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Strategies & Market Trends : The 56 Point TA; Charts With an Attitude -- Ignore unavailable to you. Want to Upgrade?

To: bruce-l who wrote (36848)	9/5/2000 12:31:32 PM
From: Doug R	Read Replies (1) \| Respond to of 79382

Bruce, SPNS is on the launchpad and engines are fired up. eom. Doug R

To: bruce-l who wrote (36848)	9/10/2000 6:29:03 PM
From: bdog	Respond to of 79382

jeepers bruce, now you're gonna make me think...>g< just rolled into Sun Valley, lemme get back to ya. the 50% is in reference to indicator/system signals not end portfolio performance. whoa, I'm gonna hafta read doug's posts a few hundred times to figure out what he's talking about...>g< have patience... brainlessdog

To: bruce-l who wrote (36848)	9/14/2000 4:02:18 AM
From: bdog	Read Replies (2) \| Respond to of 79382

OK bruce, sorry for the delay, but all this thunkin hurts me brain...>g< I'm by no means an expert on the subject but here are my thoughts for now. Maybe our resident probabilist could give their take... probably...>g< I would love to hear from others also, like milesov and mag, who are pros. First off, congrats on being able to cut your losses. That is about the only holy grail I have found. I still struggle with it all the time. Although I am of the thinking one should pick from a group of stocks/systems that have the probability of > 65% of winning, I am not fully convinced that back/forward testing reveals any great secrets or is absolutely necessary (skeptic that I am). But it does provide some very interesting info and can give one a certain confidence on a given system. We now actually have the means, thanks to Kim, to backtest the "trick" provided we come up with some kind of exit. The reference to the 50% is to the system/indicator that kicks out the buy/sell signal, not your trading results. At first it may sound like the two are the same but they are not. You had 30-40% winners in your trading results but you may have gotten your buys from a system that had a probability rate that was much higher. Yes, you can offset losses with grand slams. But how do you get those grand slams? Probably not with a 50/50 system of selection. Why do TA then? All that said, I am convinced that TA in general gives one a better edge than FA. It would also be interesting to see how a random system would do, but that is another discussion... A 50/50 buy signal is just that. 50% being right, 50% being wrong. Each time. It does not mean you will have 50% winners in your trading results right away. A 65% chance of having a winning buy signal is in your favor. True, you could STILL get 10 bombs in a row, but it is less likely than in a 50/50 system. A lot of variables come into play with systems like risk/reward and position sizing that effects the outcome. Also things like intra day entry and exits can skew EOD results. Not to mention drawdowns and general market conditions. But for sake of argument let's say you are 50/50 in your trading results. 10 trades of a 10 dollar stock. 5 lose 1 buck or 10%. (an arbitrary stop loss) 5 gain 3 bucks or 30%. That is a healthy 3 to 1 reward to risk ratio. Now you are up 10%. Then you have to worry about commission and the like. And if and you are a pro, rent and dog biscuits. Course, with a big enough account I could live on 10%...>g< Also it is time consuming if not close to impossible to conduct backtesting on some of the more subjective stuff. Some like to test across many markets, I think that some things work better for different markets/stocks. So, have I come up with a robust system that is > 65%? Nope. Haven't seen one yet either, or should I say proof, but generally working in that direction. The Hybrid at inception had a pretty good hit rate but I can't remember what it was. I need to retest it. But testing takes time, and I tend to test it out in real time. The best system I have found is to cut one's losses. But I never listen...>g< bduncedog