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AA,
When you say "Choose 1-2 financial products", do
you mean equities?
The recurring messages I keep reading or hearing
about are "buyem when they'r cry'n and sellem when there yell'n" or counter
trend trading. I also keep reading about just using MA's to make buy and sell
decisions.
I have been looking at charts until I am
cross-eyed. When you say "that the truth is the price" what are you eluding to?
What makes the current price a good price to buy? Oversold conditions, a certain
standard deviation above or below some moving average?
I am trying to be clever but it fells like I am
trying to reinvent the wheel!
Thanks AA, Scott
----- Original Message -----
Sent: Sunday, March 13, 2005 5:09
AM
Subject: Re: [Metastockusers]
Scott---Building a Profitable System
Scott,
if I may add a few words of advice also,to
those the other members of the
forum gave you,let me tell you
this:
I've also passed through the stage of testing
indicators,geometrical
patterns,combination of indicators,etc.Please do
yourself a favor and throw
all of them into the waste's basket where they
belong......
A good system is not defined by the percentage of the
winning trades.It's
defined by the edge that is giving you.You must be
able to define that edge
and use it consistently in your favor.No lagging
indicators and no patterns
that are time frame depended will give you that
edge.The truth is the
price.Nothing else.....
A good system is the
one that makes money.The good system will be defined by
your trade
management rules.I can use a simple moving average system and
make money
and you can use all the BS sold around (fractals,Gann,neuronic
networks,etc) and still lose money.Learn to read the charts.Find something
that works independently of time frames.It doesn't really matters what the
market is doing.What matters is your position related to the current
price.Choose 1-2 financial products and stick to them.Don't scan every
night
thousands of stock trying to find the next home run.Pull
consistently money
out of the market and don't give it back.And,most
important of all,don't
ever believe that you can buy a system and become
rich.The reason they are
selling you this system is because they can't
make money out of it.That's
why they put all those disclaimers on it.Be
clever.
----- Original Message -----
From: "superfragalist"
<jackolso@xxxxxxxxxxx>
To:
<Metastockusers@xxxxxxxxxxxxxxx>
Sent: Sunday, March 13, 2005 8:46
AM
Subject: [Metastockusers] Scott---Building a Profitable
System
>
>
> Read this entire Charlie Wright article
from beginning to the end. In
> the later parts he shows you how to
develop a system. His simple
> system trades very well.
>
>
http://www.elitetrader.com/tr/index.cfm?s=17
>
>
To help you understand more about what you are doing, read a few
>
systems development books. I recommend reading all of them. But you
>
can start with books written by Kaufman, Stridsman and others. I've
>
learned more about trading from systems development books than the pop
>
books written by the "guru's" who don't trade much at all.
>
> The
percentage winners is really not the problem. The bigger issues
> are
the profit per winner vs loss per loser, the frequency of trading
> and
the drawdowns.
>
> Roy's newsletter is about to start a series of
articles written by
> traders that will describe how they trade and what
MS tools they use.
> You could benefit from that a lot.
>
>
www.metastocktips.co.nz
>
> You could also benefit from the back
issues of MSTT which explain how
> to use the systems tester,
etc.
>
> I've developed a number of systems and it's not very hard
to do.
> What's hard to do is to learn when to use each of the systems.
No
> single system works well in all market conditions. That's a really
big
> mistake people make.
>
> I have a couple of systems
for up trends, down trends, sideways
> typical and sideways with
rotation. Each one has a different
> expectancy and different values for
P/L ratios etc.
>
> After I use the system to find high
probability trades I fiter the
> charts through my best computer--the
one in my head. In general that
> improves the ratio of winners to
losers by about 50%. In other words
> if my system has a 50/50 ratio, my
evaluation of the charts improves
> the ratio to 75/25, and often
better.
>
> Can you reduce the chart evaluation to a mechanical
system---no. You
> need experience to evaluate the charts, especially in
the four
> different market conditions.
>
> A very simple
and very profitable method of trading is simply to use a
> prefiltered
list based on TA, momentum and fundementals--the valueline
> T1 stocks,
the IBD list or the S&P neural fair value list.
>
> Use a
moving average of any type, and one simple indicator like the
> IFT of
the RSI (Roy's newsletter). Buy the momentum stocks on one or
> two of
those lists whenever they're above the MA and the IFT, if it's
> above
it's thresholds. That's all you have to do to make money.
>
> That
being said, 98% of the want-to-be traders want to do exotic
>
explorations of 3000 stocks a night for patterns, breakouts or other
>
crap they can't even define muchless find. Of course they're going to
>
have 40% or 50% winners when the market is in an uptrend. When the
>
other three conditions exist they're only going to have 20%
winners.
>
> If the market is in an up trend advancing stocks
always lead declining
> stocks, so a monkey could throw darts at a copy
of the wall street
> journal and wind up picking 50%
winners.
>
> Trade from the defined lists, learn to read the
charts of the momentum
> stocks so you can tell when the momentum is
likely to continue--there
> aren't any indicators that are going to tell
you that any better than
> your eyeball after you've looked at something
around 1000 momemtum
> stock charts.
>
> There are simple
methods to use in all four market conditions. I think
> Roy will have
articles about the methods in up coming newsletters.
> There isn't the
time or space to post everything every newbie should
> know--not to
mention having to repeat it one hundred times.
>
> Start with the
Charlie Wright articles and work your way up.
>
> We are in a
sideways market with rotation or a slight downtrend with
> rotation.
That's the worst market there is to trade in so buckle up.
> On Friday,
I saw some signs that the rotation might be about to stop.
> If it does,
I'll determine what kind of market we have after that and
> then use the
appropriate system. This is good time to read because
> without a lot of
experience you aren't going to be making any money
> right now anyway in
this kind of market. Maybe after August.
>
> If you don't believe
me regarding market conditions, here's a simple
> test. Set up the
explorer to find stocks that have gone up two days in
> a row. Run it
everyday for the last two weeks and see how much over
> lap there is
between the lists on a daily basis. For this test,
> confine your lists
to the S&P 500, 400 and 600. That's 1500 stocks.
> Now if you can't
find many stocks that have gone up two days in a row,
> and with lists
that overlap, it's time to read a book and stop trading.
>
> Have
fun!
>
>
>
>
>
>
>
> --- In
Metastockusers@xxxxxxxxxxxxxxx, "Scott Mariani" <mariani@xxxx>
>
wrote:
>> O.k.
>> I have been building system test after
system test, trying several
> different combinations of indicators.
Since I use EOD data I have
> given up on getting accurate exit values.
I get a bunch of high losses
> which I attribute to the EOD data not
exiting until the close.
>>
>> I assume the object of a
system test is to have more winning trades
> than loosing ones? I have
resorted to adding one optimization so I can
> look at the overall
system performance on a total $$ basis. The only
> problem with this is
that with the exits being what they are, my
> losses are humongous. I
have been trying to find a system that is
> better than 50/50 but have
yet to stumble on anything that yields more
> winners than
losers.
>>
>> How do others go about analyzing system tester
results?
>> Thanks,
Scott
>
>
>
>
>
>
>
>
>
>
>
Yahoo! Groups Links
>
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