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Ah, if Vivaldi were a scientist, he would have written "The
Difference Between Science and Astrology" perhaps.
Folks, it is situations just like this that LED to the scientific
method, such as it is, and the use of statistics therein.
>
> Michael Crain <MichaelC@xxxxxxxxxxxxx> wrote:
> > I have to agree with Robyn "a relatively small percentage of the
> > trades accounted for a relatively large percentage of the
> > gains....... I think it's prudent to throw out a handful of best
> > and worst trades to eliminate the possibility that the system
> > results aren't simply the result of luck (good luck or bad luck).".
>
And it was "a relatively small percentage of eclipses that led
to droughts, floods, and frogs ..."
Throw out whatever displeases you, but until you look at the
distribution functions of what concerns you, you won't have a clue
as to what you are analyzing.
> Ordinarily I'd agree with you. Many systems will pop out the
> occasional wildly successful trade, but you can't rely on those freak
> trades in future trading. It's a good idea to toss out those
> "outlier" trades so they don't skew your results.
>
If someone walking in the door said they had a "perfect" system, having
done 100's of trades with a profitable bottom line, would you believe them?
What criteria would you use to judge the system? Would you adopt
the system if you knew others were using it? What percentage of
winning trades would you require? Would you allow excuses for bad
trades? For good ones?
> However, that defeats the entire purpose of a trendfollowing system
> like Aberration. By design, it catches unusual (aberrant) moves in
> the market, and rides those moves. Many apparent breakouts will
> really be fakeouts, so you take lots of smallish losses. But the
> genuine aberrations, where the market breaks out and keeps going, is
> where a breakout system earns its keep. Those large breakout trades
> tend to be in the minority, and they tend to be much larger than the
> average. But they are *exactly* what the system is designed to
> catch. They're not freak occurrences that should be discarded;
> they're a consistent feature (of SOME markets) that the system was
> built to catch.
>
Back to my Astrology Handbook, eh? It says:
"Real astrology does not predict events. If you meet an astrologer that says they can do this, run the other way! Astrology can help you find and exploit cyclic patterns in your life so you can predict your own future.."
> You have to be disciplined to trade a system like this. You never
> know which trade is going to be the Big Winner that makes up for your
> string of losses. Assuming the market doesn't drastically change
> character, and continues to break out as it has in the past, then if
> you faithfully take each and every trade, you should be able to rely
> on catching those big trades in the future.
>
> (On the other hand, if you have luck like mine, those big breakouts
> will always happen when you're out of the country or otherwise unable
> to trade it... :-)
>
> Gary
>
Let's throw some science at the problem, before you adjust your travel
plans, Gary.
Cheers,
Rob Lake
rbl@xxxxxxxxxxx
>
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