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At 11:12 AM 3/22/98 -0500, Bob Fulks wrote:
>At 8:58 AM -0500 3/22/98, A.J. Carisse wrote:
>
>>So what's really the point here - I'm not really sure - I guess for the
>>most part I'll leave that up to others who may wish to elaborate. However,
>>a couple of points are worth mentioning here. Is the person who trades
>>intuitively a better trader than one who trades systematically? This may
>>differ, but results are what counts here. Is the former more of a "real"
>>trader? This would be nonsense. Is one approach better than the other? I
>>guess this depends to a large degree on the individual - although I would
>>tend to agree with Peter and say that, theoretically speaking, the
>>systematic approach would be more sound, whatever works best for you is
>>the right way to go. Of course, finding this is a never ending task.
>
>
>I often use an analogy to describe this.
>
>You can build a computer program to fly an airliner, the autopilot. It does
>a pretty good job and is programmed to handle most, but not all, of the
>situations it will encounter. Hopefully, when it encounters something it
>has not been programmed to handle, it sounds a warning.
>
>Now you can use it several ways:
>
> > You can turn it on and walk back to the passenger cabin and let it
> fly the plane. Normally, you would only do this when the weather
> is clear and you are in the middle of "normal situations".
>
> > You can put it on autopilot and read a book. Flying a plane for
> hours on end can get pretty boring. The alarm will alert you if
> something strange happens and you can deal with it with your
> judgement (which may or may not be up to the challenge). As time
> goes by, the programs get better and better and can handle more
> and more of the unusual cases, requiring judgement less and less
> often.
>
> > You can turn it off and fly the plane yourself. Most pilots love
> to fly so they do, so even if the autopilot could do it perfectly
> well. In fact, most autopilots can fly the plane much better
> than the average pilot can in "normal situations".
>
>The problem with most programmed trading systems designed by individuals is
>that they are programmed to handle only a small number of cases, "normal
>situations", requiring you to break in and use your judgement frequently
>when the market stops being "normal". The good ones have more and more
>complex code to handle more and more of the special cases.
>
>Bob Fulks
>
>
>
Bob
Great analogy! I suggest you get an update from a pilot who has
flown an Airbus. I have heard that the Airbus eliminated many
of the overrides a pilot can do with other autopilot systems.
I would underscore your point about the system needing
improvement. I don't care for expensive "black box" systems
that cannot be improved by the user. The advantage of an
open system that gradually is improved to a point where 6 or
more of 10 trades are profitable is that can get its performance
improved to the point where you can trust its consistency. It
can be very tireing if your usual approach is to jump in those
4 out of 10 trades that go south to minimize a loss. You should
be able to let them go. Of course it's up to you to override
those or not (and to prevent early exit when you believe the
full profit is not yet there). But then acknowledge that the
result is then due to a reliable and repeatable system.
This consistency is not obtainable with an intuitive approach
and with a lot of systems where you must intervene. This
intervention is not going to be consistent and may play such
a major role in one's trading that having a system doesn't mean
much (it does not differ from a totally intuitive approach).
I am a complex machine and react to my environment faster than
I can keep track of and with many different motivations at
different times that I am not conscious of. To make a profit
at trading requires a simpler machine where what you had for
lunch or the thirst for revenge or greed or how things are going
in your relationship with your lover play no role in the decisions
made. Sounds like a pipe-dream! Well I am not finished, and it
could take many months to get there. We might hope that the
system that fills this need gets built sooner even if it is done
by someone else.
petena9090@xxxxxxxxxxxxxx
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