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No truer words were spoken. This is exactly why a system trader must be
completely comfortable with a system before trading. The only way I know how
to do this is to get all the numbers and historical data before trading. I
believe all to often traders don't do this and that is why they bail at the
wrong time.
Regards,
Michael
-----Original Message-----
From: Neal Hughes [mailto:tradero@xxxxxxxxxxxxx]
Sent: Thursday, December 12, 2002 5:25 PM
To: omega-list@xxxxxxxxxx
Subject: Re: Limited life span of mechanical systems?
Hi Traders,
It is normal for any mechanical system to "stop working" at times.
Actually it has not stopped working. It is working as designed.
A mechanical system may experience flat, losing, or winning streaks at
any time, if it was designed that way.
If the system is back-tested on market data which is similar to our recent
history, it would most likely provide flat results. The
system needs different market conditions to perform better.
The challenge with any system is to stick with it. Even during periods
of draw-down, if the system works you must stick with it. This is a
common problem with traders. It's not so much the system that stops
working, it's the trader that stops working with the system. Too often,
traders quit using a system at exactly the worst time. Similar
to gaming in Las Vegas, quit when you are winning, rather than losing..
But this is counter to human nature. Trading is counter to human nature
in so many ways.
System trading can be very emotional, just ask all those traders who
have abandoned systems, or skipped some of the signals during
losing streaks. Or those who decided they need to modify/re-assess a
system which seemed perfectly good before.
Best wishes,
-Neal.
At 12:05 PM 12/12/2002 -0800, carrslem wrote:
> > Bob Fulks wrote:
> >
> > What would be the mechanics that would cause a system like OB to stop
> > working ?
>
>If you discover the answer to this, please let us all know!
>
>Regards,
>Carroll Slemaker
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