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By the term "financial products" I mean simply
trading vehicles.Either a few stocks,or some futures,for example the e-minis or
the dax future.My point is that you have to focus......
My intention was certainly not to suggest a
specific trading method or strategy.I tried to tell you that all the indicators
are price derivatives and therefore lagging the market.Also,the various patterns
are closely related to the time frame.For example,a fractal pattern on a
5-minute chart,dissapears on a 10-minute chart.
Scott,there are no oversold or overbought
conditions.That's why RSI and stochastics and all that stuff simply don't
work......The market is talking to you all the time.Every single moment.When you
have bought a stock at 10 and the price is at 15,the only facts are the price
and that you win 5 dollars.The next day the price can go to 17 or to 13 and that
will be the only fact then.....Do you understand what I'm telling you? Have a
plan and stick to it.With confidence,with discipline and with consistency.Define
what is a "profit" and what is a "loss" for you.Be ready to react.Know in
advance what you'll do if the market skyrockets and you are long.How much of
your profit you'll protect and how much you'll risk in anticipation of more
profits.No method works all the time.....You don't know and you don't care why
the market is going up or down.What you must know in advance is what you'll do
in any market movement.
----- Original Message -----
Sent: Sunday, March 13, 2005 5:40
PM
Subject: Re: [Metastockusers]
Scott---Building a Profitable System
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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