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I believe mechanical trading does work. The turtles used a mechanical
trend following approach. Bob Buran uses a mechanical approach. Tom
Dorsey uses a mechanical approach using point and figure charts. A
simple system for trading a mechanical system might be to use indicators
to define a trend such as dmi and moving average. If the market is not
in an established trend you don't trade it. Then, during a down trend
trend for argument sake, when the %R rises to a given level, enter on a
stop below one bar back and put your safety stop over the most recent
swing high. Then, trail your stop behind swing highs until stopped out
and add a contract on every further signal. Now this is a relatively
simple system and ought to be a winner.
I have not tested this on software but would like to hear other sytem
ideas from folks.
Paul Cote
John Dundee wrote:
>
> $3000 to 16,500 for a mechanical trading system. "You can fool all of
> the people some of the time and some of the people all of the time".
>
> When doing my serious research into mechanical systems something
> interesting came up. Two commodity hi-net worth trading manager's at a
> large international bank stated to me the best performing system they
> found was to find the one that did the worst and do the opposite. The
> returns were much higher than trading the most expensive neutral net or
> other system top performer's.
>
> Perhaps the best move to make is to buy the cheapest system available on
> the bottom of the performance lists and use it in this fashion.
>
> Good Trading
> JD
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