|
AA,
Thank you. That is much clearer to me.
I should pick a few stocks, say from the IBD100, and learn their
personalities. I guess only then will I be able to make a determination as to
the value of the stock at the current price?
Thanks AA,
Scott
----- Original Message -----
Sent: Sunday, March 13, 2005 11:26
AM
Subject: Re: [Metastockusers]
Scott---Building a Profitable System
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
>
>
>
>
>
>
>
| Yahoo! Groups Sponsor |
ADVERTISEMENT
![click here]() | |
![]() |
Yahoo! Groups Links
|