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Strategies & Market Trends : DAYTRADING Fundamentals -- Ignore unavailable to you. Want to Upgrade?

To: bajasurf who wrote (2610)	8/10/1999 8:17:00 AM
From: TraderAlan	Read Replies (1) \| Respond to of 18137

baja, Every successful trader knows that the best backtesting system in existence is to look at his/her P&L at the end of the year. If you've you've significantly beaten the market, your system worked! Frankly, I find trying to jam my discretionary trading into a pretty box with a pink ribbon on it (so I can turn this all into a simple right brain math exercise) a waste of my time that appeals only to self-doubt. Instead, I maintain accurate statistics of my trades that measure my wins and losses, how much I place at risk, how long I hold and the general opportunity-cost equation. This keeps me much more honest and provides better feedback than trying to treat trading as a blackjack game. If backtesting helps you, do it. But don't assume it's the one true path. You also assume the way someone trades stays constant over time. I am shifting my strategies EVERY DAY to compensate for changes in the market environment. For example, about 80% of my trades the last few weeks were short sales. I didn't do any short sales Jan through July. Doesn't take a rocket scientist to see why that little shift occurred. Alan

To: bajasurf who wrote (2610)	8/10/1999 9:59:00 AM
From: Eric P	Read Replies (1) \| Respond to of 18137

Probabilities, probabilities, probabilities, thats all that matters. I couldn't agree more. Knowing the probabilities give you several very important advantages. First, it gives you the confidence to follow your plan without hesitation. Why second guess your 'system' when you know it will be profitable over the long run. Second, it reinforces the fact that no trade is a sure thing. It is "okay" to have losing trades. In fact, it is expected. The probabilities demand it. No system is perfect. Finally, without a system or methodology in which you have confidence, you will be more inclined to trade haphazardly. You will be more likely to trade out of boredom or due to the emotion of the moment. You will be less likely to wait for high probability entry points before jumping into a position. System trading is not for everyone. But for those who follow a system, there are many substantial benefits. -Eric