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> All this is IMO, playing the news.
Yup, although there is more to Kaufman's chapter than that.
> "Price Shocks have No Rules or patterns that can be applied in advance."
> --Just
> roll the dice.
>
> "Because they are always unexpected, then can occur anytime during any
> market"--So, he thinks the markets are random????
You have to put his statements in context with what he was trying to say
in the chapter. In his context, a "price shock" is by definition
unexpected and unpredictable. If it were expected, it would not be a
"shock." The main emphasis is for the system developer. He should:
(1) Not overoptimize a system's entries to capture past price shocks
because of their essentially random nature. You don't want to mistake a
news driven move (e.g. China nukes Taiwan) for one that was predicted by
your new super-duper-opto-wopto oscillator.
(2) Make sure the system and money management are robust enough to
handle unexpected moves both for and against you when you are already in
a trade.
There is much more but that's the general idea.
--
Dennis
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