Cool challenge. I imagine that the chart readers will have
a big argument for the chance of taking the other side of
the bet.
By the way, your terms give an almost incredible advantage
to the other guy.
First of all, the restriction that 25 trades occur can easily
be performed without a loss. Recently I bought and sold
a stock three times consecutively in a single minute, each
time buying at 11 5/8 and then selling at 11 11/16. Of
the three times I held the stock, none was for as long as
10 seconds, and once I only held it for 2 seconds. So
I could easily get 25 trades done in the first couple of
weeks, at prices that would leave me likely at a profit.
I'm not sure how to interpret "Compare TA rate of return
versus my long buy and hold strategy". If by this you
mean the historical return of DELL, then we must
annualize our returns, and my ability to make a 1/16th
profit in a couple of minutes will translate into an incredible
return. Even making the spread once per hour would be
a 200% annualized gain or so, which I believe is faster
than DELL has appreciated over the long term, (but I
haven't checked.) As far as this being possible, you
are probably aware that DELL is the most traded stock
by SOES bandits, and at least some of them make money
doing this.
On the other hand, if I am to interpret "rate of return" to mean
that the comparison will be between what DELL does over
a year and what the TA expert account does over a year,
then a slightly different tactic will beat you with extremely
high probability:
First buy the stock. This is the initial trade, and you will
alternate between being long and being flat. After making
a profit and having 25 trades, you simply leave the position
alone (long) for the rest of the year. That this will be highly
likely to succeed is simply due to the mathematics of
random walks.
-- Carl
P.S. I don't consider myself a "TA expert", but just looking
at the DELL chart, I would expect it to continue dropping.
The market maxim that applies is "The trend is your friend."
But I wouldn't get short now. If I was short I would cover on
the first up day. |
