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Nicholas (also Guy Tann see below),
In some sense my statement may have been too general. What I was
referring to was the quest for the "holy grail". By "holy grail"
I mean some indicator that will work in all markets at all times.
You are not going to take a couple of moving averages and achieve
this.
Certainly one will find indicators that work very well in certain
markets at certain times. I recently developed one for choppy markets
that gave a better than 90% win rate when applied to Exxon (This was
not some overfitted function, it was very general). This indicator
worked because Exxon has been trading in a sideways choppy manner.
This indicator was a loser in trending markets. The problem is you
never know when prices will trend and when they will chop.
The other issue is how do you measure the success of a trading system,
profits, win/loss, maximum drawdown, risk of ruin. You can't have it
all. Some trading systems have a win percentage that is less than 50%.
BUT, because they use good MONEY/RISK MANAGEMENT techniques they are
very good systems.
The main point I was trying to make is that you will never be able to
predict or control the markets (otherwise they cease to be markets).
You can control how you respond to what the market does (Money/risk
management). If you are going to expend time and mental energy on
trading, focus it on the money/risk management aspect. Don't believe
that some slick indicator will solve all of your problems.
A 50:50 win rate is not a bad thing. If you manage your trading such
that you make twice as much on a winner as a loser, and you manage
your money with the proper re-investment, over time you can do quite
well.
Guy Tann may be proving me completely wrong. Guy, do you think your
system would work on all markets or is it "optimized" for the S&P?
I welcome any comments/criticisms...
Regards,
Tim
Nicholas Kormanik wrote:
>
> "traders spend much too much time creating indicators. None of these
> indicators in the long run will give you more than a 50:50 chance at making
> money."
>
> I find it hard to believe that various indicators don't perform better than
> others. Take the MACD, for instance. I think it would yield greater than a
> zero return over time, if used properly.
>
> Haven't you found *some* indicators that you have developed confidence in?
>
> Thanks,
> Nicholas
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