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<DIV>I don't have the modem or nerves for scalping 16th's. I'm trying
for a point or more...</DIV>
<DIV> </DIV>
<DIV> </DIV>
<DIV> </DIV>
<DIV>Linda, any trading strategy which incorporates scalping teenies as its
BASIS is by far:</DIV>
<DIV> </DIV>
<DIV>
(1) the costliest (because of exponentially high commissions and greater
slippage due to greater volume of entries)</DIV>
<DIV>
(2) the riskiest (because of the need for very tight stops and the greater
temptation to enter trades which are often not </DIV>
<DIV>
justified by objective criteria)</DIV>
<DIV><FONT color=#000000
size=2>
<FONT size=3>(3) the least productive (because it takes 16 high-risk,
nerve-racking teenies to make a single low risk point made
based</FONT></FONT></DIV>
<DIV><FONT color=#000000 size=2><FONT
size=3>
on proper entry</FONT></FONT><FONT color=#000000 size=2><FONT size=3>
criteria, and that's before factoring commissions and slippage into the
equation).</FONT></FONT></DIV>
<DIV><FONT color=#000000 size=2><FONT size=3></FONT></FONT> </DIV>
<DIV><FONT color=#000000 size=2><FONT size=3>I have not met nor heard of any
traders whose objective is to make a sixteenth and exit immediately, every
time they trade. However, the trading strategy which makes the most
intuitive sense to me (and has added the greatest measure of consistency to
my fledgling success as a trader) is one in which you have a WILLINGNESS to
exit at breakeven or slightly better if the situation necessitates it.
</FONT></FONT></DIV>
<DIV><FONT color=#000000 size=2><FONT size=3></FONT></FONT> </DIV>
<DIV><FONT color=#000000 size=2><FONT size=3>I have frequently read about
using the "factor of five" when trading. This means that if
you base your entry decisions on daily charts, you should have corroboration
from weekly charts first. If you use 5-minute charts, you should
examine 25-minute charts first... and so on. That may be useful, but I
have found that this approach works best for me: when I find an
attractive candidate in the course of my research, I simply peg clear levels
of support and resistance on 3 days' worth of 10-minute intraday charts and
examine the daily chart of the last 200 days to get a good feel for the
broader trend. I base my entry and exit decisions on this simple
analysis and it has worked well.</FONT></FONT></DIV>
<DIV><FONT color=#000000 size=2><FONT size=3></FONT></FONT> </DIV>
<DIV>If a trade does not go my way shortly after entry (time frame depends
upon the underlying volatility of the stock), I bail. Since I
implemented this strategy, I have exited countless trades for +3/8, +1/8,
breakeven, -1/16, -1/4. I have exited a select few others at +1 1/2,
+2 3/4, +3, and so on. I only need 10% of my trades to give me these
kinds of gains for me to make a comfortable living based on trading alone,
yet I typically do a little better than this. The basic mistake that a
lot of traders make is one of seeing each trade as the be-all,
end-all. This is what forces a trade to be exited at the maximum
stop-loss a while after entry - rather than at a meager profit or zero
shortly after entry. (Or much worse, when psychological barriers force
a loss to assume devastating proportions.)</DIV>
<DIV> </DIV>
<DIV>Moreover, if you have the humility to acknowledge quickly that the
trade is not going your way in any meaningful manner, you have two
options: (1) you can reverse your position, which in more cases than
not will go on to make money for you, or (2) you can try for a better entry,
which you will get in an overwhelming number of cases. </DIV>
<DIV> </DIV>
<DIV>Objectives and practical considerations must be married for a trading
strategy to yield consistent success. Rigidity and an insistence that
every trade make a killing for you... that's a surefire formula for
failure. It cost me a lot of money to learn this.</DIV>
<DIV> </DIV>
<DIV>Best regards,</DIV>
<DIV> </DIV>
<DIV>Paul Szilassy</DIV></BLOCKQUOTE></BODY></HTML>
</x-html>From ???@??? Fri Apr 09 23:43:06 1999
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Date: Sat, 10 Apr 1999 02:33:33 -0400
Reply-To: rossrk@xxxxxxxxxxxxxx
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From: "Ross Kovacs" <rossrk@xxxxxxxxxxxxxx>
To: RealTraders Discussion Group <realtraders@xxxxxxxxxxxxxx>
Subject: Re: New(?) Indicator/Potential System
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An odd indicator/potential system popped into my head:
Mov Avg (Close,x bars) / Mov Avg (Open,x bars)
Mov Avg method could be any type, from simple mov avg to time series
forecast (linear regression). It looks interesting, so far. At least 100
bars seem to be needed to make it useful. 150 bars with time series
forecast seems to work well with S&P EOD.
1. Any comments from the group?
2. Anyone know of a similar concept already public?
Potential pitfalls I already know:
1. Open prices for any period are arbitrary and frequently corrected. Yes,
I know that closing prices are also frequently changed and, depending on the
tradable, can also be arbitrary (e.g., options). Obviously it's not usable
on any financial instrument without realistic open & close prices.
2. It seems to have the same pitfall of any moving average
indicator/system -- the number of bars selected greatly affects the results.
Ross Kovacs
rossrk@xxxxxxxxxxxxxx
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