|
PureBytes Links
Trading Reference Links
|
That's why your historical test must have clearly defined rules that address
every scenario. You are right, the biggest obstacle for traders to overcome
is themselves. Back testing and then applying the system to real trading
can mitigate and eliminate this emotion if properly structured. The rules
must be followed without deviation. There can be no gray areas or emotions
will creep into your trading. Analysis must take place when developing the
system not when trading.
Best,
Larry Carhartt
MasterDATA
The Only Source for Index & ETF Composite/Breadth Reports, Charts & Data
www.MasterDATA.com
lc@xxxxxxxxxxxxxx
818-701-6686
-----Original Message-----
From: equismetastock@xxxxxxxxxxxxxxx [mailto:equismetastock@xxxxxxxxxxxxxxx]
On Behalf Of sebastiandanconia
Sent: Wednesday, September 07, 2005 8:30 AM
To: equismetastock@xxxxxxxxxxxxxxx
Subject: Re: [EquisMetaStock Group] (OT) Entire "statistics" discussion has
a major fault.
"...They isolate and amplify certain aspects of the
base data in ways which may help us understand price movement
better..."
They also isolate and amplify certain aspects of the data in such a
way as to create patterns that aren't really there, which serves to
confuse our understanding of price movement.
Ironically, back-testing is what proves that the majority of TA
doesn't add any value. The bias of a stock analyst is easy to see
and guard against, but recognizing and protecting against our own
bias is tougher. JMO.
Luck,
Sebastian
--- In equismetastock@xxxxxxxxxxxxxxx, "Andrew Tomlinson"
<andrew_tomlinson@xxxx> wrote:
>
> The stock price and the IFT of the RSI are not independent
variables. The
> indicator is derived from the price. Clearly the RSI cannot "cause"
a change
> in the price as it is a derivative of the price. This is the same
for any
> indicator.
>
> Does this mean that TA is meaningless? I don't see why. All
indicators are
> filters - no more, no less. They isolate and amplify certain
aspects of the
> base data in ways which may help us understand price movement
better.
>
> There's no magic to causation. We know why stock prices move - at
any one
> point, a share price will rise if there are more dollars being
spent on
> buying the stock than selling, and vice versa. End of story. The
analytical
> problem is that the best measure of that net buying or selling is
the price
> itself.
>
> When we backtest data we are certainly looking for persistent
correlations.
> If we think we understand why they happen, then great - but we may
be wrong
> much of the time anyway. That shouldn't stop us from trading. The
whole
> point about TA is that its pragmatic - we go with what we see, not
what some
> (likely bias) analyst is telling us.
>
> Andrew
>
>
>
> -----Original Message-----
> From: equismetastock@xxxxxxxxxxxxxxx
[mailto:equismetastock@xxxxxxxxxxxxxxx]
> On Behalf Of sebastiandanconia
> Sent: Wednesday, September 07, 2005 10:23 AM
> To: equismetastock@xxxxxxxxxxxxxxx
> Subject: [EquisMetaStock Group] (OT) Entire "statistics" discussion
has a
> major fault.
>
> There seems to be a widespread confusion between causation and
correlation.
>
> If a stock price is in an uptrend and the Inverse Fisher Transform
of RSI is
> greater than 50 (indicating a "buy" signal, depending on
parameter), that's
> only a correlation between the IFT of RSI and stock price. The
stock isn't
> rising because of the indicator, the indicator is rising because of
the
> stock price and it's the same story with virtually every TA
indicator.
>
> So what is the purpose of back-testing this OR ANY indicator if
it's not the
> cause of stock price movement? The only things that are being
generated are
> meaningless correlations.
>
>
> Luck to all,
>
> Sebastian
>
>
>
>
>
> ------------------------ Yahoo! Groups Sponsor --------------------
~--> Put
> more honey in your pocket. (money matters made easy).
> http://us.click.yahoo.com/r7D80C/dlQLAA/cosFAA/BefplB/TM
> --------------------------------------------------------------------
~->
>
>
> Yahoo! Groups Links
Yahoo! Groups Links
------------------------ Yahoo! Groups Sponsor --------------------~-->
Put more honey in your pocket. (money matters made easy).
http://us.click.yahoo.com/r7D80C/dlQLAA/cosFAA/BefplB/TM
--------------------------------------------------------------------~->
Yahoo! Groups Links
<*> To visit your group on the web, go to:
http://groups.yahoo.com/group/equismetastock/
<*> To unsubscribe from this group, send an email to:
equismetastock-unsubscribe@xxxxxxxxxxxxxxx
<*> Your use of Yahoo! Groups is subject to:
http://docs.yahoo.com/info/terms/
|