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Kevin...
It stinks to have 8 losers in row so that I can hopefully get on a trend
to make up for all the loses. My account is much happier taking small
profits 70% of the time. Those 70% profits add up! Over the years I have
slowly but surely gravitated towards a trading style along the lines you
have described. I have found through extensive testing that these non
trend systems were also the ones to have the best returns on a shorter
term basis. I can understand the desire to have those trades that go on
and on and one can talk about it for years but one thing that made a big
difference in my trading was when I stopped trying to make a "killing"
and started taking profits.
Count me as another "zealot" on testing before trading.
Best Regards... John
Kevin Morgan wrote:
>
> Rich said:
>
> "Analyzing my trades, I once again realized how
> hard it is to follow a trend. Much easier to hit and get out, hit and get
> out."
>
> Yes, and I've found that to be true in system development also! Which is
> ironic given the constant propoganda to "follow the trend". I like the
> equity smoothing that comes with >70% winners. Hard to build trend
> following systems with that characteristic (LeBeau got some like that
> for sale, debating with myself if I'll learn enough to pop for $250 but
> it is tempting.)
>
> And Edward said:
>
> "Indeed, I find it easier and more profitable too in the system development
> arena. Getting consistency of winners (>50 or 60%), having reasonably
> low average loss sizes, and good overall profitability I find to NOT be
> easy to achieve with trend following approaches. And I hate systems that
> only win 30% of the time, because of the greater equity fluctuation."
>
> Oh man, were truer words every spoken? How many traders have NO CLUE what
> the expectation of their approach/technique/system is? (Remember, absolute
> minimum is a need for 30 trades worth of history.) Most discretionary
> traders, and that's most traders. We think it _should_ be a winner system,
> so whats the need to measure our approach? My experience: my best ideas are
> losers, only alot of work and study and refinement and try again work produces
> winners, and few of those win alot. My conclusion: by far most traders are
> trading what, if studied, are certifiably negative expectation systems. Which
> means the longer they trade it, the more certain they will lose every cent they
> own.
>
> I hope everyone gets this, because its just so darn incredibly important,
> IMO. Measure it before you trade it! Any only trade it if it proves
> itself a money winner! I'm a zealot on this point.
>
> -Kevin
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