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Strategies & Market Trends : MDA - Market Direction Analysis

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Nov 21 4:00 PM EST

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To: Doug R who wrote (1299)	12/11/1998 8:02:00 AM
From: j g cordes	Read Replies (1) of 99985

doug.. I gave you a first cup of coffee emotional response without giving your interesting cat bounce theory a good look. Sure, that appears to be a winning pattern to trade although I'm sure your candidate list of 30% gappers is limited. The inverse of your system also probably works on gap open stocks that retrace for short selling strategies. I like your stochastic controls to help determin exits though some probably exceed the cat bounce expectation by returning or exceeding the pre gap down price.. due to news. <g> Much of the black box trading relies on increasing the certainty of trades, which usually means limiting the time of holding and %-age return expectation... in other words doing lots of small high probability trades. One can put together conditional trading programs that trade a hundred times a day, each trying only for a small but sure win. The next step taken was to do the same with extreme leverage and multiple markets. Bear in mind that currently there's a lot of automated pattern recognition and TA based trading working the markets on autopilot. Long Term Capital showed how short sighted this can be. Why don't you post when you next enter a 30% gap down for a dead cat so we can follow it realtime. That would be much appreciated. Jim

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