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Re: Bear Trap



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Here is the reason or thinking about trading in my opinion. In a short time
frame you have a better chance to be right as time is add the uncertainty
increases of being right. Then here's the kicker you had a whole lot of
time your chances to be right are greatly increase from any shorter term.
Example would be a high risk mutual fund when long term time is added its
the most profitable.

Robert



At 06:55 AM 7/23/1999 -0500, Robert W Cummings wrote:
>I had to change a spell checker error and to repeat what Chuck Le beau said
>once about a system. He said a pure system is not made from an indicator
>another thing I believe most semi system traders use. My purpose here is to
>attack systems very few people use them and very few people know what they
>are. Unless you have a real understand about how markets trade and then
>have the program skills to write a system not solely based on a indicators
>you should abandon system trading development. Its my experience systems do
>not make money.
>
>Robert
>
>
>
>
>
>At 06:30 AM 7/23/1999 -0500, Robert W Cummings wrote:
>>
>>I didn't mean to infer position traders wouldn't be effected by price
>>shocks. Only that because of a longer view which could mean having bigger
>>larger risk and larger rewards might be able to weather a price shock
>>better. We agree on one point there are very few pure system traders on
>>this list even from traders who believe they are in that category.
>>
>>Robert
>>
>>
>>
>>
>>
>>>The problem that Robert raises (the problem of price shocks) is a very real
>>>one for the system trader.  What surprises me is that he says that this
>>>problem affects only day traders.  I do not understand why he says this.  I
>>>can think of all sorts of recent price shocks which affected position
>>>traders.  Both the position trading system and the day trading system must
>>>deal with price shocks (or use them...).
>>>
>>>So a question is:  How should we deal with (or use) price shocks in our
>>>systems?  TJ recently suggested (on this list) an approach which involves
>>>using "filtered" price data as feedback (or input) to the system algorithm.
>>>His idea, if I may paraphrase, was that price shocks are abberations which
>>>the system needs to notice but not overreact to.  So he "tones down" or
>>>mutes the system reaction when a shock occurs.  I find his idea interesting
>>>but not practical (for money-management reasons).
>>>
>>>
>>>The point here is that we have 2 choices, and that these two choices apply
>>>to both position and day traders:
>>>
>>>(1)  Deal with price shocks in our systems or
>>>(2)  Adopt method or discretionary trading
>>>
>>>
>>>The Omega Man
>>>
>>>
>>>
>>>----- Original Message -----
>>>From: Jim Murphy <jmurphy1@xxxxxxxxxxxxx>
>>>To: <Omega-list@xxxxxxxxxx>; Robert W Cummings
>>><robert.cummings@xxxxxxxxxxxxxxxx>
>>>Sent: Friday, July 23, 1999 12:41 AM
>>>Subject: Re: Bear Trap
>>>
>>>
>>>> >One of the reasons I don't like systems was the trade today in the
bonds.
>>>> >Had a channel going then broke out to the upside that would trigger most
>>>> >systems to buy. Followed a horrific  break that lasted 12 minutes for
>>>over
>>>> >a point and a half before a small bounce up. I guess the people who use
>>>> >systems would say the trick would be to reverse but today was an
>>>exception.
>>>> >Most times if you try and reverse this market you can get hit both ways.
>>>> >Sorry if anybody got hurt today in the bonds but reaffirms to me systems
>>>> >don't work for daytrading.
>>>>
>>>> Seems  like a no-brainer to me to NOT take signals from a system when
>>>> Greenspan is in the news.
>>>>
>>>
>>>
>>
>>
>