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hey super,
Even tough overall u are extremely right about ADX, indicators, gurus
and all...still there is something in ur judgement that is wrong and
that is "beats buy and hold". A valid trading strategy tested on a
portofolio of securities should keep u out of watter (thats loosing
very little or just breakeven) when the market index makes huge
drawdowns like on 2001 and 2002 and beatting the index the rest of
time and it should never be compared with buy and hold because if u
do that u compare apples with...tomatoes. Such a strategy would give
a anuallized compounded interest rate of over 20% wich is more than
the return of the majority of mutual funds. Now if this strategy has
decent drawdowns (about half of the anuallized compounded interest
rate) then it should be considered a valid trading strategy and from
my experience not many people have something like that. Further on
for higher results (of course with higher risks) u could trade on
margin or use different money management, this will yield different
returns, also the number of years will yield different returns and so
on... there are a large numbers of variables that could lead u to 40-
50% anuallized compounded interest rate. Over the years i saw a lot
of people wich are pure gamblers and they not even know or understand
that. On short buy and hold has nothing to do with trading and it
should never be compared with a trading strategy or the other way
around.
*PP :)
--- In equismetastock@xxxxxxxxxxxxxxx, superfragalist <no_reply@xxx>
wrote:
>
> The ADX is so so like all indicators.
>
> When the market is going up 55% to 80% of all stocks are rising. If
a
> random number generator were used to pick stocks for your portfolio,
> the number of winners in your portfolio should match the overall
> percentage of stocks that have risen since the portfolio was picked.
>
> Well, you don't like random number generators. You can not handle
the
> psychological aspects of picking stocks randomly. It just doesn't
make
> sense to you that it could work.
>
> So you develop a trading system using the ADX, or any other
indicator
> or combination of indicators. Wow, it beats buy and hold. Really.
>
> Here are a few questions to ask.
>
> During what kind of markets does it beat buy and hold. Downtrends?
> Uptrends? No trends?
>
> Is the system going to destroy your peace and sanity when it starts
> it's huge drawdowns like it would have in 2001 and 2002
>
> Does it pick more winners than a random number system would? Does it
> make more profit than a random number system?
>
> In what kinds of markets does it beat a random number system, if it
> does at all.
>
> How does it do on a yearly basis over long periods of time. Forget
the
> overall performance. How many times out of the last X years would
you
> have quit trading it because you couldn't stand to lose like that.
>
> Now do any of the books, articles and websites touting the ADX or
any
> other indicator answer those questions. NO! Why not!
>
> Well, here is their answer.
>
> This fabulous indicator was developed by one of the world's greatest
> traders and chart analyzers. It doesn't need to be tested because if
> it comes from our guru, you know it's good just because he said it
> was. He's written countless books and given lectures all over the
> world. Forget the test results, you have our fabulous guru's word
for it.
>
> Yeah, but I would still like to have my quesions answered.
>
> Okay, here's out answer. Since everyone uses indicators differently;
> everyone has different trading skills; everyone trades a different
> market, test results would be meaningless, so we just don't publish
> them. Even if we did, no one would believe how good this is and how
> rich it has made our famous guru. Don't you want to be rich?
>
> Here's my answer.
>
> Show me one system with the ADX, or any other indicator or
combination
> of indicators, that has beaten buy and hold, is consistent year to
> year, beats a random number system and has rational drawdowns. Show
me
> just one. Put a disclaimer on it telling me the blah, blah, blah and
> I'll test it myself. If it does all those things, then I'm going to
> take a serious look at the indicator that did all of that.
>
> I'm going to read all of your guru's books and kiss your guru's
ass.
>
> Then I'll find ways to incorporate this indicator into my style of
> trading, and I'll develop a system that suits me now that you've
shown
> me an indicator, or trading logic, that I can use as the base for my
> own strategy.
>
> Don't take my word for it. Do the tests I've suggested with the ADX
in
> any combination you choose and get back to me with the results.
>
> It's fairly easy to beat buy and hold. It's very difficult to
achieve
> consistency and to beat a random number trading system in a specific
> market.
>
> Super
>
>
>
>
>
> --- In equismetastock@xxxxxxxxxxxxxxx, "Paul Harris" <paul_vicmar@>
> wrote:
> >
> > Have recently been looking at Wilders Directional movement system
and
> > reading about it on the web.
> > What are people´s experience using this sytem? How effective is
it in
> > identifying trends etc...
> >
> > http://www.surefire-trading.com/tsl/tl/tl-71.html - ADX and RSI
> > http://www.renegadetrader.com/ - Choosing stocks
> >
> > Thanxs in advance
> >
> > PAUL
> >
>
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