Forum Archive Index - February 2003

["tennyson@caverock.net.nz" <tennyson@caverock.net.nz>]

Hi Travis,
 
> 
>Backtesting in such a way works no better than
>backtesting a single indicator on the entire market. 
>Stocks do not have "personalities", although many
>traders seem to think they do.
> 
>News comes along essentially randomly.
> 
>I say bah humbug to the all knowing insider.
>


Except when the insider is buying?


> 
>The precision to which someone can measure psychology
>in OHLCV data is only about as great as the precision
>with which someone can measure the amount of
>phlogiston in a piece of wood.  You can write the best
>programs and use the best hardware but it is a doomed
>enterprise.
>



Maybe, but I don't see anyone on this forum making the claim that 
they can program a computer to trade automatically.

By the same token, I don't see any fundamental investor here claiming 
they can pick shares by using automated fundamental analysis.



> 
>TA users don't often pay much attention to fundamental
>information such as "news", they just read charts.  
>
>



Sure but Phaedrus claims he does use fundamental analysis as well.

So saying that a trader who pays no attention to fundamental 
information is likely to be on the fast track to failure is probably 
something Phaedrus would agree with.



>
>> 
>>So what you are saying, Travis, is that successful
>>traders are really successful risk managers.
>>   
> 
> Yes.
> 
> There are two aspects to trader money management and
> as I said neither of them involve charts.
> 
> Traders decide on the average amount per trade they
> are going to commit, these methods include pyramiding
> vs anti-pyramiding strategies where the trade size is
> increased in line with equity increases or decreases,
> or optimal f and secure f.  These methods are always
> based on mathematical techniques and analysis of
> trades.  No charting is involved.  This is often
> referred to as "money management", though I prefer to
> call it "trade sizing" because "money management" has
> other meanings.
>
>

I can't remember a single discussion on 'trade sizing' taking place 
on this forum.  Perhaps some successful traders out there would like 
to comment on this subject?.

>
> 
> The second aspect is the limitation of losses.  So
> called "risk management".  These basically involve
> stop losses of various sorts including fixed stops or
> trailing stops.  Once again it has nothing to do with
> technical analysis because it is based on your trade
> equity, not the price of the stock.
>
>

Please explain how you can 'fixed stop' or 'trailing stop' that is 
not based on the price of a stock.


>
> 
>Anyone is welcome to chip in with evidence that:
> 
>TA systems work, including studies to support this
>assertion or comprehensive backtesting studies that
>work on valid out of sample data.
> 
>That users of TA can outperform the market over the
>long term and that successful users outnumber what one
>might expect from completely random chance.
> 
>That there exist successful TA users and that their
>success comes from TA.
> 
>Provide evidence for some or all of these and I'll
>stop terrorising this group with all my horrible nasty
>little facts.
> 
>Note that you need to do better than just quoting some
>article written by an internet pundit, I'm
>specifically looking for credible information with a
>degree of respectability and scientific repeatability.
> I know there are many articles making claims about
>TA, I don't need more claims I just want evidence.
> 
>Once again, anyone is welcome to contribute here, not
>just Snoopy.  
>
>

Yes I should probably take off my devil's advocate hat here and let 
the real traders take over the argument

>
>
>If someone here has any credible
>evidence whatsoever I'd love to hear it.  I'm sure you
>all do because no rational thinking human being would
>follow an investment strategy without first
>determining whether or not it works, would they?
>
>


Well, I'm not so sure.  Plenty of people buy any property because 
"property always goes up".   They still teach budding fund managers 
'efficient market theory' at university.

SNOOPY







 
---------------------------------
Message sent by Snoopy 
e-mail  tennyson@caverock.net.nz
on Pegasus Mail version 2.55
----------------------------------
"Dogs have big tongues, so you can bet they don't 
bite them by accident"

----------------------------------------------------------------------------
To remove yourself from this list, please use the form at
http://www.sharechat.co.nz/chat/forum/