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<DIV><FONT face=Arial size=2>Without going into a great lesson on stops and how
and where to place them, the main aspect of money management is the risk/reward
ratio. I have found that 3:1 or more is what you are after to come
out on top (well, in the bonds anyway). If you cannot see 3:1 on entry and
by that I mean where your stop is, not where you actually get filled for the
trade, then the trade should be questionable.</FONT></DIV>
<DIV> </DIV>
<DIV><FONT face=Arial size=2>If you are day trading and going in and out of the
market two or three times a day, you want to be able to be wrong more than you
are right and still come out okay. Once you have decided where your
stop will be, then the closer you can get a fill, the better the r/r/r and the
more comfortable you will feel with the trade. Just going in and having an
arbitrary number of ticks for your stop is asking for trouble.</FONT></DIV>
<DIV> </DIV>
<DIV><FONT face=Arial size=2>The object of the exercise is that your stop will
be where the market is going to use some effort to get you out - and it is
probably going the other way, so you will want to be reversing. The closer
your entry to that stop the better the r/r/r and if you cannot see where your
target is and what that risk is, don't take the trade. If you don't have
an edge you don't have a trade.</FONT></DIV>
<DIV> </DIV>
<DIV><FONT face=Arial size=2>Bill Eykyn<BR><A
href="http://www.t-bondtrader.com";>www.t-bondtrader.com</A><BR>"Learn to read
the tape"</FONT></DIV>
<DIV> </DIV>
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</x-html>From ???@??? Thu Apr 13 15:09:31 2000
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Date: Thu, 13 Apr 2000 17:39:47 -0400
Subject: [RT] RE: FYI: Technical Analysis vindicated!
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Status:
You also might want to look at what is being done at Brookhaven National
Laboratories by Prof Sergei Maslov on "Applying Physics methods to
Economics and Finance " a power point presentation.
http://www.unifr.ch/econophysics/
There is also another paper here by Doyne Famer (Prediction Company)
"Market force, Ecology and Evolution"
I would also like to mention that some of what these guys are doing
(Cointegration Analysis) has its roots in the work of Jesse Livermore.
Jesse called it "pairs" trading. Probably some of you really "old"
members know about "Pairs" trading. As for Elliot and Mandelbot, the
concepts of chaos, fractals, elliot waves, or whatever the current label,
can be traced back to ideas of Pierre-Simon Laplace around 1776. (He was
a physicist) And later to Henri Poincare. (he was a mathematician). You
can continue this thread back to Pythagoras (another mathematician). If
you go to page 232 of "The Major Works of R.N. Elliot" you will see a
copy of an illustration form Manly Halls publication "The Secret
Teachings of All Ages". It shows the Pythagoran "Right Triangle" basis
for the wave counts. The idea of who came up with the original concepts
is not constructive. These ideas and concepts have to be constantly
revised in any new light that can be brought to bear on them.
Ron McEwan
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