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Robert,
I don't use stops. I used to be very vocal about the "need" to use them.
Over the years, I've changed my mind. I don't even want to get into a
discussion about it (I've heard it all and even contributed to the "other
side of the argument"). Nobody should even think of approaching these
markets unless they are well capitalized. Also, things go a lot better with
diversification. Drawdowns ALWAYS occur, no matter what your approach may
be. One should spin their Optimal F's and money management software on the
numbers and decide if "any" approach suits your "risk to reward" fantasies.
So, rule #1: start with adequate funds.
Rule #2: diversify among as many markets as you can.
Rule #3: try to forget the propaganda about "stops" that you've been fed
your whole trading life
This approach is not for the undercapitalized, nor is it for the faint of
heart. Each mechanical approach has its own Achilles heal. Some traders
will scream that because of the "no-stop" rule that this is not a credible
approach. Who am I to argue?
Anyone trading a "Mini S&P" needs a minimum of $25,000 to safely trade this
approach. To segregate less than that to trade this system would be very
foolish. Also, please understand: my clients that trade the S&P "do not"
use this BB Histogram to position themselves. I have a number of approaches
that I share with my traders that I will not make public. Each approach
shows a much greater return than what can be realized with the BB Histo
formula.
I wish I had "one stinkin' dollar" for every time I have called a
"direction" properly...only to be stopped out by a tick or two and then
watched as the market appreciated/depreciated in the direction of my
technical work. Stops have cost me more money than drawdowns (period).
What I do is rather simplistic: momentum oscillators, averaging positions,
and no stops. I totally understand the risks and at times it has caused me
to sacrifice a bit of sleep. Both my proprietary approaches have performed
above the 80% level during 1999 and applying "fail-safe" stops (in an effort
to improve the profitability) has not improved the winning percentage or the
bottom line. Recently, I've allowed "Dr. Ag-Econ" and "Mr. MBA" to try to
improve on the approaches by applying any safety nets they can conjure. So
far, the phone is not ringing off the hook with suggestions about how to
increase the productivity.
Most importantly: If trading with no stops makes you nervous...DON'T.
Everyone needs to feel comfortable with trading. Secondly, my opinions,
approaches, and posts are to stimulate "mechanical system" discussions.
Take the formula as a starting point and improve on the approach. Then, try
sharing some of your improvements. A large part of my success has been due
to the "sharing" of ideas and formulas on this and other forums. Synergy
works!
Steve Karnish
Cedar Creek Trading
http://www.abbracadabra.com/cybercast/
----- Original Message -----
From: Robert Lambert <lambertb1@xxxxxxxxx>
To: <metastock@xxxxxxxxxxxxx>
Sent: Tuesday, December 14, 1999 8:45 AM
Subject: Re: First a "freebie" then open your wallet!
> Hi Steve
>
> Found a BBOsc formula on the Guppy site very similar
> to yours, and have already been testing it:
>
> 100*(C-Mov(C,20,S)+2*Stdev(C,20))/(4*Stdev(C,20))
>
> It charts similarly to yours, but obviously it's
> constructed differently, so I'll definitely make a
> closer comparison.
>
> Question:
>
> Do you use Stops at all, or do you always make the
> assumption that price will eventually confirm the
> oscillator? Example: let's say you shorted S&P500
> on latest entry into OB zone- wouldn't that incur
> quite a drawdown, especially if the current uptrend
> turns into a trending market?
>
> I guess what I'm asking is... what are your stop/
> money management rules, if you don't mind sharing
> them? If you can emotionally tolerate a large
> drawdown,
> I believe that's a great asset if you're confident
> in your trading system.
>
> By the way, I'm enjoying your site and daily comments.
>
> Thanks.
>
>
> --- Steve Karnish <kernish@xxxxxxxxxxxx> wrote:
> > List,
> >
> > Here's a "freebie". I know it's not the my deeply
> > guarded secrets about "Cybercast" and my new and
> > improved "MOOSE" approach, but hey, it's free and
> > simple. This is the "loss leader". All those that
> > profit "wildly" from this approach are obligated to
> > buy "mondo expensivo" proprietary systems that I
> > will market in 2000. Yes, Mark Brown, I have nasty
> > motives behind my posts. First you give your work
> > away for a couple of years and then you "screw"
> > everyone by "forcing" them to buy your software.
> > But before I put the "screws" to everyone. I
> > challenge the list to post a credible system that
> > has a better return than the attached approach. I'm
> > all "eyes". Many are quick to ridicule, few
> > actually disclose any formulae or approaches. The
> > BB Histogram that I use has slightly different
> > numbers substituted in the formula than the "off the
> > shelf" one that I present. This shouldn't affect
> > the profits.
> >
> > BB Histogram:
> >
> > ((C+2*Std(C,20)-Mov(C,20,S))/(4*(Std(C,20)))*100)
> >
> > Sell the opening days after the BB Histogram
> > penetrates 100 and buy when it penetrates zero. Add
> > to positions when the BB Histo leaves "above 100" or
> > "below zero" and then "repenetrates" the trigger
> > levels (see attached charts).
> >
> > I believe this approach has recorded 11 straight S&P
> > winners, with 700+ points. "But Steve, this system
> > must not be working any more because it is losing
> > the last trade you put on". Right!
> >
> > My only disclaimer is that I guarantee that I will
> > sell software, charting services and anything else
> > that I can think of to make a "buck" in 2000. In
> > the meantime, suck all the free stuff from me you
> > can copy. And most of all, please note, the biggest
> > antagonists on the list provide absolutely "zero"
> > when it comes to helping you trade. Seek the
> > answers from "within" (with some shortcutting help
> > from people that are willing to share).
> >
> >
> > Steve Karnish
> > Cedar Creek Trading
> > http://www.abbracadabra.com/cybercast/
> >
>
> > ATTACHMENT part 2 image/gif name=SPM.gif
>
>
> > ATTACHMENT part 3 image/gif name=SPZ.gif
>
>
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