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Just a quick thought as I sit here, up too late again, trying to get the
testing done on a system I've been working on for far too long...
It's a common thing to feel persecuted by the market, the floor, those
pesky floor brokers who run stops, and all the other "stop sniffers" out
there. Okay, it's common for *me* to feel persecuted; the rest of you
may be well-adjusted. Anyway, you know how it goes. You get in the
market, you set your stop for whatever reason, and damned if the market
doesn't (within that bar or the next couple of 'em) head straight for
your stop price, take out the stop (giving you a bad entry or exit), and
then head off in the opposite direction, leaving you screwed at the
worst price of the day.
Well... this happens for only a couple of reasons, of course:
a) the stop was set in an "obvious" place
b) some form of technical analysis indicator showed that spot to be a
good opportunity for large specs and commercials to step in the other
way
c) some form of collusion is occurring on the trading floor
d) stops are somehow magnetized
Want a contrarian viewpoint? For the past ten weeks or so, I've been
bleeding from the eyes working to get a trendANDchopANDdoldrums system
put together (sure, it's possible). While the system uses mechanical
moving indicators to generate basic price thresholds, rules for entry
and exit are based on simple price offsets, price calculations, AND
non-price-based bar patterns. Unless an enormous number of traders are
sucking from the same Happi-Wip can as I am, there is no particular
reason that my stop levels should be getting hit with any surprising
accuracy. Yet over the last ten or so years, I notice that my
non-obvious stops based on my odd... nay, "eclectic" assortment of
determiners, are getting nailed right between the eyes about 5-10% of
the time.
Upon further review, that doesn't seem to be all that different from
what's being experienced by me and clients I've watched in real markets.
Something to ponder for folks that like to assign a large measure of
reason and explanation to market motion; sometimes, ..it really does
just happen, maybe.
Sticks
--
Troutman, Defender of Sticks (aka) Jonathan Matte, President
troutman@xxxxxxxxxxxx Defender Capital Management, Inc.
Introducing Broker
http://www.teleport.com/~troutman
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