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No, the system is a reversal system, always in the market, both long and
short. So, half the trades were long, and half were short. Well not quite.
14 out of 20 short trades were profitable. The reason there weren't exactly
half short trades is that on 2 or 3 of the
stocks I don't go short. Backtesting indicated it better to just go long on
those.
Which makes yours a fair point. However, I'm thinking that my time frame is
short enough (a few days typical, a few weeks max) that the "booming bull
market" is not a key factor. And, if I am underperforming in a bull market,
I think it should balance out when the market falters.
Since you made me look up my short trades, I guess I'll bare my soul and
tell the list a horror story. One of the above-mentioned short trades was
to short EGRP (end of March time frame) at $58. Now, I've already mentioned
that sometimes I have a hard time following the system. Well, I watched
EGRP rocket up 3 or 4 days in a row successively by 20-25% at a crack.
Anyone remember that? Well, it got to the point where emotionally I
couldn't take another day of a 25% gain. I think it was up around $125 at
this time or so. So I placed a stop order around $140 to cover half my
short and bought a call option to cover the other half. Well needless to
say, the market hit my stop and I covered at exactly the high of the market
and took a huge (for me) loss. Then I watched as EGRP dropped back down to
$73 or so. I was just sick that I didn't stick it out and follow my system
through the drawdown (although the backtest never had a drawdown that big).
Anyway, I panic'ed and it cost me. I should have followed the system
without the emotion. Lesson learned. Maybe.
Trading is tough. I hope I'm not the only one struggling with things like
this while everyone else is getting rich on internet stocks.
> Do you only trade long? If so - 66% profitable in a booming bull market
ought
> to give one pause. What will happen when the booming bull market ends?
Robyn
>
> Chris Edwall wrote:
>
> > I trade 15 stocks with a mechanical system of my own devising. I try
like
> > hell to follow it with no second guessing (and am successful most of the
> > time). Since the first of the year I have made 49 closed trades, of
which
> > 33 were profitable, or 66%. I believe I can continue to do at least
that
> > well.
>
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