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Strategies & Market Trends : Technical Analysis - Beginners
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To: Robert Graham who wrote (7112)11/28/1997 12:16:00 AM
From: Richard Estes   of 12039
 
To use an example, if you choose an 89 time series or TSF(wow) MA for your system. You would simply buy on a cross up and sell on a cross down. The difference between the Price and the MA is RISK. You increase your risk if you had choosen a simple or EMA. At the same time if the increased risk is in keeping with your mindset, It might keep you in the trade longer and keep you long in corrections.

System testing gives you an idea what your system delivers in drawdowns, the size of the average loss or win. These to a degree measure risk of the system. As you shorten the time period you trade in, You increase the number of false signals because your decision is made on fewer data points. There by increasing risk.

Money management mainly is tied to the ability to take a loss. Allowing a loss to get out of hand can turn us into "investors" or big loosers at a later time when you can't stand the immoblity any longer.
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