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Walter,
Using Metastock's MAE with stocks under the markets current high volatility
requires some tweaking in Excel. First you should determine what constitutes
a "normal" true range for the stock. Generally, you should consider
expanding MAE stops when current range exceeds 95% of your past experience.
If so, then you should next check range expansion for winners and losers. In
any case of range expansion, widen MAE by about 50% of the estimated
expansion.
hope this helps,
Rick
Tokyo, Japan
-----Original Message-----
From: Walter Lake <wlake@xxxxxxxxx>
To: metastock bulletin board <metastock@xxxxxxxxxxxxx>
Date: Thursday, September 03, 1998 12:24 PM
Subject: proven correct
>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
>
>
>
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