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How do you measure reward/risk?

Good points. But gaps can work for and against you and in high frequency swing trading they end up causing a variation of risk of zero-mean about the target value. Michael Harris makes a few comments regarding these and other problems of the risk percent method in this paper...

You got it! This is a good reason to try to figure out a way to set stops based on value rather than on technicals that make little sense at this point. Actually, the big dogs care about how much they make or lose. This means that technical levels are primarily determined by value.

But how do they determine the entry point? You need software to do that unless you are some kind of a fundamental or random trader. Then what you say applies solely to position trading.

DRYS? lol...

Looks like a black box of some kind. APS is a white box. It generates code you can use immediately in 4 different platforms or you can use the exact pattern descriptions provided by the program to develop code for other platforms.

Probably, I woudl say even lower, if and only if, deleveraging continuous for a while. IMO, P/E multiples are just like leverage in some particular sense. We may get to a point where people will not be willing to investe in secutities with a P/E higher than 5 for example. That will bring Dow...

I find very interesting the possibility that some patterns can stay profitable for a period of time as long as 6 years or so as it is suggested in the following analysis: http://www.tradingpatterns.com/About_Us/articles/article3/article3.html Programs like APS are just tool for finding...

Excellent points! Trading is not as simple as tossing a coin, whether biased or not.

Before this market makes new lows it will provide a strong but of course false sense to the general public that the bear market is over. This will create more upward momentum and a good opportunity for many funds that lost money to recover some $$$$$ at the expense of the uninformed investor...

This is an important question. Michael Harris in his new book 'Profitability and Systematic Trading' deals with this issue and the answer he gives is that it depends on your time horizon. He also provides an example of lines that meet the definition of a trendline but on a Dow chart, one still...

Manage exactly what? If you are right 80% of the time your expected gain per trade (expectancy) is zero as someone else already pointed out to you: E = prob win x avg win - prob loss x avg loss = .8 x 1 - .2 x 4 = 0 After taking into account slippage, commissions, missed trades, etc. you...

Since many here have been forward testing since teenage years in addition to back testing, probably you won't get too many replies. :)

Good question. There are many answers depending on the objective function you use in the optimization. (1) Do you want to minimize risk and maximize return? (2) Do you want to minimize variance of returns? (3) Are you looking for geometric equity growth (4) ...... I think you...

In you website you state: "Solving, P=439/5040=8.5%. So with a 50/50 chance of a winning trade, you will almost certainly be down at some point during a 14 trade period." Not correct IMO. First, an 8.5% probability of survival is quite high. Second, I think you confuse probability of...

Specialists hit bid/ask all the time to provide liquidity, so what you say is in conflict with that notion.

Please define: (a) Liquidity taker (b) Liquidity provider

How much would you pay to outsource having sex with your girlfriend?

I exchanged a few emails wwith the staff at tradingpatterns.com about this and I was told that this is not the case and there are no seed rules in APS. TSL uses seed rules but employs a genetic programming algorithm that can create completely new rules. Having used APS for a while I get the...

On the contrary, I think anyone who believes order flow can provide a massive edge understands nothing about order flow. I get the impression you are an old timer who worked during the time order flow in a pit occasionally provided some edge to locals and their firms. However, retail traders...