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Dear Jimmy,
I do not build systems, but probably have one, as that man who spoke the
prose all his life and did not know it.
As much as I understood your strategy you are:
1. Build a trading system that is profitable to trade.
2. The system is working on stocks that are follow the certain pattern.
3. You have means to select stocks that suitable to trade with your system.
4. If you are wrong (that means that stock selected for trading stops
behave as required by the pattern) then the system will exit the trade with
nominal loss.
I see nothing wrong with that providing you took into account the extreme
(catastrophic) market moves (opening gaps, hold in trading, bankruptcies,
take overs, etc. Because if you are not you will be like "covered call
writer". The gains of many years are wiped out by one loss). As long as
market would supply the stocks your system require you should make money.
(As a tiny suggestion try not to stretch the "dollar" to the extreme, just
a little patience. If the system is working you will have soon enough
dollars to trade your size).
Nonsystematic Alex.
At 04:22 PM 11/20/99 -0600, Jimmy Snowden wrote:
>It has been my belief that a system should work from one stock to another
>without changing the inputs. I would like to know if this is a rule that
>might be incorrect sometimes. Does anyone use a system that they optimize
>for each stock or other symbol and find it acceptable to trade over time.
>
>My thinking is that if a system is optimized for a single stock and works
>well as new data comes in RT then eventually when the stock's trading
>pattern changes just optimized again on more current data. If this is so
>and the system works for several months with no changes is it viable or am I
>kidding myself on this. Yes the system works on a broad range of inputs but
>there is significant difference from one stock to another in the best range
>of inputs.
>
>Here is where I am and my logic. I built a system based on Up trend is true
>if retracements are less than up legs. If so and the stock reverses to the
>upside it goes long. If the stock makes a peak it exits. Yes you miss up
>moves if the stock doesn't have a retracement. I watch lots of stocks to
>make up for this.
>
>The short sell system is the same thing turned around.
>
>I have optimized the system for each stock and for each time frame I chart
>the stock on. My thinking is each stock has different cycles and I want the
>most profit from each swing. The system is a screen for strong stocks and
>stocks that lend themselves to the system. What I am after is to only
>trade the stocks that optimize out with the following criteria.
>
>1. Either high percentage of successful trades or high win loss ratio
>2. Losses on bad entries are small and less than the average winning trade
>3. The largest win is not nearly all of the net profit
>
>I am using 60 minute charts to trade and I watch daily and 10 minute charts
>to calm myself on the daily and get my blood pressure up on the 10 minute
>charts. I want the biggest bang for my extremely margined buck. I buy only
>one or two stocks at a time. If I am stopped out I will buy as much as my
>account will allow on the next buy signal. Stops kick in so fast that
>losses are still kept small on the larger position.
>
>I optimized all stocks about a month ago and signals are still right on.
>Yes I know the market has been up for a month but the short side is working
>also. The system is really two separate systems one for long and another
>for short.
>
>I am attaching two system reports on the last two stocks I traded. If they
>don't optimize at least this well I don't trade them.
>
>I am very interested in any input before I either get rich or go broke.
>
>
>Thanks,
>
>Jimmy
>
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