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RealTraders:
A few days ago, a long time trader friend of mine who is an RT member called
me and said, "Eddie, we need to find out what trading methods really work
for RealTraders members. Even though RT has some degree of noise, the
membership is still a significant cut above the typical Internet discussion
group. One way we can learn from each other about what really works is to do
a survey."
I've known John for several years. He is an honest, hardworking trader who
does some nice work on intraday. I told him to send me the survey and--after
a incorporating a few of my suggestions, I agreed to post it.
I even created a special address for responses: It is survey@xxxxxxxxxxxxxxx
Anyway, here's the survey. Please read it and fill it out and send it in
before next Monday.
Eddie Kwong
THE SURVEY by John Brown
I think RT'rs in recent threads have beautifully framed an issue here which
has raised an intriguing possibility as a springboard for a proposal I am
now
going to make to everyone participating in this discussion group. It occurs
to me that as subscribers to RT, we have an opportunity to conduct some
potentially useful trading research. Since we have a statiscally significant
number of subscribers, (approaching 1000 members!) perhaps we could come to
some more objective conclusions about whether the "abundance of technical
indicators" approach to trading, or more significantly, any particular
approach
to trading is the best way to go.
Ever since I have been on the net, the past 2 years, and observing
multitudinous
posts from traders flooding the internet with various theories, opinions,
testimonials, doubts, etc, concerning what works and what doesn't work, and
what is "correct" or "incorrect"--- I have always had this nagging suspicion
that most of the views were not really based on conclusive evidence, or any
substantial experience. (Note, I am not in any way focusing on the recent
"debate" or any specific individuals-- rather I am speaking in general about
what I see as a pervasive net phenomenon. The "Debate" I merely see as a
catalyst for my proposal, giving me the idea for a solution, for something
more meaningful.)
I suspect many other readers of RT have had similar feelings. Yet there
appears
to be no end to expressions of true belief, or strong doubt, or cynicism,
or stinging attacks, or endless debates based on opinions and emotions.
Now I am not suggesting that we can turn the tide and put an end to all the
hot air proliferating the internet! But I am shooting high. (After all,
wouldn't
most agree that the quality of contributers to RT is certainly of a higher
standard than less dignified trading discussion groups around the net?)
At least we might for a brief time make a minuscule effort to do something
unique: come up with something at least a little bit more objective and
substantial, defining a little bit better than less concerned, less
informed,
net surfers. That is, we can come pool our experience to provide a somewhat
objective framework for a better idea of what is actually working in real
world trading.
Here is what I propose, and here is what I personally propose to contribute
if
the group goes along with the idea. (The success of the venture depends on
widespread participation of everyone on the list: just a minute of your time
and choosing a category and clicking the send button on your browser.) (If
everyone bombs out, or no interest or whatever, or if for some reason I end
up getting flamed to smithereens, I'm not going to force it--all our loss,
but no hard feelings.)
1.I propose a research project to evaluate what approach to trading traders
are using, in terms of what is profitable and what is not. I propose we all
keep an open mind and paricipate in a survey which will attempt to quantify
the variables in a manner which defines categories of trading approaches,
and
whether the implementation of the various approaches is producing a minimum
of profitability.
2.I also propose to contribute the time and effort to coordinate and
tabulate and
report the results back to the group. Hopefully this can be accomplished in
a
manner which requires almost no effort by group members, other than clicking
reply on the browser and sending in a category number and possibly minor
additional info. The design will be such that no ebarrassment can possibly
come to any individual. No disclosure of any weaknesses, nor inflation of
reputation, since all input will be guaranteed the utmost in
confidentiality,
with even the tabulator (myself) knowing almost nothing of any significant
detail
about the respondents anyway. (Only a category designation and whether above
or below a general threshold level of profit.) Even this insignificant
information
I am publicly declaring to keep absolutely private and undisclosed to anyone
for any reason. Only the nameless final numbers of categories and
profitability
of trading approaches will be tabulated and presented.
Finally, everyone should feel completely free to participate. Also the value
of this research depends entirely on the participation and honesty of all
participants. Remember, we all know the commonly documented facts show that
90-95% of all traders are losing money, or close to it anyway. No one should
feel shy about a confidential anonymous reply to a survey when we already
fully
expect only about 5-10% of respondents would be expected to be profitable.
And even fewer respondents should be found to exceed our 12 PLUS
requirement.
So please do participate, since we will all gain from our collective
experience.
SURVEY PROCEDURE
Following is a summary of the survey procedure. Following this summary,
there
will be an elaboration to hopefully clarify details, so it should be easy to
determine what your trading approach category is, and if you exceed the
survey profit threshold. Then again at the end the suvey submission
instructions
will be repeated. Remember the criteria are cut and dry, based on following
definitions.
SURVEY RESPONSES GO TO FOLLOWING ADDRESS:
survey@xxxxxxxxxxxxxxx
ONLY ONE REPLY PERPERSON.
IN BODY OF EMAIL REPLY DESIGNATE CATEGORY 1,2,3,4 OR 5 AS BEST DESCRIBING
YOUR
APPROACH TO TRADING. (FOR MOST THIS IS ALL THAT IS REQUIRED FOR SURVEY.)
IF 12 PLUS APPLIES TO YOU FOLLOWING DESIGNATION IS ALSO MADE IN BODY OF
EMAIL.
DESIGNATE 12 PLUS IF YOUR AFTER EXPENSE PRFOITS FROM TRADING 3/31/97-3/31/98
EXCEEDED 12,000.00. IF NOT 12 PLUS, NO DESIGNATION IS MADE.
5 CATEGORIES OF TRADING APPROACHES
The following five categories will be definitive for the purpose of this
survey.
Simply determine which category best describes your own approach to trading.
The definitions are lengthy, in an attempt to answer all possible questions
and be all inclusive of just about any approach one might use.
(Note: we know that there may be may different ways to break down categories
of approaches to trading. For a survey design some decision must be made to
draw the lines and go with it. The attempt here is to differentiate some
idea among subjective vs. objective approaches, and "technical indicator"
vs "chart analysis/common sense, or number based" approaches to trading.
What we have settled upon with the following definitions will be good enough
for useful conclusions, and should be adequate to fit anyone's approach.
So please don't worry about splitting hairs. The same applies to our profit
threshold. Obviously lots of arguments could be made for higher or lower
values,
or the preference for % based return, different account sizes, etc. No way
to
have all. Our simple criteria will be good enough for useful conclusions.
So,
again no need to split hairs.)
DETERMINE YOUR CATEGORY AND REPLY WITH CATEGORY NUMBER IN BODY OF YOUR EMAIL
REPLY.
SURVEY RESPONSES GO TO FOLLOWING ADDRESS:
survey@xxxxxxxxxxxxxxx
1.Many software derived indicators, and/or any subjective judgement . (No
need to split hairs about what is an indicator or not. The ones common in
software programs, like TS, SC, MS, FS, Ensign, Apsen, or NP, Get, OT, WW,
etc. Canned, programmed, no matter.)
Also, whether or not you use indicators, if you approach allows for any
judgement, either subjective application, or somewhat objective, but
sometimes
override, or pick and choose trades. This category includes mechanical
systems,
if the user overrides signals, or picks and chooses signals.
(Note. Survey is meant to be cut and dry. If you follow mechanical or
objective
rules 90% of the time, or your method is "95%" objective, you still are in
category #1, since your approach uses some subjectivity.) This category
includes all of the geometric techniques and the more subjective oriented
"forecasting turns" approaches. Gann, Elliott Wave, cycles, astrological,
etc.,
are in this category, unless the application has been strictly objectively
quantified to the extent that it has been fully mechanized, such that it
could
be automatically traded by any trader with the written rules or software
automated signals. In that case, a trader using these tools might fit into
categories #3 or #5.
2. Not indicator based. Using chart only, or pivot numbers, or some other
numbers (Fib, chart support resistance, simple trendlines, chart analysis
and
"common sense", which may include some fundamental thinking (Reports'
influences, etc.). As in #1, also using judgement, either subjective
application,
or somehat objective, but sometimes override, and choose trades. This
category includes mechanical systems, if the system is chart or number
based,
(but without software derived technical indicator tools) and the user
overrides
signals, or picks and chooses signals.
3.Indicator based. Strictly no ambiguity 100% mechanical application of
rules
which have been thoroughly backtested with 100% objective rules for all
entry
and exit criteria, that could be universally understood and traded with
exact
same exit and entry points, achievable by another trader who has read and
understood the rules.
4. As in #3, but with no indicators, other than chart,
price levels, or mathematical levels. Strictly no ambiguity 100% mechanical
application of rules which have been thoroughly backtested with 100%
objective
rules for all entry and exit criteria, that could be universally understood
and traded with exact same exit and entry points, achievable by another
trader
who has read and understood the rules.
5. Any 100% mechanical system with computer generated signals for entry and
exit.
(Might be a vendor's TS system, or your own programmed mechanical system, or
other software mechanical system generating orders. Or same thing with
orders automatically plce with broker assistance, if computer generated
aoutomatic
signals.) No judgement, the computer beeps or indicates time and
price, and trade is taken on every signal, exited on every exit signal.
CRITERIA OF PROFITABILITY
Our criteria of "profitability" will be simply defined as after expense
income
at a level that can certainly be considered bare minimum, 12,000.00 from
past 12
months, 3/31/97 through 3/31/98. That means, after all trading related
expenses,
data feed or subscriptions, newsletters, systems, seminars, books, methods,
advisories, etc., have been paid out, your trading has generated at least
12,000.00. Again, we are cut and dry for the survey. If your profit after
all expenses is 11,200.00, close but no cigar. No need to reply to
12 PLUS part of survey. If 12,000.00 profit was made 1/1/97 to 1/1/98,
but not 12,000.00 from 3/3/97-3/3/98, again close but no cigar. No need to
reply to 12 PLUS part of survey.(A simple definition to avoid rate of return
and % on equity debates. All we are looking for is a really low common
denominator of what even someone with most modest aspirations might deem
justifiable as a full time profession. Less than minimum wage.)
WHEN YOU CLICK THE BROWSER BUTTON, IN THE BODY OF YOUR EMAIL REPLY, SIMPLY
SPECIFY 12 PLUS, IF YOUR TRADING PROFITS 3/31/97-3/31/98 EXCEEDED 12,000.00
AFTER ALL TRADING RELATED EXPENSES.
SUMMARY:
SURVEY RESPONSES GO TO FOLLOWING ADDRESS:
survey@xxxxxxxxxxxxxxx
IN BODY OF EMAIL REPLY DESIGNATE CATEGORY 1,2,3, OR 4 AS BEST DESCRIBING
YOUR
APPROACH TO TRADING.
IF 12 PLUS APPLIES TO YOU FOLLOWING DESIGNATION IS ALSO MADE IN BODY OF
EMAIL.
DESIGNATE 12 PLUS IF YOUR AFTER EXPENSE PRFOITS FROM TRADING 3/31/97-3/31/98
EXCEEDED 12,000.00.
IF NOT 12 PLUS, NO DESIGNATION IS MADE.
REMEMBER ONLY ONE REPLY PER PERSON. STRICT CUT AND DRY ANSWERS ACCORDING
TO DEFINITONS OF SURVEY DESIGN. THE SUCCESS AND USEFULNESS OF THIS SURVEY
FOR ALL OF US DEPENDS ON PARTICIPATION AND HONESTY OF ALL RESPONSES.
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