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Strategies & Market Trends : Stock Attack II - A Complete Analysis -- Ignore unavailable to you. Want to Upgrade?

To: waverider who wrote (21997)	10/18/2001 2:20:03 PM
From: TechTrader42	Read Replies (2) \| Respond to of 52237

I wasn't espousing buying and holding, wr. The heck with that in a bear market. All I was saying is that most systems based on indicators do worse than buying and holding. Many systems that sound good in theory actually lose money in profit tests. The point is that TA doesn't provide the certain profits in trading that a lot of newer traders expect. Any successful system has to be firmly founded in good money management. So if you're following a system based on indicators such as stochastics, and expect it to make money for you based on its signals, and don't use stops, and don't guard against losses, you're probably going to lose money. I think the best traders can make money with the worst systems, and the worst traders can lose money with the best systems, because they know how to limit losses. It's a sensitive topic, because some traders need to believe in mechanical systems that are going to make money for them, when in fact they're usually not. They're the modern-day alchemists. In the end, if they don't guard against losses with sound money management, their caldrons will be filled with a lot of lead. And some traders need to convince themselves and others that they can consistently forecast the direction of the market, when time after time it becomes evident that they can't, no matter how they repeatedly spin things in hindsight. TA can be extrememly useful, when used with some degree of caution, good money management, and even some degree of skepticism about indicators. That means using stops, and avoiding risky trades based on guesses or other people's predictions. The best newsletters allow for the fact that the market might not move as expected, and they often include specific trades with specific stops. They also give specifics on performance. And they often advise staying out to the market when the trend is unclear. They seek to minimize risk. And so on and so forth. We will now open our hymn books to No. 118, "Our Guru Shall Watch Over Our Portfolios."