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Biotech / Medical : Trinity Biotech (TRIBY)

TRIB 0.918

-13.4%

3:59 PM EST

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To: Peter Caradonna who wrote (689)	5/7/1996 12:50:00 PM
From: olduser	of 14328

That's interesting Peter. Having followed this thread, I have a lot of respect for your acumen. For some time I wondered why a simple algorithm that bought and sold on the negative and positive deviations from a moving average wouldn't make money. I suspected it wouldn't; it was such a simple idea, others must have tried. Eventually I tried a series of simulations. At first I was excited because I "made" lots of money on a ascending stock, and my losses were attenuated when dealing with a secular decline. Later I realised I would have made more on an ascent if had just held, although it seemed as if the downside damage limitation was valid so it seemed it might be worthwhile. My simulation dealt only with random noise (normal iid) superimposed on a trend. I decided that my algorithm would have had me doing precisely the wrong thing when news was announced. I can see that you might make a case for an "informal algorithm": a procedure similar to that which I used, but with an intelligent overide. That is buy on short-term drops, sell on short-term highs, but use common sense to avoid a mechanical transaction in the face of news that indicated the changes were not short-term. AJ

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