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CIR wrote:
>
> Let me begin by asking a question? Why do you think that most mechanical trading systems fail? What
> would be a list of reasons that you would suspect causes failure? If there is a problem to be
> solved, an answer should be obtainable wouldn't you think? Have you ever thought that the process of
> finding the answers were all wrong? Thus tainting the entire developmental process?
>
> --
> TC
For the same reason than most discretionary approaches fail - false assumptions about
the markets. After all a mechanical trading system is nothing more than the
formalization of discretionary trading rules.
One of the false assumptions may in fact be that it is possible to extract abnormal
profits from the markets for an indefinite period of time if one only knew the magic
formula. It's such a seductive prospect that most people will believe in this
possibility regardless of any evidence to the contrary. That's why the markets exist
inspite of 95% of traders losing money.
If we assume that magic answers do exist to market profitability then I believe the
reason that most approaches fail is because they apply a static model to markets
which are dynamic and ever changing. An enduring method must have the capability to
evolve and grow with the markets.
--
,-._|\ Richard
/ Oz \
\_,--.x/
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