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At 9:17 AM -0500 7/23/99, Robert W Cummings wrote:
>If your constantly having to decide when to trade then you can't
>have a true system. Your plane example gives a good illustration of
>long term trading. Now imagine the plane you used as an example is
>flying in a tight channel say with very small margin for up or down
>movement. Say your flying through a railroad channel bored through a
>mountain. The same could be said with time and risk rewards and not
>having much of either.
I am pretty sure one could design an autopilot that would fly through
a tunnel a lot better than most pilots could. I personally would
prefer to avoid flying through tunnels but I get your point.
>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 don't believe you will see any good trading system posted on public lists.
>The point is if you go to the trouble to back test it then altered
>it in real trading why even bother back testing. I could agree with
>what your saying IF you have long term trading and good risk reward
>like the airplane in wide open spaces. But if you had in trading why
>ever take it off auto pilot.
If most of the profits from backtesting were made while "flying in
open spaces", as they should be, then that is the place to use them.
If the backtesting profits are all made during Greenspan moments and
other such shocks, I would have little confidence that they would be
repeatable.
Most traders I know have ways of telling when the market is in the
"open spaces" mode and when it is not, and they stay out when the
market is not "normal" as defined for their system/method.
Opportunities to make money occur every day but capital is precious.
Why take the chance that your autopilot will work in every situation?
Better to fly around the thunderstorm than to hope that the autopilot
can make it through.
But I once knew a money manager who loved crisis shocks when the
market suddenly tanked. He waited until the bottom and then jumped in
long to ride up the correction for what was usually an over-reaction.
Bob Fulks
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