Any comments on always in (either discretionary or mechanical)systems? I have blown up more than one account using always in trading, but I think I personally could have possibly had a little more to do with the failure than the concept. I am looking for a psychological crutch to help me stay with positions (both winners and losers) until I am convinced my position needs to be reversed.
IMHO, a good system is always in the market - at least in theory. The only "automated system" that I know that can do that is: ZERO A descretionary trader could do it I think...but he would have to be half cyborg to not get any ulcers. nitro
Nitro, I'm half cyborg, that's not a problem. Now the other half of me is also cyborg, and that is a problem. The miniscule moves that I am in on are nothing compared to the relatively large moves that occur when I am out. I like to scalp. I figure, if I was just in instead of sitting here waiting for a scalping opportunity, I would still be trading about the same everyday.
My system often reverses short to long or long to short in certain circumstances but not always. There are times when market noise will kill you. Runningbear
I am always in, but I trade pairs, so I am half long and half short. This seems to work fairly well for me, but it requires some serious money management. At times I only have a portion of my capitol invested, but when things get really spread out, I will bump up against my 4 to 1 margin if I'm not careful. The challenge for me is to size my positions so that I have as much of my capitol invested as possible and still have enough room to work the trades without running out of margin when they are going against me. I find that I catch a lot of the moves at the open and close that I would probably miss if I wasn't holding overnight. But, like I said, you have to be careful about your sizing.
it depends if you talk about always in with one market or always in accross markets (including hedge, pairs, asset alloc). I think always in within a single market is very difficult. and that's because there are many times no play has good odds to you or any system. maybe it can be done but I don't know how. the odds are just easier to get when you choose not to be always in. being always in, accross markets, on the other hand, is very effective.
The problem with always in trading is that on a normal multi-bar pullback your system may call for an exit and reversal, then to be met with another as soon as the original trend continues. You can give back much of your gains this way. I'm backtesting a 30-minute / 13period SMA plan right now and seeing alot of whipsaws.
Moving average "always in" methods provide plenty of whipsaws. But the longer the time frame, the less significant those whipsaws are. Additionally, moving average "always in" methods tie up your money when the move occurs fairly quickly and then consolidates, ie., moves sideways, while the moving average catches up. But if you can hang for the long term there are some stocks out there that will make excellent money for you. Take a look at IBM for the past 2 years just using a 40 day sma and always being in. You know, I ain' saying nottin' about nottin' 'cept that...