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I object to any system, whether it be financial or poitical, that expects you to
follow blindly down the path layed out by someone else, without any understanding
of the system. Some traders have the ability to last because of financial
strength. The same as the theory that you can't lose if you double your bet
everytime you are bound to at least break even. The premise is that you have an
infinite amount of capital to play the game. As far as adjustments go I will
give you one example. I have used it before. The market goes up and down and
there is a pattern in that oscillation. Gann, Fib., Hurst and many others have
proven that fact. Observation will prove that to any astute observer. The falacy
comes when the statement is made, that the cycle will remain constant. Hurst
proved that the cycles vary and that there are cycles within cycles. So any
trader can select any cycle that suits his/her temperment and risk/money
management system. No black box here. Indicators are mostly tied to the closes of
price and to the price bars. Let us use Stochastics as the example this time.
Almost all charts use 14,3,3s as the numbers for stochastics. Even a black box or
two will use those numbers, if stochastics is one of the indicators in the black
box system. If you have read the formulas used in stochastics and the way they
where intended to be used, you will note that the 14 should be X. For the first
number should be the 1/2 cycle of the item you are trading. Now everyone using
14,3 3s is getting bad information, unless they are trading a 28 bar cycle and
there actually is 28 bars low to low. How many of you out there use stochastics
and just found out that you are getting bad information and risking your money
using a bad premise. Simply by looking at the cycle you are trading, and cycles
do change, you can make that adjustment and have the indicator give you the right
information. Knowledge is power, but understanding how to use that power creates
success. Hope that this answers your question in part. Ira
MRLYNNG@xxxxxxx wrote:
> In a message dated 5/1/99 9:37:41 PM Pacific Daylight Time, ist@xxxxxx writes:
>
> << I have followed this thread on mechanical trading systems and find that
> there is one flaw. As the markets change the system remains the same.
> Any system that is not flexible, and unable to adapt itself to changing
> markets, will create large financial losses in the long run. When I say
> flexible, I do not mean interpretive, I mean one that can adjust to
> conditions as the occur. I am not talking about a neural net that is also
> a blind analysis. Ira >>
> ******************************************
> Ira:
> There are so many conditions in the markets that I am not sure what you mean
> by adapting to the changing markets. Can you be more specific or give
> examples. Thanks.
> Lynn
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