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JO,
You are absolutely right. I've given up on a very profitable system, because I couldn't
trade it. I've discovered that I'm only comfortable with price triggered systems where I buy at a certain price and sell at a certain price. The system I discarded was where two indicators crossed that had little to do with the specific price action at the time of the signal.
I'm currently trading two systems on a handful of stocks. You absolutely have to be completely comfortable with the trading systems that you use and the security that you are using it on. I have a system that works great on OXGN, but I'm not comfortable trading OXGN, because of its crazy wide swinging volatility. There are many stocks I'd like to trade, but the liquidity just isn't there. To be successful, both the system and the security must be comfortable.
The "Holy Grail" is in money management not trading systems (buy and sell arrows) per se. Good money management frequently has you making large bets within a very narrow risk enviroment for a brief period of time. You can't do it unless you are comfortable with the trading system that you use. You have to be very comfortable betting a half a year's salary worth of borrowed money on a security. (thoroughly backtest something like this before you do it for real) Unfortunately, the software companies seem to feed on this public desire to get the ultimate trading system (buy /sell arrows). I wish the software companies would put more emphasis on money money management software. (optimal f, fractional f, fixed fraction, fixed ratio, etc.)
I think most successful traders are very comfortable with their trading systems or they have a computer or some one else do their trades.
The lessons I have learned over the years is that good Money Management is more important than the trading system you use. If a trading system that your are comfortable with results in a reasonble risk/reward result on a specific security, then good Money Management is the whole ball game from there. I think Money Management, especially the possibility of adapative Money Management systems, is a huge uncharted territory that isn't explored, because the software (tools) just isn't there to explore it. Ralph Vince, in one of his books said, you'll probably be the most leveraged, right at the market top, when you want the least leverage.
Been there, done that.
There is way too much emphasis on looking for a better trading system. That isn't a high priority to me. I'm not saying that buying plug-ins is a waste of time, because maybe you haven't found a trading system that you are comfortable with. But, if you have a trading system that you are comfortable with, explore money management, because that will make a bigger difference to you pocket book.
My two cents....
Kevin Campbell
In a message dated 7/11/03 9:20:11 PM Central Daylight Time, kelols@xxxxxxxxxxx writes:
On some of the boards, there's been a lot of talk about the
trendmedium plug-in that Metastock just released so I got the
software and ran a few optimizations. Most of the discussion has
centered around testing. I have my own system for testing.
Over the last year, I've written a couple of experts that I trade
with everyday. They have been tuned specifically for the dozen stocks
I trade.
I compared the results from TrendMedium and the resulting experts
were pretty good. I find that mine still beat TMs by a few tenths of
a percent, (in live trading, not in system tester or whatever) so I
wouldn't switch to the ones that were generated with TM. I calculated
that against the results from live trades, entry and exit points.
The experts I've written are very profitable when applied to the
small universe of stocks I use them on. I have written explorations
and they work well in finding stocks that are about to trigger buys
or shorts in my system. But I don't search for stocks because I make
plenty of money just trading the swings on the stocks I trade
everyday. Sometimes I trade mutual funds. I wrote a great expert
system for mutual funds, but the market is not in the mutual fund
mood right now.
I would put TM's experts in the top ten percent of the ones I've
tested or programmed myself. I have tested over 160 of them, It took
me many hundreds of hours and dozens and dozens of revisions to get
my experts to work as well as they do. You can get ninety percent of
the way there with TM, without the hundreds of hours of work.
That being said, I have no clue if you can make money using TM. If I
subsituted TM's experts for mine, I would still make a nice return,
but I can't speak for what other people are trading. When I tell
traders what I trade and how I trade, they look at me like I'm an
idot, until they find out the daily profit percentage of the system.
I'm a believer in the axiom that you have to trade stocks and use
systems that fit your personality and style. I see people on this
chat site wanting better ways to search 7000 stocks a night. How are
you going to find stocks that fit your style, if you look at 7000
everyday to find 100 new ones.
I told someone today that in one of my revisions I programmed a
system that worked great on a wide variety of stocks. I traded with
it for a few weeks and hated it. It was dead on, but when you don't
like something, you're not going to make money for long with it. I
started making the most money when I picked stocks that fit me first
and then programmed a system for trading them. It fit like a glove,
and now I actually look forward to trading everyday. While I didn't
lose any money with the other system, I was losing my smile, which is
equally as important as how much you make.
TM is not bad. There's a few things I haven't figured out how to do.
The manual is a little sparse.
I would buy it and keep it, if I didn't already have optimized
experts on my charts. I found Bressert's to be the second best plug-
in, if you need a day trading system and can't write one. I've used
almost all of the Metastock plug-ins. They aren't suppose to be a
complete trading system and find all the profitable stocks in the
universe. However, they gave me many good ideas which I have used in
my other systems that produce the results I was looking for.
I see lots of questions regarding plug-ins and my answer is simply
that asking what's the best plug-in is like asking is a 38 R suit
better than a 44 tall. Well, it depends on who you are and what your
size and style happens to be. No one has invented a one size fits all
suit yet either.
Good luck!
JO
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