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

To: TechTrader42 who wrote (24405)	11/19/2001 12:44:50 AM
From: Robert Graham	Respond to of 52237

Just to make things more interesting, what is trading range in one time frame can be trending in another. I find it difficult to sort out trades based on a mechanical method of trend following in a volatile market. I think it is more important to be versatile, and cognizant that there are different markets that need to be evaluated and traded differently. That is what my experience with day trading the SPOOs taught me. So I learned how to trade in different market conditions, including what may be crudely termed as "trending" and "trading range" markets. Actually, I found that the market cannot be classified as purely "trend" or "trading range" for trading purposes. Even though there are worthwhile concepts here to understand and be appreciated in looking at the market using this model, I found that it is woefully inadequate in actual practice. Some markets simply need to be handled markedly different than others, irregardless of this distinction of "trending" or "trading range". IMO I have seen the SPOO do things that simply cannot be adequately described in this fashion for my trading purposes. What matters is how one needs to trade the market to procure profits, given what is compatible with ones trading style and at the same time maintain ones profit to risk profile. For if I waited for the SPOO to do the "right thing" for me where price action is supporting of strictly the way I trade, my way, like in a textbook definition of a trend, I would not be able to survive as a day trader in my trading of one instrument, the SPOO. It is important to be flexible and adjust ones trading approach to the changing market. This is IMO the most significant thing trading the SPOO has taught me. Also how to think contrarian...no, there is a better term for what I have seen with the SPOO: diabolical. LOL I can see how this would change if I had the universe of stocks to trade. I would be giving up some of the significant benefits in trading future contracts. But I would gain the benefit of being able to filter out and select for stock that is behaving in-line with one particular trading strategy. Even then it would take me a final look at the charts in order to determine which ones I would be able to trade. This would be different then the day trading of one instrument, the SPOO. So my comments above relate to the day trading on one instrument for income. Still there is something to be said in trading what a particular instrument provides you in changing markets, and the distinctions of the market this approach can provide a trader. Also before I would credit any system as being very good, I would want to see the brokerage statements over a several year period. I find that many if not most break down when going through one complete market cycle. Either the system ceases to work, or the individual trading the system does not have the discipline to consistently follow through on the signals it provides, through what can turn out to be significant drawdowns. I also think that any tradable system will cease to work for the trader over a large enough period of time. I remember several years ago a well-known individual with good experience in the markets and an author of books on the subject made an offer to pay good money to see the brokerage statements as proof of a system's validity. He was not asking for the system itself, just the recorded proof of its success. He made this offer in his discussions on the Internet. He found no one has come forward to collect on his challenge. My 2 cents. ;-) Bob Graham PS: I did not have any specific system in mind when I made the statements above about the limitations of system trading.