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

To: Richard Estes who wrote (7582)	1/5/1998 10:08:00 PM
From: David R. Evans	Respond to of 12039

Hello Richard, Excellent points!!!!! I've found that many times using the cross instead of > misses some entry/exits if they are back to back. It also changes in the reverse. You need to experiment and see what sounds and looks right. Then you must apply the same tests on hundreds of new charts to make sure the results hold up. I have run these test in so many different ways I forget half of them BUT I still continue to run them. Is it just a waste of time or playful gaming? NO! I am trying to save myself money by making the mistakes off line. Never assume that a combination of indicators will work a certain way because in most cases you will be wrong. Example. I ran many test of StochRSI (14) and thought that if I could just run it on the right side of the mountain I would make a lot more money. With that in mind I put a 5 - 40 EMA cross on top of it. Now I would only buy when StochRSI (14) crossed UP THROUGH 30 AND the 5 day EMA was above the 40 day EMA. Sounds like it will save me a lot of money right.... WRONG. I actually got worse numbers with the 5-40 cross. Why? Well the 5-40 cross eliminated two of my better trades... As I started running the same test on different charts I found similar results. Some charts it helped and some charts it didn't. There was nothing significant to tell me that my original assumption, as sound as it might have seemed, was based in any trading reality. That's why you must TEST out anything and everything BEFORE you put your money on it. DO NOT trust your heart! Do NOT trust your emotion, and for God's sake, DO NOT trust your eyes!!! Dave Evans