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You may want to consider using the maximum trading system which essentially buys at the low and sells at the
high each day. This will give you a relative basis on which to compare the efficiency of buy and hold. Another
technique is to use a 5% zigzag to get a trading system to use as a reference benchmark.
On Friday, February 06, 1998 2:25 PM, Chip Anderson [SMTP:chipamy@xxxxxxxxx] wrote:
> Geez Richard, I was not advocating slavish devotion to B&H and the
> suspension of common sense. Sorry if my quick comment touched a
> nerve, but I find it useful and prudent to understand how well or
> poorly a new system that I'm considering compares with a B&H strategy
> over different time periods. If the system I'm evaluating can only
> generate 1/4 of the B&H profit in a given market, then I'm sure not
> gonna use it in that market.
>
> In retrospect, I should have said "beats B&H by a significant
> percentage."
>
> > Drawdowns are ignored when you look at bottom line. B/H might be
> ahead now
> > but you could have set through a 50% drop.
>
> If that's true and B&H still beats my new system, then my system
> probably needs to be adjusted because it missed the 50% drop. Again,
> this suggestion was for comparison and evaluation purposes. After
> running the comparisons, I take a long hard look at where the buy and
> sell arrows fall and why and I then apply common sense to the results.
>
> > One aspect Equis might change is not start count till there is a
> system buy.
> > Another more realistic change would be to stop compound trade
> amounts and
> > let us say buy/sell 1000 or 100 shares on each trade, instead of
> putting all
> > profits back in each trade.
>
> I completely agree with this suggestion.
>
> Just trying to help,
> Chip
>
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