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Hi Glen
Re Ed Winter's assumptions:
"... The assumptions behind this are:
- there is a reasonable expectation that the system you are using for
trading can be repeated
- the system you are using has statistically verifiable rules
- the method of execution is mechanical
- you want the maximum growth of the account regardless of the increased
risk. ..."
These assumptions appear to be logically correct but are simplistic and are
seriously flawed.
The basic psychological process that undermines these assumptions is
incremental drift caused by boredom, tinkering, improving, seminar
attending, insight, etc.
Even though Rick may have 5,000+ closed trades to analyze he would need
detailed records to correlate the multiple trading system used over time to
produce these results.
You might also want to check out the neuropsychological literature on
unconscious biases which prevent mechanical execution. Here is a short
sample:
http://www.sciencemag.org/cgi/content/full/275/5304/1293?ijkey=qvmuCiNjPcckE
The Damasio's are serious investigators. There are lots of medline
references at the end of the article. There are articles available at the
various neuroscience sites for the anatomical sites that are involved in the
neural networks so that your own "individual" symptom list can be prepared
from your trading diaries.
It's always interesting to plot your own trading disabilities.
Best regards
Walter
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