Why Are Systems Necessary in Technical Analysis?

No stock market goes up forever. Indeed, most world stock markets have declined to zero at one time or another. The buy-and-hold strategy so popular in the United States today is based on a statistical anomaly. It is a strategy based on a survival bias in the U.S. and the U.K. markets, the only

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Complete Trading System

The following is from The Original Turtle Trading Rules by Turtle member Curtis Faith : Decisions required for successful trading: Markets—What to buy or sell Position Sizing—How much to buy or sell Entries—■’When to buy or sell Stops—■’When to get out of a losing position Exits—When to get out of a winning position Tactics—How

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How Do I Design a System?

Now you are convinced that you need to design a system for trading. However, how do you do that? Let us look at some of the requirements and steps involved in creating an effective system. 1. Requirements for Designing a System What is needed to design a successful system? Before even considering the components

How Do I Test a System?

Testing a hypothetical system is absolutely necessary, and the testing process can be tedious because so many ideas of how to trade turn out to be unsuccessful. This is the most difficult aspect of designing a system, and unfortunately, because it is so time-consuming and discouraging, many analysts take short-cuts, such as not performing

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Optimization of Trading System

Once you determine that the parameters in your system are valid, you may optimize the system. Optimizing is simply changing the parameters of a system to achieve the best results. The most important benefit of optimization is that the designer may find parameters that do not work under any circumstances. If parameters do not

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Risk and Money Management

“Risk is the amount and probability of an adverse or series of adverse events occurring” (Rotella, 1992). Substituting “losses” for “adverse events” results in the following: Risk is the amount and probability of a loss or series of losses occurring. Note that the probability of occurrence is as important as the total amount. There

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Testing Money-Management Strategies

We covered the standard method of testing a system in Chapter 22, “System Design and Testing,” but now we are looking at complete portfolio systems that include, hopefully, many subsystems and many issues traded using each subsystem with different objectives that satisfy the requirement for diversification. Of course, we should already have tested each

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Money-Management Risks

We have defined risk in many ways in earlier chapters. Variability of returns, amount of loss per trade, beta, and maximum amount of loss per trade, drawdown, maximum drawdown, and volatility of prices have all been used. In Appendix A, we cover some of the statistical principles associated with risk measurement in Modern Portfolio

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Money-Management Risk Strategies

In addition to determining the optimal position size, optimal initial capital, and leverage, risk strategies include the timing and placement of exits. Entry strategies carry no risk until executed. An entry can be made at any time, when the situation or setup is right, or not at all. Perhaps you would rather go to

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Monitoring Systems and Portfolios

All systems and portfolios must be monitored for changes in behavior. The obvious change is when the system is running a series of losses larger than usual. There are methods of monitoring the system that will warn of changes, however, before any substantial loss is incurred. Bryant (2001) suggests the following methods. Calculate the

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If Everything Goes Wrong

Occasionally a portfolio model breaks down completely. Murphy’s Law takes hold, and everything that can go wrong does. At that point, the remedy is to close down the system and exit all positions. A standard for closing the entire portfolio model is a dollar or percentage stop, usually around 20%. No system should sustain

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The responsibilities of the office

1. Introduction Everyone knows what is meant by an ‘office’ but very few are able to define it. To some it is where the management is and where the paperwork is done: to others it is where the clerks do their work, where the correspondence is done and where the filing is kept. In

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The location of the office

An office has to have a location and it is, therefore, appropriate to consider the various aspects concerning this before looking at the other factors concerning the environment. It is in the nature of things that it is not possible to find the ideal location but a satisfactory compromise must be achieved between the

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The office environment

The environment within which office work is carried on has been the subject of much study in recent decades, though this has lagged very much behind that done for the factory. Particular attention has been paid to the way furniture and equipment is arranged within offices, especially in those premises where the floor area

Physical considerations of office management

All office work causes mental fatigue, just as surely as manual work induces physical tiredness, and the result of this is a reduction in output, an increase in errors, and a lessening of the ability of the clerk to concentrate. The work of the clerical staff, whatever kinds of tasks they perform, is directly

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An introduction to office machines

The advent of machines into the office is often thought of as a modern innovation and it is sometimes forgotten that their introduction goes back into the last century, starting with the typewriter and the telephone. This introduction of machines was responsible for far-reaching changes, not only in organisation, but also in the methods

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Office Typewriters

1. Standard Typewriters The normal type of machine is the standard typewriter, sometimes referred to as a manual machine, where the typist’s fingers provide the motive power to operate the typebars and a clockwork mechanism and escapement produce lateral movement of the carriage. The usual machine of this type has an 11 or 13

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Word processing

1. Word processors Whereas the text-editing typewriter may be (and often is) called a word processor, word processors are fundamentally different in configuration and use. Almost all of them have a visual display screen (sometimes referred to as a visual display unit – hence the acronym VDU) which may or may not be integrated

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Dictating machines

Dictating machines have been in use for many years but it is particularly in the last few decades that their use has become widespread. This has happened for many reasons, but mainly because of the development of new, electronic devices, particularly magnetic recording, of smaller and more easily manipulated machines and because of the

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Reprography

One of the commonest tasks in the office is that of multiple copying, the requirements ranging from two or three copies to thousands. To meet these varying demands many types of machine have been developed, both duplicators and photocopiers. In fact, advances in the design of photocopiers using electrostatic methods have led to encroachment

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