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look at tech analysis of equity curves. I would suggest that every
undiversified trading system has patterns akin to a market. They go thruough
phases just like mkts. A sys might have a 3rd wave type phase with minimal
corrections for a while, then it gets whacked and you think it is broken,
but really it is just going through a natural w4 correction. Managing all of
this systematically is challenging though.
Chris
----- Original Message -----
From: "Charles Johnson" <cmjohnsonxx@xxxxxxxxx>
To: "Mark Brown" <markbrown@xxxxxxxxxxxxx>; "Omega List"
<omega-list@xxxxxxxxxx>
Sent: Thursday, February 27, 2003 8:55 AM
Subject: The Due Effect
> Mark Brown writes:
>
> i think to be successful with any system you have to have a confidence
> level with it. know what it does, so that you can begin to suspect
> when it will make a killing and when it may get whacked. it's call the
> due effect (trade mark ;) it's what i have lived by. i did not invent
> the due effect i was taught it by someone, and it can be quantified. i
> think systems are like employees, you have to understand what they do
> well and what they don't and then take it at that. you will never get
> a perfect employee but that doesn't mean that they can't get the job
> done.
>
> ----------------
>
> Mark, can you go into this more? Sounds like you are talking about
> overlaying onto mechanical systems a discretionary trade/do not trade
> decision.
>
> When you say "it can be quantified," do you mean it can be systematized --
> i.e., you take a system and you add more rules to it?
>
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