|
PureBytes Links
Trading Reference Links
|
Norm,
I have always enjoyed your posts, and I hope you will continue posting.
However, it has always puzzled me that of all the long-term RT contributors,
you alone seem to indulge in repeated low-key spamming, with an occasional
blatant spam. Are the rules different for you than for the rest of us?
Scot hit the nail on the head:
<SB>This post looks like something I would get in the mail from Jake
Bernstein. <snip> You offer nothing about trading in this post, only a
teaser leading into an offer.
In place of Jake we could insert George Fontanills, Bernie Schaeffer, Larry
Williams, etc. Is this how you wish to be perceived?
> Wake up people. All of life is one big advertisement.
> No one does anything for free unless they think they can somehow benefit.
Actually, all of life is life. Advertisements are but a small part of it.
The best contributions to this forum (IMHO) have come from people who have
nothing to sell, or at least post without the slightest whiff of Spam: Ray
Barros, Denis Cattani, Earl Adamy, Gwenn Gautier, Tim Lee, Tom Alexander,
Tom Stein, A. J. Carisse, Ira Tunik, Mike Higgs, Bill Shumake, etc.
> > It just occurred to me Scot, I apologize for not being able to remember
> > when you last posted something that helped everyone on this list to
trade
> > more profitably. This means something that everyone on the list can use,
> > so no ELAs, complicated computer programs, or moving averages and
> >oscillators that nickel and dime your account into oblivion. Perhaps you
> > could refresh my memory?
In case your memory still needs refreshing, I've appended (cut & paste) the
text of a post Scot made in December. I find it a well written, clearly
stated exposition of some very useful ideas. I suspect that any trader who
is struggling to figure out "what works" will find it worth reading. Also,
there are no ELA's, and no mention of computer programs, moving averages or
oscillators.
Norman, your suggestion that Scot does not make useful contributions to the
list was unwarranted and untrue. I suspect that you lost some potential
students with that one. Perhaps your advertising campaign could use some
rethinking.
Sincerely,
Jeff Kingery
<<<Scot's post follows>>>
This applies to futures trading although I imagine it would hold true to
stocks as well. Buy and hold is the longest-term trend-following system
possible.
This is why I like methods that are trend following in nature. These can be
long-term or day trading:
1. They follow the oldest and truest adage by nature, "Cut losses short,
let winners run."
2. Most CTA's that have been successful for longer than a decade have used
trend following methods.
3. I believe there is a statistical abnormality that gives credence to
trend following. The distribution curve of price movement on any time frame
has 'fat tails' when compared to normal bell curve. These fat tails mean
there are more large moves than normal distribution would suggest. These
moves are also larger than they 'should be'. By taking advantage of this
statistical abnormality, one creates a market edge.
4. Hedgers sell as the market goes up and buy as the market goes down.
Hedgers want to rid themselves of risk, but no one will take risk for free.
Therefore, hedgers 'pay' speculators a premium to assume their risk, which
is the money to be made by speculation. These hedgers lose in the futures
markets during large trends, which is exactly when trend followers make
their money.
5. Trend following relies less on magical interpretations and forecasts to
make money. Trend following isolates one factor, the existence of trends,
and profits from that factor. The reduction of parameters increases the
robust nature of a simple trend following method. These will not perform as
well as other methods in back testing, but they are much more likely to
continue to profit into the future. It is not dependent on predictions.
Trend following makes only one prediction, that trends will continue as a
phenomenon of the marketplace.
6. Trend following leads to mechanized systematic trading in which I see
several advantages:
a. Less pressure on the trader over a 15-30 YEAR trading career.
b. Removes as much human emotion as possible from the trading equation.
c. Discipline is easily measured by the adherence to the system. If the
system was followed, the trader was disciplined. If not, he/she wasn't.
d. The system can be back tested, while discretionary ideas can not.
e. Success of the system can be traced and analyzed. With a
discretionary method it is difficult to discern if the method is not
performing or if the trader is misinterpreting the
information.
f. Consistent decision-making is assured.
I do not think that trend following is perfect, but I do think it is the
path of least resistance to profitable trading.
Sincerely,
Scot Billington
|