Ultra OTC Fund - UOPIX Message Board

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Strategies & Market Trends : Ultra OTC Fund - UOPIX

UOPIX 132.30

-4.7%

Nov 20 4:00 PM EST

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To: bob wallace who wrote (796)	11/4/2000 10:10:09 AM
From: Todd Reichardt	Read Replies (3) of 2063

Hi Bob, It sounds like you may have unknowingly opened yourself up to hindsight bias (i.e. you looked to see what had worked in the past and then tested that same past to show that it worked). An example: had you looked, either knowingly or not, for a pattern that captured the 18% day you would have a pattern that started out 18% ahead and would likely be profitable over a 4 month period. Unfortunately that pattern may not be any better of a predictor than the lunar cycle. I'm not suggesting that you did this intentionally, but you seem to watch the market on a day to day basis and could have over the past 4 months identified a workable pattern in your head that fit that data. To check to see if the pattern is valid, you need to test in on data outside of the data you used to develop it. One way is to paper trade it, since its a virtually impossibility that you incorporated future data into your development. Another way would be to pick some past data randomly, like go back 3 years on NDX and see what it would have done.... Todd

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