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----- Original Message -----
From: "charles meyer" <chmeyer@xxxxxxxx>
To: "REAL TRADERS" <realtraders@xxxxxxxxxxxxxxx>
Sent: Saturday, April 14, 2001 11:56 AM
Subject: [RT] GEN: FILTERING OUT BAD TRADES....
> This may sound like a naive question but has anyone discovered
> a method by which to filter out your bad trades? Example. After
> analysis of one's trading, say for some reason Wednesday entries
> are found to be unprofitable. Whenever the next Wednesday signal
> arrives; should one's bet size be a lot lower in the future? at least
> until the win percentage on Wednesday comes up to the level of
> other days? I'm not sure exactly if anything useful can be derived
> from an exhaustive post mortum of one's trading equity curve. The
> standard answer is probably either simply 'no' in the sense that one
> should learn to take all trades. Thoughts or comments from anyone
> who has cracked this nut? Thanks.
>
> Chas,
Chas, you have hit on a very importnat point. I think one major difference
between inexeperienced traders and the old veterns is that the newbies
concentrate on looking for reasons to trade whereas the vets concentrate on
filtering out the losing trades or knowing when not to trade.
I use a combination of time, price, volatility, and shape. I start with
a time forecast for a turning point. I have a model that the market should
follow in terms of how it should act via volatility and shape, and when it
should do this. If it doesn't follow the expected pattern, I don't trade it.
This eliminates about 75% of the potential losers. It also means I watch
alot of potential signals come and go without trading them. This reminds me
of one of my trading guidelines, which paraphrases the famous Woody Allen
line, "sex is dirty.........if it's done right". My rule is "trading is
boring.....
if it's done right".
Cheers,
Norman
>
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