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Kathay
> The idea is not new to the market however maybe unknown to some users
> of this group:
>
> - plot SMA 30 days on your system's equity curve;
> - if equity curve crosses SMA from above stop trading or decrease
> your risk by downsizing your betsize (for example risk only 1% of
> your equity instead of usual 3% when you use fixed fractional
> pisition sizing method)
> - start trading again or resume your 3% betsizing once equity curve
> crosses SMA from the bottom.
>
> My experience indicates changing the betsize down as a much better
> solution in aforesaid case.
> Anyway I tried to test the first solution i.e. breaking my trading if
> equity curve stays under its SMA. The problem is how to test such
> method efficiently in Metastock?
> Or rather how to force Metastock's system tester code to filter trade
> triggers depending on equity curve position?
If you are trading stocks long side only then it should be possible to reference
a Trade Equity indicator and its moving average by the System Tester. I haven't
tried this myself but it would be easy enough to set up for most of the simpler
systems supplied with MetaStock.
This would be much more difficult to implement using the equity curve of a
portfolio, but not necessarily impossible. The difficulty would also be
greater with long and short side trades from the same system. I would be
interested in working with you on this if you care to pursue it.
Kind regards
Roy Larsen
www.metastocktips.co.nz
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