proven correct

["Walter Lake" <wlake@xxxxxxxxx>]

Hi John

I base "proven correct" on MAE, (Maximum Adverse Excursion). John Sweeney's
book "Campaign Trading" has a complete discussion on how to use MAE in
trading. MAE is found in Metastock in the System Tester --> Summary
Report --> System Reports --> "Trade" Tab --> 5th column + highlight
individual trade --> Inspect.

The MAE column lists all of the MAE's for the trades made. These are put
into "bins".

Then I look at the trades to see the time factor: i.e., did the trade
wander, take off, or go south, etc.

"Proven correct" is the resulting time and distance calculation required to
maintain the trade after entry. For day traders whose entry criteria is
11:30 or noon based on opening range then "proven correct" may be 1/2 hour
before close. For longer term traders, "proven correct" would be calculated
in days. Each tradable: stocks, funds, commodities, options needs to be
researched for the specific criteria.

I think of the NASA moon launches, You have lift off, with all of the
stresses and strains to achieve earth orbit. Mission control asks each
station for a status report. Only if "proven correct" is the lunar mission a
"go".

Safety stops are very real and are an integral part of my emergency plan on
how I am going to trade my way out of a fast market which is going against
me, whether it be commodities using options, or stocks in the face of a poor
earnings report. Maintaining a cool head is hard enough, but without an
emergency plan I'm sunk.

So, each trade demands planning.

Best wishes

Walter