mr_cassandra

Thats a good point. We each have our own styles, risk adverseness and personality that must needs be applied in trading. For instance, my own work targets deep selloffs and attempts to buy in as close to the bottom as possible. While we all know that no system or method will achieve laser precise entries, the real-world goal is to apply a method which gets as much as possible as often as possible. Many people have contacted me about ema based 'wait-until' methods because it makes them feel better if the turn has already occurred. Others enter before a turn based on indicator extremes. The final arbiter should be a spreadsheet or ledger comparing both ideas. As we've all seen, a quick glance at a chart and 'hey that looks good' won't do it.

But before I do remember one thing. Take everything you read in a forum or book, or hear from a guru or in a seminar with a grain of salt. Question everything. Only when you prove it to yourself, does it become the rule. Thank you for reinforcing the most important mantra for any student of investing (or anything, for that matter). The media and boards are full of learned sounding pontifications. You are tapdancing in a minefield unless you are willing and capable of checking out ideas for yourself. You would be horrified to know how many people out there make long winded learned pontifications on things they've barely researched, if at all. One example is people giving lectures about the out put call ratio, without ever mentioning that in recent years, its been totally skewed because of the inclusion of index options. caveat emptor

Richard Dennis was totally right. I've particpated in mechanical system boards for years and can tell you for a fact that many people don't use the systems as instructed. below is a list of reasons that NO system or method will EVER be so widely used that it invalidates itself. I read somewhere recently that any particular strategy will be skewed if it becomes popular enough and enough people start using it. That is indeed a widespread belief or concept. It is one of many that are often repeated by the financial media, another one is 'you can't time the market'. I think it does not take into account the huge effect human nature plays in its application. I've been developing a computer program that governs my trading since late 2000 and in discussions with other developers and users since then I have experienced many scenarios of human nature that would prevent any system or method from becoming so widespread that it would invalidate itself. Below is a list of factors of human nature that would be involved. 1. The myth that any system or method can catch every point of every move every time. If any system or method had even one loss or drawdown, this would cause X percent of followers to drop off in search of a better one. If this happened on their first trade X would become a larger percent. If there were two losers in a row, I?ve seen enough posts over the years to know there would be a large exodus. 2. Along the same theme, if the system buys or sells and misses any possible further gain, another X percent would become discouraged. 3. Along the way, you will also get people who 2nd guess the system, and thereby miss trades and get discouraged. This also involves media coverage making them discouraged or too optimistic versus what the program is telling them. 4. The 2nd guessing can also take the form of pure disagreement with the system, for instance if it said to buy at a major market low when things looked especially gloomy or vice versa during euphoria periods. 5. How much work will it take also eliminates anther X percent of possible system users. To illustrate this, here?s an example. Early versions of my program took me 5 minutes per day to update. I had several people ask me if there was any way to automate that so they wouldn?t have to spend 5 minutes per day. Think about it. 6. You would also loss another X percent of investors due to 'the grass is greener on the other side' syndrome, wherein they would drop off to chase a different system that looked better. 7. another X percent of people out there are religiously convinced it can't be done at all; to the extent they will steadfastly refuse to even look at trade receipts. Over the years I've seen about 75% of the people who respond just quote some sound bite they once heard saying 'you can't time the market' or must be curve-fit etc etc. When you press them for details, many times it turns out they have done little or no work on their own, just read an article once by a broker who said so. If I talk to 50 people, I get perhaps 5 like him that actually will do the diligence. 8. others feel that dollar cost averaging is the only way to go. 9. Others are all hung up on management fees to the extent that they will ignore a 20% fund with 2% fees in favor of a 14% fund with 1% fees, because a sound bite told them fees are everything. 10. others will get all hung up with macro bear or bull projections and miss all the intermediate moves a system could produce for them, sometimes ending up on the wrong side of an entire run. 11. It takes money to make money, so if it takes $5,000 to trade a given system, how many potential users did you just eliminate? 12. How many people will make some excuse to withdraw their money because they want a new sofa? (or fill in the blank) I've seen variants of this idea saying that if any one indicator was all that useful, everyone would follow it and it would become useless. In particular I've seen this said about the vix. Yet, it is as useful to my program today as it has been at any other time since the first back-tested trade in 1996. In part, I think that is because it measures fear levels translated into option premiums and as such is a guage of the crowd. As a mass effect, the crowd is highly consistent, decade over decade. I've been at this since late 2000 to correct my own gross inability to be a trader by using my career abilities as a programmer and fascination with contrarian indicators into a program which removed 'me' from the picture. In short, unless it delivers 10% per month to their account in a bank with zero risk, I say no system or indicator will ever become that widespread because people are people.

Theres a lot of ways, everyone probably settles into their own. One could be extremes in 5 day rsi and mfi. Others involved $trin. Watch out with oscillators, they judge everything by the time frame they are based in and if a given stock/index rises longer than the indicator is set for, they begin to 'diverge' yet this may be more of a wrong time frame in the indicator than a problem with the rising stock.

I agree, its not a simple piece of work. In addition to what you said, in my 7 years work I also found that you can't accept what many will step forward and tell you as 'givens' in the indicator world. You have to be willing to think 'outside the box'

I agree. My own work uses many indicators and there is nothing I haven't been able to write VB code for in excel.

not only that but I've seen all the following live and real with people following my work: 1. they disagree and sit out a long 2. they disagree and sit out a short 3. they try for a better entry and miss the trade 4. they see a quick profit and sell too early 5. they use short term ta on an intermediate term system 6. they use long term ta on a short term system The list is virtually endless.

I'm new here but not new to trading. Just offering my two cents. I've been watching people on system boards for years and don't think any system or strategy will ever be so widely used that it invalidates itself. People (in general) are so very prone to second guessing, expecting perfect trades, etc that it just won't happen. regards, Steve