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In a message dated 7/25/99 2:05:56 PM Pacific Daylight Time,
editorial@xxxxxxxxxxxxx writes:
> The problem with allowing selective decision making when implementing a
> "system", the problem with turning the controls back to the "pilot" when
> flying through the tornado, is that it eliminates the three major benefits
> of automation:
>
> (1) Elimination of the effects of emotion
> (2) Consistency of application
> (3) Mechanical risk control
>
The idea that you could totally eliminate "the effects of emotion" just by
using a system does not ring true over here. Whether you are a system trader,
or flying by the seat of your pants, emotion comes into play. I agree systems
can help you be more consistent, but emotion has got to be controlled just
like risk. I watched a guy trade a system perfectly and go up 400%. Then he
pushed up his position size 500% overnight and the inevitable drawdown took
it all away in a few weeks. He followed the rules just fine. He just got too
happy and what should have been a 20% drawdown took him out of the game for
years.
Bill Wynne
SmartTrades.com
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