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Hi Ray,
When we judge his rules we are probably asking ourselves:
1) Would this work with our system(s)?
2) Would this work with any systems we know of?
I suggest that with the proper system his rules can work very effectively.
Typically this type of system knows and goes with the trend and it takes
being glued to a screen. This type of system is not for everyone.
I have one for the currencies were you put in orders for tomorrow
It uses the turtle type rules and uses a 10K unit, with all profitable
trades that bring the account over 10K being sent to me.
This account has been down to 7K once. It uses no break even stops and makes
more money than I want to say here.
What is significant is that if I added break even stops to the system
my profits would probably decrease by 90%. You see the market breaks out
of a correction and lots of people buy and then a few days later some take
profits. The market then goes back to a little before the crowd got in, takes
out the stops and turns to continue on it's merry way.
If someone is designing a system I would reccomend that they focus upon
effective stops and not break even stops. What they may find is that they
do a lot better.
Mitch
owner-realtraders@xxxxxxxxxxxxxx wrote:
> Hi Pompatis
>
>
> ----------
> > From: POMPATIS@xxxxxxx
> > To: RealTraders Discussion Group <realtraders@xxxxxxxxxxxxxx>
> > Subject: Fut:POP's rule #1
> > Date: Sunday, August 09, 1998 5:34 AM
> >
> > Greetings all:
> >
> > This post is directed to those of you who are familiar with Phantoms
> >rules.
> >
> >
> > 1) Do you think that Phantom is implying that a position should be
> >closed the instant that the mkt crosses the entry point? If so this
> >would eliminate many potential winners, increase the number
> >of losers, but it would preserve those wonderful trades that are
> >instantly profitable.
>
> RB: This formulation idea implies that a trader can pick either
> buy close to the exact low or sell close to an exact high of the time
> of entry. For me this is unrealistic. Sure sometimes it happens but to
> expect it to will lead to huge and unnecessary pressures on the
> average trader.
>
> > Or: do you think that he is
> > simply saying that within an individual trading approach, a strong
> >emphasis should be put on getting out as soon as one doubts
> >the correctness of the trade?
>
> RB: I'd put it another way as that formulation starts from the premise
> that a trade is correct. POP on the other hand assumes the trade is
> incorrect and looks to the mkt to confirm that the trade is right. This is
> a subtle but important difference.
>
> So I'd say that "before we take a trade, we primarily need to have some
> idea of what the trade must do for us to remain in it and only secondly
> what the mkt looks like for us to exit the trade immediately".
>
> >This might preserve some good trades but is still likely to cut out
> > many potential winners. Also, is takes alot of fortitude to be wrong
> >alot, even if the lossses are small.
>
> RB: There are a number of assumptions here that need to be addressed.
>
> Firstly the fact a trade is cut early does not mean we will miss a
> potential winner. If the mkt sets up, we can always re-enter.
>
> Secondly cutting a trade if it does not perform, does not necessarily
> result in a loss. It can and often results in a profit.
>
> The comment appears to envisage a series of consecutive losses but
> this is not an necessary result of POP #1.
>
> It's also important to understand the process of how we come to
> apply POP 1. POP1 is for the experienced discretionary trader. We need
> to have experience so as to build a reality orientated model of
> expectations. Without this model, POP 1 won't work. For a newbie,
> he's better off with a straight stop until the model builds up.
>
> > 2) A related matter:
> >
> > How do you gents feel about "never let a winning trade turn into a
> >loser"? On its face this statement appears to be very good advise.
> (snip)
>
> RB: Very early in my trading I found this maxim vague and difficult to
> apply. So I adopted the Rule of 3 and traded those mkts with volatility
> that
> allowed its application. I have posted Rule of 3 in this forum on a number
> of previous occasions.
>
>
> > 3) Related to #2. Suppose one does move the stop loss to a point of
> >"break even" and the trade goes well. If it is a good move the market
> will move
> > through the next support/resistance (possibly faltering a little at these
> > points); what about moving the stop again to below/above the next sup/res
> (snip)
>
> See Rule of 3 above.
>
> regards
>
> ray
>
> R Barros
> 101/25 Market Street
> Sydney NSW 2000
> Australia
>
> Voice: 61 2 92673470
> Fax: 61 2 92673478
> E-Mail: rbarros@xxxxxxxxxxxxxxxxxx
Mitch Ryder
Ynos@xxxxxxxxxxxx
____________________________________________________________________
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<pre>
Hi Ray,
When we judge his rules we are probably asking ourselves:
1) Would this work with our system(s)?
2) Would this work with any systems we know of?
I suggest that with the proper system his rules can work very effectively.
Typically this type of system knows and goes with the trend and it takes
being glued to a screen. This type of system is not for everyone.
I have one for the currencies were you put in orders for tomorrow
It uses the turtle type rules and uses a 10K unit, with all profitable
trades that bring the account over 10K being sent to me.
This account has been down to 7K once. It uses no break even stops and makes
more money than I want to say here.
What is significant is that if I added break even stops to the system
my profits would probably decrease by 90%. You see the market breaks out
of a correction and lots of people buy and then a few days later some take
profits. The market then goes back to a little before the crowd got in, takes
out the stops and turns to continue on it's merry way.
If someone is designing a system I would reccomend that they focus upon
effective stops and not break even stops. What they may find is that they
do a lot better.
Mitch
owner-realtraders@xxxxxxxxxxxxxx wrote:
> Hi Pompatis
>
>
> ----------
> > From: POMPATIS@xxxxxxx
> > To: RealTraders Discussion Group <realtraders@xxxxxxxxxxxxxx>
> > Subject: Fut:POP's rule #1
> > Date: Sunday, August 09, 1998 5:34 AM
> >
> > Greetings all:
> >
> > This post is directed to those of you who are familiar with Phantoms
> >rules.
> >
> >
> > 1) Do you think that Phantom is implying that a position should be
> >closed the instant that the mkt crosses the entry point? If so this
> >would eliminate many potential winners, increase the number
> >of losers, but it would preserve those wonderful trades that are
> >instantly profitable.
>
> RB: This formulation idea implies that a trader can pick either
> buy close to the exact low or sell close to an exact high of the time
> of entry. For me this is unrealistic. Sure sometimes it happens but to
> expect it to will lead to huge and unnecessary pressures on the
> average trader.
>
> > Or: do you think that he is
> > simply saying that within an individual trading approach, a strong
> >emphasis should be put on getting out as soon as one doubts
> >the correctness of the trade?
>
> RB: I'd put it another way as that formulation starts from the premise
> that a trade is correct. POP on the other hand assumes the trade is
> incorrect and looks to the mkt to confirm that the trade is right. This is
> a subtle but important difference.
>
> So I'd say that "before we take a trade, we primarily need to have some
> idea of what the trade must do for us to remain in it and only secondly
> what the mkt looks like for us to exit the trade immediately".
>
> >This might preserve some good trades but is still likely to cut out
> > many potential winners. Also, is takes alot of fortitude to be wrong
> >alot, even if the lossses are small.
>
> RB: There are a number of assumptions here that need to be addressed.
>
> Firstly the fact a trade is cut early does not mean we will miss a
> potential winner. If the mkt sets up, we can always re-enter.
>
> Secondly cutting a trade if it does not perform, does not necessarily
> result in a loss. It can and often results in a profit.
>
> The comment appears to envisage a series of consecutive losses but
> this is not an necessary result of POP #1.
>
> It's also important to understand the process of how we come to
> apply POP 1. POP1 is for the experienced discretionary trader. We need
> to have experience so as to build a reality orientated model of
> expectations. Without this model, POP 1 won't work. For a newbie,
> he's better off with a straight stop until the model builds up.
>
> > 2) A related matter:
> >
> > How do you gents feel about "never let a winning trade turn into a
> >loser"? On its face this statement appears to be very good advise.
> (snip)
>
> RB: Very early in my trading I found this maxim vague and difficult to
> apply. So I adopted the Rule of 3 and traded those mkts with volatility
> that
> allowed its application. I have posted Rule of 3 in this forum on a number
> of previous occasions.
>
>
> > 3) Related to #2. Suppose one does move the stop loss to a point of
> >"break even" and the trade goes well. If it is a good move the market
> will move
> > through the next support/resistance (possibly faltering a little at these
> > points); what about moving the stop again to below/above the next sup/res
> (snip)
>
> See Rule of 3 above.
>
> regards
>
> ray
>
> R Barros
> 101/25 Market Street
> Sydney NSW 2000
> Australia
>
> Voice: 61 2 92673470
> Fax: 61 2 92673478
> E-Mail: rbarros@xxxxxxxxxxxxxxxxxx
</pre>
<br><pre>
Mitch Ryder
Ynos@xxxxxxxxxxxx<br></pre>
<BR>
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