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Just a few comments on the submission below:
1. When someone suggests "switch time frames for better
exits," rather than merely explain how to do it, why not
take a few minutes and use one of the platforms available,
and show how the profit/loss, drawdown, etc., would differ?
I have found that once you have a profitable system, any
minor changes to one of the strategic parts rarely does
anything more than switch profitable periods & drawdowns,
but does not improve overall results. Rather than tweaking
a system, time is better spent on new systems that capture
different concepts.
On this same theme, I have found that many plausible
trading concepts, just do not pan out when testing.
Reasoned explanations are useful, but it may take rigorous
systematic testing to flush out the fallacies in the
"plausible" concepts.
2. I don't know what Dr. Elder does now, nor if he has ever
made a living trading, rather than offering courses on such.
Years ago I took a 1-day (possibly 2-day) course Elder gave,
during the week so we could watch him use his systems to
trade. (At the time I had started trading my own systems in
futures & was eager to learn more.)
After spending hours explaining his systems, and the
importance of sticking to your system, we were ready to
watch him in action. His very first trade in the S&P turned
out profitable. HOWEVER, it was exactly opposite his
system. And he admitted, somewhat proudly, that he thought
this time it was not appropriate to follow his system. His
background, as I recall, is in psychology, and may assist
him as a discretionary trader. (One of the best floor
traders I ever knew had taught abnormal psychology at the
college level.) But Elder's methodological hypocrisy
convinced me he had little to proffer regarding system
development. Again, he may have changed after a number of
years.
3. Price objectives.
I have been trading futures for 30 years, although the first
10 were not profitable, including time as a member of one of
the commodity exchanges. The next 15 years I made money as
a full-time discretionary futures' trader, trading only my
account. After translating some of my methods to systems,
the next several years I managed money in futures, also
quite profitably.
Not once in 20 + profitable years of trading have I
used a profit objective. Nor have I ever met, or heard of a
successful trader who has. On the other hand I have know
many traders
who never made much money because their profit objective was
reached, and they missed the big move. And these same
traders are often the type constantly picking a top or
bottom. The only bottom this seems to pick is the equity in
their account.
The market cares little about your position, where you
established it, what you think is an appropriate profit, or
loss. There are countless strategies one could employ as to
how to determine which way the market wants to move.
Setting a profit objective has never been one of them.
As a footnote, I see at the bottom of this posting
is a system for sale that "contains sound logic that should
work very well for picking bottoms in stocks." SHOULD
work? Picking bottoms? I think I've said enough on this
topic.
Regards,
----- Original Message -----
From: "Ed Kiers" <rokinseq@xxxxxxxxxx>
To: "Jimmy Snowden" <jhsnowden@xxxxxxxxxxxxx>;
<redeemed10@xxxxxxxxx>; "Omega" <omega-list@xxxxxxxxxx>
Sent: Sunday, April 08, 2001 4:36 AM
Subject: Fw: Bulletin 44 Switch Time Frames For Better Exits
> As a contribution to the "different timeframes" posts.
This is from Chuck Le
> Beau's website.
>
> Ed Kiers
>
>
> ----- Original Message -----
> From: "The System Traders Club "
<traderclub@xxxxxxxxxxxxxx>
> To: <traderclub@xxxxxxxxxxxxxx>
> Sent: Friday, April 06, 2001 7:35 AM
> Subject: Bulletin 44 Switch Time Frames For Better Exits
>
>
> ----------------------------------------------------------
--
> The Traderclub Forum: Traders Club Bulletins: Bulletin 44
> Switch Time Frames For Better Exits
> ----------------------------------------------------------
--
>
> By webmaster (Admin) on Thursday, April 5, 2001 - 10:35
pm:
>
> Bulletin #44
>
> Switch Time Frames For Better Exits
> By Chuck LeBeau
>
> I just returned from a weeklong Trader's Camp hosted by
Dr.
> Alexander Elder in a beautiful island nation in the South
> Pacific called Vanuatu. When I studied geography in school
> many years ago, Vanuatu was known as the New Hebrides
> islands. Vanuatu is located about 1,000 miles west of
Fiji.
>
> If you have read Elder's excellent book, Trading For A
> Living, you will recall that Dr. Elder is an advocate of
> using multiple time frames for trading both stocks and
> futures. For example, he suggests looking at the weekly
> chart to make sure that the weekly trend is firmly up
before
> trading the long side of a market based on the daily chart
> patterns. This approach makes good sense and I highly
> recommend his book and his strategy.
>
> While listening to Dr. Elder explain his multiple time
frame
> strategy for entries, my thoughts wandered to the
> application of his ideas to my favorite subject - exits.
> One of my goals in trading is to find exit strategies that
> do a good job of protecting open profits. One method of
> accomplishing this goal is to simply move the daily stops
> closer once a specific profit objective has been reached.
> However, it might also make sense to simply switch to a
> chart with a shorter time frame once we have reached a
> reasonable profit objective.
>
> Here is an example of how such a strategy might work.
Let's
> say that we have been trading XYZ stock on an intermediate
> term basis using daily charts. The trade is working out
> very well and we now have six ATRs of open profit. (See
> previous Bulletins for an explanation of how to use
Average
> True Range to set profit targets). Up to this point we
have
> been using our well-known Chandelier trailing stop placed
at
> 3 ATRs below the high point of the trade.
>
> However, now that we have reached our primary profit
> objective we want to tighten up our stop to protect more
of
> our profits. We could reduce our Chandelier stop from 3
ATRs
> to 2 ATRs and continue using the daily bars or we could
> switch our chart to one hour bars and continue to trail
the
> Chandelier exit at 3 ATRs based on the intraday one-hour
> bars. The basic idea is to switch to a chart with a
shorter
> time frame once we have reached our profit objective.
This
> procedure should allow us to let our profits continue to
run
> but we would be protecting our open profits with much
closer
> stops by using the chart with a much shorter time frame.
>
> Combining our exit strategy with Dr. Elder's entry
strategy
> would provide the following sequence: for entries we first
> examine the weekly chart and then use the daily chart to
> trigger the trade. Once we are ready to exit our trade we
> examine the daily chart and then trigger our exit using
the
> hourly chart.
>
> Of course this strategy would require some extra work as
> well as the use of intraday data. The alternative would
be
> to simply reduce the number of ATRs used to hang the
> Chandelier exit on the daily chart. Either way we do it,
> the logic is to move our stops closer once we have
achieved
> a worthwhile trading profit.
>
> * * * * * * *
> Notes On Bear Markets
>
> One of the best ways to gauge a bear market is to observe
> the reaction to good and bad news. In a bear market the
> averages go down even when the news is good. (For
example,
> look what happened the last time the Fed cut interest
> rates.) We will know that the bear market is finally over
> when we observe the market reacting favorably to good
news.
> In the meantime, we can take some consolation in the fact
> that at the present rate of decline we will soon be at
zero.
> At least at that level we should be able to safely resume
> trading stocks from the long side.
>
> * * * * * * *
> April Systems Sale - Any Six Trading Systems for $1,000
> (Save $500)
>
> Order your systems before April 15th to take advantage of
> this special offer. The usual price of our trading
systems
> is $250 each so now is the time to save money if you were
> planning on buying systems from us. All systems operate
> using end of day data and all rules and code are fully
> disclosed. Many members have purchased systems just to see
> the logic and to get ideas they might use in developing
> their own systems. For example, the Phoenix Bond system
> contains sound logic that should work very well for
picking
> bottoms in stocks. Now there is an idea whose time has
> come!
>
> * * * * * * *
> Last Reminder - April Workshop in Los Angeles on April
14th
> and 15th Go to the Home page of our web site at
> www.traderclub.com or phone Chuck LeBeau at (310) 265-9776
> for more information or reservations. (I lost some of my
> e-mail messages while traveling so please phone me to
> confirm your attendance if you plan on attending.)
>
> We will also be doing a Workshop with Dr. Elder in New
York
> in May. You can get more information on his web site at
> http://www.elder.com
>
> * * * * * * *
> Good luck and good trading. Lets hope this dreary bear
> market ends soon.
>
> Don't forget to check the interesting discussions on our
> Forum at http://www.traderclub.com/discus/board.html
>
> Our Forum pages on the web site contain very active and
> interesting discussions about trading. New messages are
> posted every day. Our Forum is rapidly becoming one of
the
> most active trading discussions on the web. You are
invited
> to participate.
>
> If you need more information send email to:
>
> chuck@xxxxxxxxxxxxxx
>
> Chuck Le Beau's System Traders Club
> http://www.traderclub.com
> ph 310-265-9776
> fax 310-265-9556
>
> ----------------------------------------------------------
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