|
PureBytes Links
Trading Reference Links
|
In a message dated 7/23/99 7:17:44 AM Pacific Daylight Time,
robert.cummings@xxxxxxxxxxxxxxxx writes:
> I did say I
> thought a trading system would work if you had both of these that being
> lots of time and risk reward. Day trading doesn't have much of either and
> neither does any relatively short time trading system which is the nature
> of most systems on this list.
I agree that it is more difficult to write and trade a good short term
trading system, but the reason many try is to reduce risk they cannot afford
to take. If your SP stop is at the lowest low of the last 10 bars on a 1
minute chart you might be risking 3 points. That same stop (lowest(L,10)) on
a daily is probably 30 points or more (oops! not anymore after this drop) and
on a weekly it could be 150 points + away. Many popular longer term trend
models have huge dollar and percentage drawdowns. Some of the biggest and the
best of those traders have been knocked out of the game by those drawdowns.
Another reason traders go short term is reinforcement. I for one need to
"hear the cash register ring" as often as possible. I admit it's a flaw. I
wish I could trade the monthlies, but I don't have the patience.
>The point is if you go to the trouble to back
> test it then altered it in real trading why even bother back testing.
Back testing can be a good tool for method and discretionary traders too. You
can test which ideas work best, then incorporate those into a method. I was
not in the bonds yesterday, but there were non-confirmations of the rally
from weekly down to 3 minute charts. Stops based on short term intraday data
(system or otherwise) may have risked less than if they were based on daily
or longer term data. How it will turn out I do not know, but for me I'd
rather be out of long side of bonds here rather than be adding to my losses
with a lot of "wide open spaces" below my stop. In general, I'd rather lose
$200 three times, than $1000 once. I'm not saying it is the right way to
trade, but it's right for me.
Bill Wynne
SmartTrades.com
|