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Strategies & Market Trends : DAYTRADING Fundamentals
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To: hypostomus who wrote (14192)9/22/2001 11:55:16 AM
From: fut_trade  Read Replies (2) of 18137
 
"As an engineer myself, permit me to point out a fallacy that technical people understandably fall into when they start to trade. We treat the market as if it were a physical phenomenon and apply time series analysis, Fourier analysis, optimal estimation theory, conditional statistics, Kalman filtering, etc. ad nauseam."

I know a few EE's who would tend to analyze the market that way. That's advanced stuff. But I think the garden variety investor plays the market with simple patterns, MAs, MACDs, etc. But the result is the same.

But few investors run simulations of thousands of trades on different markets at different times to see how well their strategy performs. I have found a little success in trading index futures. Risk is limited compared to stock trading. But one must use a strategy that is simple enough to be programmed. What I find most of the time when I test a new strategy is that win/loss is 50/50 so there is a net loss per trade due to commissions and slippage. But it is possible to make a little bit of money with limited drawdown with some systems. It is really low pay for hard work.

I know there are some traders that make a killing some of the time (far end of a statistical distribution) and there are some traders who get killed some of the time. Computer testing of trading systems is one way that I can trade with more comport, although the profits will not be huge.
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