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Ron,
I'm sure that every one of us uses different systems. I can give you a
basic description of ours.
First, everything we do is based upon price. We don't use volume or Open
Interest (I guess I should mention that we are futures traders). The reason
we concentrate on price is because we feel that we're at the end of the
information food chain. By the time we hear any news or anything is
published, we feel that this information is already reflected in the price.
Next, we don't use any of the supplied indicators. We have developed our
own. Over the last 50 years or so, we have use just about every technique
known to mankind. We've used point & figures, oscillators, moving averages,
etc. We have been day traders, trend traders and for the past fifteen to
twenty years, contrarian traders. We don't use charts at all. Now, I have
to admit that I might occasionally look at a chart, but we've found that our
indicators are too sensitive to actually plot. We did chart them for years,
but gradually moved over to a mathematical approach. The reason we
originally bought MS was solely for the Downloader as I got tired of
manually entering everything by hand. :)
We have developed our own momentum indicators as well as over-bought and
over-sold indicators. Since our backgrounds are primarily in math,
statistics and economics, this has guided our system developments over the
years. The system we're trading now is comprised of two components. The
first component is a short-term indicator (we call it SP39) that provides us
all of our signals. SP39 is comprised of 6 signals (indicators or whatever
you'd like to call them). They are individual indicators we developed over
the years that we've found to be fairly accurate. Depending upon the
commodity, they each carry a different weighting factor (from 1 to 3), which
we total, and range from +10 to -10.
We couple these signals with our intermediate term signals, which are
basically over-bought and over-sold indicators. We have 4 or these. Based
upon these intermediate term signals, our trading rules vary. For instance,
if our intermediate term signals that the market is OB or OS, we don't
require any T-Bonds or something we call our contrary (basically a
mathematical representation of what the market did that day).
For actual trading, we use two rule sets. We have one set of rules if the
market is heavily OB or OS. We have a different rule set if the market
isn't.
Finally, all of our trading rules are strictly probability based. We "know"
that if we receive a certain signal, we have a 75% probability that the
market will react in a specific way, moving up or down. Since we trade
probabilities, we have no idea as to whether or not the move will be large
or small, how long it might last (as short as 1 day). We just "know" that
the odds are 75% that by the time we get our next signal, the market will be
higher (if we bought) or lower (if we sold) when we reverse.
I don't know if this will help you or not. We strongly recommend developing
your indicators manually (on paper) before inputting them into MS. We
recommend paper trading before risking any real money (my dad made me paper
trade for two years before making my first "real" trade). Finally, we don't
believe in optimizing or too much back testing. The only back testing we do
is done by hand. When we develop anything new (we added something called
3-2s a few months ago after watching it for over two years and it was the
signal we used to sell on 8/9) we go back and manually check it out for the
past five years to make sure nothing catastrophic would have happened. We
just added two additional intermediate term signals to the two we had been
using. We weren't happy with one of them, feeling it was too sensitive and
had a tendency to get us in too early, so after six months we just
integrated two more ITS into our rule set.
Hope this helps,
Guy
Never be afraid to try something new. Remember, amateurs built the ark,
professionals built the Titanic.
-----Original Message-----
From: owner-metastock@xxxxxxxxxxxxx [mailto:owner-metastock@xxxxxxxxxxxxx]On
Behalf Of Ron Scott
Sent: Thursday, August 10, 2000 4:53 PM
To: metastock@xxxxxxxxxxxxx
Subject: Learning Metastock
Guy, and all the other experienced users-
With all the discussion on the list of general trading principles from
experienced traders, I wondered if any of you might take a few minutes to
point a newer user of Metastock in the right direction. I'd like to be able
to build and program my own trading system and indicators; so don't worry, I
don't need you to reveal the workings of your secret systems. Just some
basics. Maybe you could share a few basic type indicators or systems.
Do most of your build your own indicators, or do you use the ones provided?
Much discussion has been had about buy and sell signals...but I have seen no
specifics. Guy, you talk about this a lot. Can you tell me what you are
using to generate these?
It took me my first 2 months just to get this program to stop crashing, and
now, I can use it to the extent of seeing very good charts and doing chart
pattern analysis with volume and some canned indicators like RSI. I look at
different time frames, use volume, etc. But I know I'm missing something
probably a lot of something, or a lot of somethings. Frankly, I'm lost.
Any help would be appreciated.
Sincerely=
Ron Scott
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