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Re: Bear Trap



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I agree with much of what has been said on all sides of this discussion, but 
some key ideas are missing. Although short term trading can be more difficult 
due to transaction costs, I also believe there can be advantages both in 
testing and trading short time frames since they provide greater detail of 
price patterns. The key for me is to have a short term system that does not 
over trade. I also agree that the best systems are price based (and simple), 
but....

1) You can write a filter based on volatility, trendiness, lets call it 
"trend power" that will keep you out of choppy markets and some false 
breakouts. I have done this and have happily used it to trade very little 
(i.e. reduced the # of trades) in the S&P even on a one minute basis. Indeed, 
this could be a systematized way to avoid the "Greenspan effect" as the 
markets tend to dry up before reports. BTW my filters were SCREAMING false 
breakout from 3 to 15 minute time frames on and before the upside breakout in 
the bonds. Such filters may have you flat, and missing some moves, but they 
will help reduce the odds of getting long on situations like yesterday in the 
bonds.

Remember "Cool Hand Luke?" He said in the movie of the same name: "Sometimes 
nothing is a real cool hand to have."

Then again the warden had a famous line too, and perhaps it applies to "the 
lists" relationship with Omega, use a slow Louisiana or North East Texas 
accent when you say: "What we have here is a failure to communicate."

Bill Wynne
SmartTrades.com