"Paper trade it and see what happens. That's what I'm going to do as soon as the market opens tomorrow." I just want to add I have done it and it's true that's all. Real trading, 80% losers out of 60 trades,made a tiny profit, how much more rational could I get? Actually I am convinced you can have worse than random entries and still make money. I like being accused to be irrational when people can't even follow a simple argument!!
I was talking to Bucky Lee not you. I don't doubt your results. It's just that some people need to see the results for themselves.
Well Shortnfool, TradeRX , BuckyLee or whatever you choose to call yourself. Computer Analysis of the Futures Markets There you go Bucky Lee take a read at it and than see. The results were documented in a book My father published his results in past newsletters call his office and buy one if you want to see more evidence but I've already told you of the results. Ed Seykota, Tom Basso, Paul Tudor Jones, Richard Dennis and a few others have very similiar studies. I am not sure if they ever published them though. The study of the chimp I've heard/read about the question is how losses were handled. rtharp
To get back to the difference in a winning and losing trader, I read something years ago, I believe in a book by Mark Douglas called The Disciplined Trader. He maintained there are three stages to becoming a trader. In the first stage you learn to identify attractive trades. In the second stage, you develop the ability to execute these trades. The third stage is reached when a trader can consistently build equity in his account. This is done by developing the discipline to apply your trading plan or system consistently. I have read the claims about random entry systems. I think there is a logical explanation why they can be successful. There are two basic entry signals used in trading systems. One is some form of breakout, whether from a channel or a volatility band or a new n day high,etc. The other is a countertrend entry which attempts to buy a low or sell a high, usually signaled by some sort of oscillator. The first is optimal for trending markets, the second for range-bound markets. The problem in system design is that you don't know whether you are in a trending or non-trending market until it's too late to take advantage of it. Thus you never really know if you should use one approach or the other. A random entry technique has the potential to blend these contrasting entry styles. If you throw in an exit technique that lets you stay in any good trend moves you happen to catch, you have a fighting chance of getting lucky and making money over some limited time period. The downside I would expect is a scary drawdown number.
Liam, How do the profitable guys do it? Good question...there are many ways...and usually because of a number of things adding up...the profitable one always seem to know when things are going to go in the the direction they expect....how do they do it? Do they have a crystal ball? Nah...Lets talk about one way...how about Tony OZ...He primarily uses support and resistance along with volume and pattern recognition...but how does he always seem to be able to find that winner? Easy, he has developed intraday real time scans that alert him to changes in the market or stocks which suit his trading style...insn't that what its all about... to be able to quickly know when a stock is going move in the expected direction? Thats one way and there are others...but I think the real KEY in any trading system or for any trader who is profitable is having that ability which quickly gets him in line for an expected move. Finally, if things aren't going the way the trader expects it to go he quickly and I mean quickly gets out.
Tharp, You make the grand assertion that any random system can heavily outperform the market... and when I ask for proof you tell me go read a book or buy a pamphlet from your dad??? I'm not surprised you had nothing to show us... Ed Seykota, Tom Basso, Paul Tudor Jones, Richard Dennis and a few others have very similiar studies. I am not sure if they ever published them though. You must have read these studies to know of them, what did they say? Please post just ONE of those studies right here for all of us to read. Works such as these I would enjoy as I'm sure many here would. Give us just one reference to a study from your dad's pamphlets or the book you mention that concludes that any random trading system HEAVILY outperforms the "market". Do you think you can find just ONE? Bucky Lee
liltrdr I am at ease. No matter what kind of proof you provide he won't believe it. This argument is a waste of time anyway. He should shut up and get a proof himself.
Richard Dennis's partner , I can't recall his last name, william was his first...he has tested a random entry system with good results. I read this some time ago ...will try to find it.... Nick
NKNY: âRichard Dennis's partner , I can't recall his last name, william was his firstâ¦â Eckhardt.
What's the difference between profitable and unprofitable... Here's my 2cents Some trading strategy works, gives profts in a certain market conditions. Opposite strategy MUST be unprofitable in the same market conditions. I think there are two types of market behaviour: 1. "Trendy" market. Trends are big, they exsist for some time. It's possible to jump in too late and close position to early or to late ( after trend's reverse ) and still have a nice profit. Trends are easy to pick, moves are strong - in these market behaviour one popular trading strategy works great: "cut your losses quickly and let your profits run" !!! But this strategy doesn't work all the time. When it doesn't work? In the... 2. Choppy market. When moves are chaotic, prices go up and down very quickly by a little amount, with no certain direction. Prices are bouncing in a tight range. "cutting losses and letting profits run" gives poor results in the choppy market. You can't run your profits beacuse there's no big moves. You can't cut your losses, because they happen all the time in the choppy market. So, opposite strategy must give great results in the choppy market, right? Don't cut losses, wait for a little profit. Don't wait for a big profit, close positions with a little profit. The moment of opening position also should be opposite to the strategy used in a "trendy" market. Go long when price falls, go short when price rises. I think this will bring your chances of making a succesful trade above 50% in the choppy market. I know, it's just a theory. But I think we must put our strategies on some theoretical fundamentals. You have to believe in SOMETHING! DT-waw