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Chris,
My experience leads me to believe that complexity in indicators
is not essential, but you do need an edge. Fading the common
Stochastic signal is profitable for me, but only within
the right context.
The foundation of my trading is Fibonacci analysis, but the
simple Fibonacci facilities of popular charting software
are inadequate, advanced Fibonacci is required (for me) to be
profitable. This gives me an edge over other traders.
If you combine a couple if indicators in a simple way, and
use this combination long enough to be able to "read"
the markets reliably, you may not need complexity.
My guess is that most people reach for complexity because something
is lacking in their trading skills, and I suspect that what is
most often lacking is mental preparation, rather than technical
analysis complexity.
My techniques work in all liquid markets, so I would not trade
penny stocks, for example. If your method only works in two
stocks, it is important to find out why. If there is not
a good reason for this, you may have an over-optimized system.
Unless your methodology works in more stocks you should be
suspicious, and trading with a nagging suspicion is not wise....
Best wishes,
-Neal.
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DiNapoli Fibonacci techniques -
http://www.fibtrader.com
At 11:39 AM 7/5/98 -0400, Chris Edwall wrote:
>I, too, am interested in this question. However, I would pose it
>slightly differently:
>
> 1) is there any real evidence that suggests complex systems will
>work better than simple ones?
>
> 2) to what extent is it valid approach to find a market that works
>well with a given system (be it simple or complex) and use it
>successfully on that market, even if that system doesn't do well in
>related markets? In other words, find the market that works on a given
>system rather than the other way around...
>
>The reason for my questions is I am currently testing a rather simple
>system that uses a well-known indicator and some straightforward but
>logical entry and exit rules. I have found by much study that this
>system does not work universally well on many (30 or 40) stocks I have
>tried it with, however, I have found 2 stocks that it works
>exceptionally well with, and I am ready to start trading it. I am well
>aware of the dangers of over-optimization, and that is one reason why I
>have kept the system simple. However, I don't know whether to be
>concerned or not that it works so well with these markets and much less
>so with others. I welcome the comments of others who may have tried
>this approach, either successfully or unsuccessfully.
>
>
>Robert W Cummings wrote:
>
>> Members:
>>
>> I put this partial post from another trading list I'm on. I decide to
>> put
>> this here to see what this list thinks of these remarks. Seems to me
>> that
>> there people out there that somehow believe they can take the gamble
>> out of
>> trading through more sophisticated trading methods. Maybe there are
>> people
>> out there taking our money trading against our indicators we use in
>> TS. Has
>> technical trading already moved to a higher level than TS can offer
>> and
>> when our indicators work and make us money are we really just
>> considered
>> lucky by some and doomed long term.
>>
>> Robert
>>
>> >From another list a partial post;
>>
>> Simple gambler functions like RSI, stochastic (which, incidentally,
>> comes
>> from the Greek "stokhazesthai," meaning "to guess at"), and the like
>> will
>> be
>> difficult to find until we and various users write them. However,
>> there
>> will be no shortage whatsoever of truly valuable functions from many
>> sources
>> .
>>
>> No one makes money over the long term using popular indicators, except
>> by
>> chance. They work in back-testing only with optimization that matches
>> them
>> to what happened in the past. They work in the future only in
>> fantasies.
>> They are great for gambling. They are great for professionals trading
>>
>> against those who use them. They are worthless to anyone trading with
>> them
>> for income.
>>
>> As those who don't already know learn the truth of what I just said
>> through
>> the loss of hard-earned money, they will be ready to advance to
>> professional
>> tools that actually work. When they are, TradeLab and VB will support
>>
>> almost any advanced market analysis tool imaginable.<
>
>
>
>
---
DiNapoli Fibonacci techniques -
http://www.fibtrader.com
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