Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : Technical Analysis - Beginners -- Ignore unavailable to you. Want to Upgrade?

To: Jan Robert Wolansky who wrote (7517)	1/4/1998 2:56:00 PM
From: David R. Evans	Read Replies (2) \| Respond to of 12039

Hello Jan, Anything that can give you more information is good BUT you can only go so far with system test. A good example is StochRSI. Run a system test using StochRSI for any length and you will see what I mean. The end results may be very good BUT I bet there are many trades that would not have been traded the same way as the system test shows. I'm sure there is at least one case where you get a buy signal when StochRSI crosses UP THROUGH 20 or 30 or whatever you are using for your buy signal but it fails to cross UP through 70 or 80 then fall back down through 70 or 80 for your exit. The system test would keep you in long until at some point in the stock's future it does cross up through 70 or 80 and falls back down through it. Now that's all well and good BUT, is that the way you would have played it????? The same is true for Dahl. Now please remember that I LOVE Dahl and rely on it heavily BUT, would you really stay in a trade that might be giving back 10% or more of your profits over a say two Month period?? If you were trading Dahl that's what you would have to do. I've heard many people say they would get out before that happened and maybe they would BUT, how would they know which time to get out and which time to stay in??? You see, Dahl might do that two or three times before it is through with a stock and if you pick the wrong time to get out early you might miss the big run. The other thing to remember is stocks DO NOT hit 80/80 then drop down quickly. There are stocks that have been on the Investor's Business daily list of 80/80 for Months and even years. As long as they are growing and outperforming the Market they will stay on the list. I realize that I can not guarantee that my database will always contain only 80/80 stocks OR that the entire time period covered in my database will be 80/80 BUT it's the closest I can come to it. Once again I say I do not care about the 40/40's or 50/50's or the stocks below their 200 EMA's. I'm only concerned with the 80/80's... On the other hand, when I am trading the DJ30 I'm only concerned with them and not the 80/80's... In both cases the system I'm using works well BUT if that were not the case I'd adjust. If my StochRSI (14) system did not work well with the DJ30 and that's what I wanted to trade, I would just use another system. Maybe I'd just use price crossing UP THROUGH a 200 EMA or Jack's System (which I like very much by the way). The point I'm trying to make is stay flexible. If a system does not work well with a certain group of stocks then do not use it with that group of stocks BUT do not just throw it in the trash can, use it the way it was intended... I remember many years ago I use to use historic dividend yields to find turnarounds. It was a system that worked very well and gave me such winners as Bank of Boston bought at around $4.00 and sold at around $25.00. This was a true turn around system and took a few years to develop a trade. I also bought IBM for under $40 and sole at above $60. Now there is NO WAY I could use that system with the stocks I am trading now because I would never get a buy signal. First off many of my stocks do not even pay dividends. In the second place I would have deleted them from my database before their current yield had a chance to fall too much below their historic yield. Does that mean my historic yield system is no longer useful? NO... Does it mean that my current system is no good because it will not work with the same stocks as the other system? NO. It just means that I need a different database for each. I would never even think of testing one of these systems against the other using the same database because I know it would not work. I am also sure that BOTH of these systems will make you money. At this point in time I prefer the system that keeps me more involved so I use the StochRSI (14). Is it becoming clearer???? Dave Evans