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--- In equismetastock@xxxxxxxxxxxxxxx, "Andrew Tomlinson"
<andrew_tomlinson@xxxx> wrote:
>
> Interesting. I come out somewhere in the middle. I think you need to
know a
> fair amount in order to have the courage to stay the course. If
you've given
> yourself a good grounding in TA, then it's harder for some
self-appointed
> guru to take you for an expensive ride based on his or her
interpretation of
> some basic indicators that you should have known about anyway. If
you've
> learnt enough to do some back-testing of your simple idea then
you'll have
> the fortitude to follow your system through drawdowns.
>
> So at least do some basic homework (e.g. Murphy "Technical
Analysis...")
> before you start, and learn to do some backtesting.
>
> Oh, and be careful re Van Tharp. His mathematical rigor leaves a lot
to be
> desired, although many of the ideas that he summarizes from good
traders are
> ok. And don't expect to be able to replicate any of his numbers.
>
> Andrew
>
What do you think of the following performance criterion allegedly
advocated by Van Tharp?
After optimizing your system parameters, don't choose the maximum Net
Profit (presumably greater than Buy&Hold, or what's the point?), but
choose instead the parameter values that give a Net Profit greater
than Buy&Hold AND maximizes Net Profit divided by the absolute value
of the average losing trade:
In other words, the thing to maximize is:
'quality' := (Net Profit)/abs(average loss).
Thanks in advance.
kut2k2
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