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Jean Jacques
My comments were probably a little testy as it was late and I get cranky, so
I apologize. I thought I had explained myself a long time ago. We have
spent more time than I care to admit working on developing a stop loss
strategy. We do consider it to be important to limit risk. I'm not
disputing that. All I'm saying is that in over 40 years, we have never
found a stop loss strategy that worked with our system effectively.
All three of us have probably spent 1/4 of our time for the last 40 years
looking at stops. If you work that out, that's probably 30 man-years of
effort, which is not an insignificant amount of time that could have been
spent developing trading systems. On our schedule, once I complete
programming our Intermediate Term Signals into MS, we plan on trying to
optimize a stop loss strategy, for the two hundredth time or so.
And like buying insurance, a lot of people self-insure. What I mean by this
is that we have determined that the actual, out of pocket cost of trading
with stops over the last 40 years has greatly exceeded the cost of trading
without. We didn't determine this lightly either. This is based on
actually using stops and watching our capital dwindle. Now, again, this
methodology has to be used in conjunction with your own trading system and
has to make fiscal sense. If we felt that stops would effectively reduce
our exposure to risk and/or save us money, we would be the first ones to
implement them.
I guess, to summarize, it's not that we don't believe in stops, it's just
that we haven't found a stop loss methodology that works with our system.
That doesn't mean that we'll quit looking. And for final emphasis, I want
to reiterate, I am referring ONLY to our trading system, not anyone else's.
Regards,
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 Macromnt@xxxxxxx
Sent: Thursday, August 10, 2000 5:02 AM
To: metastock@xxxxxxxxxxxxx
Subject: Re: MARK BROWN BANNED FOR LIFE FROM REALTRADERS FORUM!
Guy,
I agree with you: luck has absolutely nothing to do. However I don't think
that you are helping some new traders in the list when you say how right you
were not to have stops. It is like bragging to be right not to have fire
insurance because your house did not burned down. Not to get killed once is
enough.
Also there is nothing to brag about not managing OPM money: it's much more
difficult to manage OPM money. You should not just make money: you should
make money within certain rules: volatility, max draw down etc.. Trading
your
own money you can move some from your equity account to you futures account
you don't have redemptions after a string of losses, or a new big allocation
when you system is with an open position one month old.
Guy, I know that you are trying to give your experience away and I
appreciate
that but sometimes I really disagree with you because I don't find that you
push your analysis far enough and you give the results like something that
has been fully studied.
So no good luck but goo trading.
Jean Jacques
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