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Perhaps a good strategy would be to fade these calls then. Wait for the money to push the market in the direction the media indicates, then fade it so you can be on the same side as the smart money when the market comes back down. -Raystonn

System versus discretionary trading is really a red herring. The real topic is risk versus reward. In kiwi's two examples, we do not know the risk for each system. He has not given the maximum peak-to-peak drawdown of either system. Thus, determining the risk:reward ratio is not possible. I...

Why do you say the first is better? The first and second may in fact be identical strategies with different levels of margin. The maximum peak-to-peak drawdown defines your maximum safe margin level. The better your margin, the better your return and the higher your drawdown. Just keep it...

For the sake of simplicity, let us assume that every year has 365 days. Also, let us assume that the probability of an up or down day is exactly 50%. (It isn't, but the average winner versus average loser removes the edge from that fact. These assumptions are just for ease of demonstration.)...

Don't be fooled by randomness. That statistic means nothing for the future. If you flip a (fair) coin 100 times and analyze the results you will find "patterns" in that data as well. You need to ignore patterns that are the result of randomness. The best way to do this is to analyze the odds...

By the way, this thread really has nothing to do with mutual or hedge funds. Someone else brought up that subject. -Raystonn

Again, the systems you labelled as being inconsistent are in fact fairly consistent. An inconsistent system will be a bit like winning the lottery during one time period and losing everything the next. It looks completely random when you move beyond the curve-fit time period. -Raystonn

More than that really. You need to examine the equity curve. A series of sharp ups and downs means the risk is too high. It's too volatile. Ideally, you'd want to run something like a Monte Carlo simulation on the list of trades from a real account. That would give you an idea of the risk...

Yes, I'm sure you do usually get slapped. But if you can keep your slaps less painful than the pleasure gained when they say "yes", then this technique could be profitable. You don't necessarily need more winners than losers if your winners average much more than your losers each time. :D...

Your strategy listed as inconsistent is actually highly consistent. An inconsistent strategy would result in a 1000% profit one year and a disastrous wipeout the next. No reasonable trader would use such a risky strategy. As far as being off the mark, please state where. Nothing I have...

I recommend you analyze your risk profile. Wha happens when the market moves against you? What's your maximum peak-to-peak drawdown? The brokers need to be able to cover this with your margin. -Raystonn

A decent, but not infallible, measurement would be Profit Factor. This value is the profit generated by profitable trades divided by the losses generated by losing trades. A value of 2.00 would indicate that twice as much money was made from winning trades than was lost from losing trades...

How many of you are impressed when you see someone has won a certified, audited, trading competition by achieving 200% profits for the year? Would you be impressed if it was 1000% instead? If you absolutely could rely on the certification and audit and the trades really did take place, would...

This is how I approach stock investing: Write down your criterion for stocks, including a minimum to filter out trash stocks, and a sort criterion which ensures your best picks are on top. Each day/week/whatever recheck all stocks in your universe and get the new top ten list. Split your...

To be honest, that is not a whole lot of money. Most brokers require more than that to open an account. To daytrade stocks requires $25,000. You can swing-trade (leaving positions open overnight) with much less than that. One investment/trading vehicle requiring a very small amount of...

Your most important task is to do your homework. Never trust what someone says unless it is a fact verifiable with an official source. Do your own math and always be skeptical. As a somewhat new investor or trader, your first priority is to not lose money. Look around you and figure out how...

Rich... Poor... the moment you label yourself you have lost the game. The former label implies complacency. The latter label implies acceptance of failure. People have a strong tendency to live up, or down, to expectations. Don't allow others to label you and you will find yourself much...

Commissions and spread aside, this is correct. If you can consistently lose a greater sum per trade than you pay in commissions and slippage, then you can reverse the buys and sells to generate a winning strategy for that time period. Note: time machine not included. -Raystonn

Stockgirl, Who are you? If/When you publish are you planning to give credit or ask permission? Per your research questions: People would rather the (potentially slim) chance at wealth in exchange for the (potentially high) chance at failure, than to be told to sit down and behave...

I object. That paper bag is clearly dry.