Experiments in Technical Analysis

rpc · #**541** 14th December 2006, 08:45 PM

hi sanjay
the chart looks like a PSAR implementation.I have not fully understood your explanation.Perhaps the excel working might clarify certain things.
with best wishes
rpc

rpc · #**542** 15th December 2006, 01:59 PM

Hi
Stop Loss *only* for protecting profits is ok for pundits of stock markets who can read stk mkts like back
of their hands.Those who can almost predict the price movements.For lesser mortals like us % SL is
a tool to protect capital loss.People who may misinterpret a chart formation or an indicator and
thereby could loose a lot of money in sudden crashes.Kalayan has rightly said our markets don't
correct, they crash.The pundits can probably forecast such crashes(Mark Mobius did so for May 06 crash)
Other people who *sometimes* get carried away by market momentum the % SL is a *must*.No one is insisting
that adverse movement by a given percentage ( 1,2,5 etc) would imply a reversal of trend.As Karthik has
pointed out this is an exercise where all the participants had decided about keeping a fixed % SL.It
is because of this % SL are being implemented.
If a long position is taken then can anyone say that after a % SL is hit and the uptrend is establisehd
again, the possibility of an uptrend continuing is more than the trend reversing again and going in down trend ?
Can people who are less knowledgeable predict the prices and trends.Can such people predict prices
that will prevail next day.If not what method should be adopted to protect oneself from losing the capital.
Staying out of market is an option only in highly volatile markets.Otherwise why trade at all.

with best wishes
rpc

AJAY · #**543** 15th December 2006, 05:42 PM

Dear Karthik and other friends who are associated in this SIE,

It seems my argument over the technical stop is not tasting good or my presentation might be wrong. I am sorry if anyone gets hurt over my argument on this issue. From my side I am not directly contributing anything to this exercise. So naturally I don't own any rights to come in between. But as I also have a little experience in these markets I thought I should do something even indirectly. But never intended to spoil the game. My only objective here is to try keeping the game on right side. But, looking into a few posts here, it seems I better go off this topic.

But friends! please remember one thing. A stop is a point where the trend is said to have failed. There is nothing like protection of profit or protection of capital - for a stop. The stop might hit at any time, whether you are running your trade in break-even or in profit.

Friends, before adopting the system, the way the exercise is on here, it should be there. I really appreciate your collective effort. But that system should be without any flaws over the basics.No system is 100% perfect. But when addressing the basic issues of the system- the Entry and the Exit- we should try keeping it least objectionable. I sincerely suggest you to diccuss-when you all meet in the chat room - to arrive at a better way of stopping the trade. Please keep some out of box thinking. Please try to look at this issue from other view point. You might come out with some wonderful output over this issue. Even then, you feel the one which is now on is good relatively over the other ideas what ever you get in course of your discussion, then I also suggest you to adopt the same without any disturbances. But please pay attention to this issue.

Still this sounds odd, I request you all to excuse me for disturbing you people.

Thanks and happy practicing Technicals

AJAYKUMAR

rahulg77 · #**544** 15th December 2006, 08:32 PM

Dear Karthik,

I have placed a query on this page http://www.traderji.com/technical-an.../5425-kst.html. I request u to see it and explain. Its a very small query and should not take a lot of your time.

Thanks

Rahul

SGM · #**545** 17th December 2006, 08:40 PM

Quote:

Originally Posted by AJAY

Dear Karthik and other friends who are associated in this SIE,

It seems my argument over the technical stop is not tasting good or my presentation might be wrong. I am sorry if anyone gets hurt over my argument on this issue. From my side I am not directly contributing anything to this exercise. So naturally I don't own any rights to come in between. But as I also have a little experience in these markets I thought I should do something even indirectly. But never intended to spoil the game. My only objective here is to try keeping the game on right side. But, looking into a few posts here, it seems I better go off this topic.

But friends! please remember one thing. A stop is a point where the trend is said to have failed. There is nothing like protection of profit or protection of capital - for a stop. The stop might hit at any time, whether you are running your trade in break-even or in profit.

Friends, before adopting the system, the way the exercise is on here, it should be there. I really appreciate your collective effort. But that system should be without any flaws over the basics.No system is 100% perfect. But when addressing the basic issues of the system- the Entry and the Exit- we should try keeping it least objectionable. I sincerely suggest you to diccuss-when you all meet in the chat room - to arrive at a better way of stopping the trade. Please keep some out of box thinking. Please try to look at this issue from other view point. You might come out with some wonderful output over this issue. Even then, you feel the one which is now on is good relatively over the other ideas what ever you get in course of your discussion, then I also suggest you to adopt the same without any disturbances. But please pay attention to this issue.

Still this sounds odd, I request you all to excuse me for disturbing you people.

Thanks and happy practicing Technicals

AJAYKUMAR

Hello Ajay

There is no argument regarding the use and importance of SL. No one disagrees with the fact that every system should have a technical SL and it means, and I quote you again here "A stop is a point where the trend is said to have failed."

The problem we are facing is the current set of systems use crossover as a signal, and if we rely only on the crossover to reverse the position, at times the drawdown will be huge. Now our back testing implies that the systems are good but there is a possibility that they may create big draw downs in the initial stages, using a fixed % stop is an option we are trying out to overcome this.

In the systems we are testing we identify the trend by crossover i.e. comparison of past performance over relative smaller timeframe with larger timeframe. We are aware of the fact that there is no predictability involved in this kind of data, what we are looking for is a statistical advantage.

Once we identify the trend and take up a position accordingly, if the price action indicates that we were wrong, what are the options other than cutting the position? The question is still open if we wait for the reverse crossover or we cut the position before that.

The statistics of the past data indicate that the systems will perform the best if we do not use a fixed % SL and wait for reverse CO. However the back tests over a small period with limited capital also bring out the fact that there can be a wipeout in few of the runs.

You must be aware that before we started this SIE we did perform comprehensive back testing and then decided to use a fixed % SL (initial and trailing but no Profit Stop)

We value your inputs and do look up to your guidance. I am sure all the participants of the SIE share this sentiment.

Suggestions from all the members are most welcome, it will be wonderful to incorporate them in the SIE.

Warm Regards
Sanjay

aca_trader · #**546** 17th December 2006, 10:45 PM

Quote:

Originally Posted by SGM

The problem we are facing is the current set of systems use crossover as a signal, and if we rely only on the crossover to reverse the position, at times the drawdown will be huge. Now our back testing implies that the systems are good but there is a possibility that they may create big draw downs in the initial stages, using a fixed % stop is an option we are trying out to overcome this.

Once we identify the trend and take up a position accordingly, if the price action indicates that we were wrong, what are the options other than cutting the position? The question is still open if we wait for the reverse crossover or we cut the position before that.

Warm Regards
Sanjay

What if we choose MA cross over or price moving below/above Pivotal low/high, whichever occurs first, as the stop loss point? This will also avoid the need of predicting future cross over points?

kkseal · #**547** 17th December 2006, 11:35 PM

Referring to post #547 by SANJAY :

That's as clear and as polite an explanation as anyone can give.

Quote:

We are aware of the fact that there is no predictability involved in this kind of data, what we are looking for is a statistical advantage.

Beautifully put!

Couldn't help expressing my admiration for the clarity, language & tonal quality of the post.

Wish i could write like that.

Regards,
Kalyan.

johnbest · #**548** 18th December 2006, 10:10 AM

Dear friends

new to TA and Mabiuts....

Using AB, I got an error on last two lines ie; plotting BUY and SELL,

Error 30, Syntax Error
PLease help me out

best regards JB

sivavkm · #**549** 18th December 2006, 10:24 AM

Quote:

Originally Posted by aca_trader

What if we choose MA cross over or price moving below/above Pivotal low/high, whichever occurs first, as the stop loss point? This will also avoid the need of predicting future cross over points?

I will vote for this method (till i find a better one)

kkseal · #**550** 18th December 2006, 07:29 PM

Quote:

Originally Posted by sivavkm

I will vote for this method (till i find a better one)

Looks a fair enough method to me with less complexity and taking care of everybody's concerns.

Regards,
Kalyan.

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