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John,
During the past few years, I have concentrated on stripping
things down to the simplest common denominator. I trade a lot
of wheat for a lot of producers and the same lumber linear
regression system is the basis for my "wheat buster". There are
times when I disagree wholeheartedly with the "system" position.
I monitor a 14 period linear regression slope, RSI, fast sto, %
of R, Bollinger Band Histogram, custom MACD (dema), PFE, and a
few things I not quite sure what they are because I just
stumbled across them within the last month. If the majority of
these indicators are pointing to a hard down and my indicator
has me in a long position....it's not a lot of fun. Of course,
each of the above indicators is open to "total subjective
interpretation". But generally, if the overwhelming evidence
points down (through my subjective interpretation of the
indicators) and the system has me long...I have to override the
system. This tends to defeat the reason we create systems!
What can I say?
Maybe others can comment about using multiple technical
indicators. What I've found over the years is a tendency for
markets to chop sideways if your indicators are conflicting.
As far as money management principles: that's a tough one. I
manage a lot of different "clumps of capital" and risk and
reward varies with each situation. Of course, there are some
really good "golden rules" that apply universally and I'm sure
we can develop another "thread" to talk about these principles
in the future.
Since you asked about candlesticks, I going to make a statement
and not back it up with any evidence. "Candlesticks are the
single most important technical tool that anyone can add to
their arsenal of trading weapons (period)." Well, maybe a
couple statements: "Nothing explains the pattern of supply and
demand (accumulation and distribution), in such a short period,
as concisely as Candlesticks." I can't understand why anyone
would draw bar charts when they can push a button and have the
chart reconfigured to candlesticks. (For all you equity
players: the market, on Friday, posted a classic "hammer" and
the Japanese say: The market is "hammering out a bottom".)
Do I think we're in the beginning of a bear market? You betcha!
Do I think the market is headed up early this week? You
betcha! Why? The hammer! Please tell me what other single day
posting can tell you more about supply and demand than a single
candle. Hopefully, people do understand that I use many aspects
of technical analysis and have since 1975. If I had to pick
only one tool, for the rest of my trading career, I'd take
candles. This is saying a lot for a guy who started developing
his own trading systems 25 years ago. They're very powerful.
I have to go check on my sweet corn,
Steve Karnish
CCT
----------
> From: John Manasco <manasco@xxxxxxxxxxxx>
> To: metastock@xxxxxxxxxxxxx
> Subject: Re:System development
> Date: Saturday, August 22, 1998 11:56 AM
>
> Steve Karnish
>
> Thanks for the reply. You're right about my exit strategy.
This is
> something I'm working on to improve. I'd like to come up with
something
> that takes the decision out of my greedy little hands. I'm at
my worst
> when I try to outguess myself.
>
> I've never traded commodities, never even new what they were
until about
> five years ago. Someday I'll venture into that arena but for
now I'll
> stick to equities and options.
>
> Your forcast oscillator system is concise and to the point. I
like
> systems that have a minimum of indicators much more than
systems that
> use a myriad of indicators overlapping each other. Do you also
use other
> money management rules in case your system fails?
>
> Do you find some systems work better on futures that equities?
I'm
> comming to believe that there is no one system that will work
on
> everything but I need to tailor my systems for different
industry
> groups and different individual equities. This is hard to
accomplish
> without curve fitting but I'm finding that stocks do have
their
> individual personalities and respond better to some indicators
than
> others.
>
> Do you use candlesticks exclusively? Could you say something
about why
> you like them?
>
> Anyone else want to jump in please do so. I'd like to hear
from new
> investors and users of Metastock. How are you going about
deciding which
> indicators to study? Are there any trends developing which may
be
> helpful to more seasoned investors who also need help? When I
first
> started using Metastock I looked at the usual RSI, MACD,
Stochastics
> etc. Then everyone started exploring statistical based system.
What's
> new now? Any using fibonacci studies? How about cycle analysis
and fast
> fourier transforms? A Gann discussion group just started. I
hope they
> report back to the list on regular occasions on their
progress.
>
> Anyway it's a nice afternoon and I'm going outdoors to enjoy
it.
>
> Good trading
>
> John Manasco
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