effect".
> I wonder, if MS' MPS optimizes this effect. It _could_ do something
> like this because of its 20/20 hindsight.
By "frequency effect" I assume you're refering to the exaggerated effect
of re-investing when you buy on margin. As far as I can tell, margin is
handled by the system tester and is not unique to the MS' MPS. With
commission set to zero and margin set to 50, both the MPS test and the
formula I posted get the same results. I've only experimented with this
on a few charts, but when I look at the report details, both tests only
seem to re-invest from trade to trade. Neither test appears to take into
account the possibility of selling and re-investing half-way through a
long move.
Maybe someone from Equis can jump in here and give a definitive answer
as to how the Maximum Profit System test works.
> BTW: What does this 20/20 mean? I would understand "20 hindsight", but
> what is "20/20 hindsight"?
20/20 refers to a standard eye test in which someone has 20/20 vision
(clear or "perfect" eyesight.) I don't know the exact specifications,
but it is something on the order of - from 20 feet you can read 20 point
type. In other words, "clear, almost perfect hindsight."
David.
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