This entry was posted on Tuesday, June 5th, 2007 at 8:34 am and is filed under Education, market myths. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.
Tweaking settings. This Market Myth is the carrot that keeps the guru chasing, holy grail seeking, pie in the sky, almost breakeven traders going. All it will take is a bit of tweaking of my indicators and I’ll have the secret to the temple. Unfortuntely what usually follows the carrot is the stick and the lost trader moves on to new settings and new ideas.
Having had the opportunity to intereact with many of the readers of this blog and my former swing trade blog I can attest to the quest for the magic settings. I am here to tell you that tweaking your indicators is not going to make you become the trader you envision. What will work is consistently applying a trading strategy that has a historical and live traded edge.
Basing your trades on buying at the X period moving average versus the Y is not going to be the revelation you think it is. Having backtested virtually hundreds of thousands of variations of the main trading concepts (trend following, mean reversion) I can tell you that the “tweaking” of common trading concepts is not the answer. And it most certainly does not flow from some guru without a historical track record over varying market conditions. ALL systems have their blindspots. The key is to know those blindspots and have other systems that can pick up the slack in that sort of market condition.
So instead of chasing the magic setting I would recommend chasing broad concepts that do work. Find what has worked - not based on what your were told but what you can PROVE with your own research.
Have a Great Day,
Dave Johnson
June 5th, 2007 at 11:52 am
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