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At 07:07 AM 2/3/98 -0500, you wrote:
>To those with interest:
>
>Many of you know my interest in Mechanical Trading.I also wanted to share
something else with you.
>
>Most mechanical systems utilize technical analysis tools.In an effort to
improve performance I have seen some possible viable results on an
experimental basis by using seasonal trends to verify the technical move.In
other words take the trade if there is an 80% chance that the seasonal trend
is up or down in that particular market.
>
>Your comments and observations are welcome.
>
>Mechanically yours,
>John
>
Hi John, Rtrs,
Seasonal trends with 80% chance are fine, but the size of the average move
is important. Only the major seasonal trends ocurring not more than few
times a year could be used. That brings us to the other premise that when
market moves strongly against a major seasonal trend, the moves tend to be
big and very profitable because there are strong fundamental reasons for it.
For example, Heating Oil instead of moving up, moved down because of the
glut in oil supply in January. etc. so if you got a signal to go short, do
you take it or not? At present I am getting buy signals in crude oil,
heating oil, gasoline. I am going to take the buy on gasoline along with
others if my entry criteria is met even though this is not the driving
season.
Seasonal trends are one way of incorporating fundamentals with the technical
, but having a good idea of the fundamental behind the trend help for the
contra-seasonal move. This would lead to an information overload which most
of us can't handle. Is there any other way to incorporate fundamental into
technical trading, perhaps the addition of COT index to seasonal trends
would help. There is a book by Philip Gotthielf on techno-fundamental
trading. I am not sure if I spelled the name correctly.
The best trades are one in which the technicals and fundamentals come
together. Opinions on combining seasonal, fundamental with technicals are
most welcome. Sorry for the long post.
Happy Trading,
Ashif
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