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I've been trading for over 25 years and think I've seen almost
everything. In the futures area it is mostly hype.
The Point & Figure approach to charting caught my attention because it
is simple, straight forward, and mechanical. I say mechanical because,
even though your PC will not spit out signals, once you have established
your trading rules, the trade signals are clear and precise. Also, you
don't have to look at all kinds of indicators and run hours of
optimization tests.
P&F has been around for over 100 years but is generally ignored in this
age of computers. While Metastock, SmartCharts, TradeStation, WOW, and
most charting software will produce P&F charts, it is the most unused
function around.
I start trading a diversified futures portfolio in July (before I knew
all the rules) and to date the account is up 9%. (This includes a $600
loss which should have been an $800 profit because I started trading
before I finished Zieg's book. So much for being dumb.)
I am also backtesting to Jan 1997 and will post the results as I
complete each test.
These back tests are obviously hypothetical and my rule of thumb is to
discount the result by 50% and ask if it is still worthwhile.
So far the results from 1/1/97 to 8/4/98 are:
Cattle Profit $ 9,119
Hog Profit $ 8,120
Corn Profit $ 4,650
Wheat Profit $21,200
$50 was deducted from each trade for commission. I don't expect to see
similar wheat results in the future; in 1997 almost every short term
move was caught and the probablity of doing this again is minimal.
Futures trading is not for everyone. The risk of loss in trading
commodities can be substantial: therefore, carefully consider whether
such trading is suitable for you in light of your financial condition.
Past performance is not indicative of future results, and there is no
assurance that your trading experience will be similar to the past
performance.
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