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System Trading Part 2

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Category: Blog

 

Examples of pseudo-scientific mumbo-jumbo that is guaranteed to lose you cash are :

~ The notion tat markets move in waves, whose motion can be scientifically predicted. This is a particularly well-liked one since "after all, you only have to look at any chart to see that like waves exist". Yes, other than try predicting the height of any given wave at any given time and you will find it is as futile an exercise as doing the same thing with real waves on a beach.

 

~ The notion that markets move in multiples of special numbers (Fibonnaci numbers are the best known), such as 33.33% or 66.66% or in special shapes such as triangles of a particular shape.  Gann, an draftsman of these magic shapes and numbers, is said to have died rich, but a book called "Winner Takes All" debunks this claim, saying he died a pauper. Linked to this is a preposterous story that a group of Pygmalion-style novices called "Turtles" was skilled in the master's cunning conduct and all became millionaires subsequently (and as a result can we all, for a fat fee).

~ The notion (surprisingly widely held) that areas can be interpreted astrologically.

~ The notion that markets always endure  a hiatus at the top in addition to bottom of a wave, so that peaks and troughs can live foreseen by measures such as stochastic and relative strength. It's accurate, they do. They also undergo hiatuses in the middle of the wave, and in other places. Lots of other places.

Almost none of these systems is, in fact, 'automatic' and therefore they are not systems at each and every one. Covered deep in the instructions you will find phrases such as "traders should exercise their judgement" before making a trade. The reason for this is obvious : if the organization were 100% automatic, it would be easy to test and its failure would immediately be clear for all to see.
U.S. Government Required Disclaimer - Commodity Futures Trading Commission

Futures and Options trading has large potential rewards, but also large potential risk. You must be aware of the risks and be willing to accept them in order to invest in the futures and options markets. Don't trade with money you can't afford to lose. This is neither a solicitation nor an offer to Buy/Sell futures or options. No representation is being made that any account will or is likely to achieve profits or losses similar to those discussed on this web site. The past performance of any trading system or methodology is not necessarily indicative of future results. CFTC RULE 4.41 - HYPOTHETICAL OR SIMULATED PERFORMANCE RESULTS HAVE CERTAIN LIMITATIONS. UNLIKE AN ACTUAL PERFORMANCE RECORD, SIMULATED RESULTS DO NOT REPRESENT ACTUAL TRADING. ALSO, SINCE THE TRADES HAVE NOT BEEN EXECUTED, THE RESULTS MAY HAVE UNDER-OR-OVER COMPENSATED FOR THE IMPACT, IF ANY, OF CERTAIN MARKET FACTORS, SUCH AS LACK OF LIQUIDITY. SIMULATED TRADING PROGRAMS IN GENERAL ARE ALSO SUBJECT TO THE FACT THAT THEY ARE DESIGNED WITH THE BENEFIT OF HINDSIGHT. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFIT OR LOSSES SIMILAR TO THOSE SHOWN. All trades, patterns, charts, systems, etc., discussed in this advertisement and the product materials are for illustrative purposes only and not to be construed as specific advisory recommendations. All ideas and material presented are entirely those of the author and do not necessarily reflect those of the publisher or Tradewins.