To all those who are tempted to outhink the SPY system (for
example, by selling into the current rally or by not taking trades
when the market appears vulnerable to you), I suggest an
experiment. Set up a paper trading account with your broker
and invest the exact amount in both your real account and your
paper account, except that the paper account makes trades exactly
as the system generates them whereas the real account is managed
the way you normally tend to manage it. I suspect that most
people will be surprised at how the paper account will gradually
outpace the live account. At least, most people who are not
extremely adept traders, but then again, these don't need a
mechanical system.
"...most people will be surprised at how the paper account will
gradually outpace the live account."
You must be looney, or just stated it backwards. The "live"
account if based on the SPY system will outpace your individual
tweaks in a 'paper' acxcount. Every tweak so far examined here is
weaker than just following the systems as is.
And just to be clear, I wasn't talking about tweaks.
Tweaks are systemic. I was talking about the tendency
to override the rules but not taking trades, closing out trades
early, etc. based on one's sense of where the market is going.
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Following the system
Posted by algyros on 5th of Jul 2011 at 06:46 pm
To all those who are tempted to outhink the SPY system (for example, by selling into the current rally or by not taking trades when the market appears vulnerable to you), I suggest an experiment. Set up a paper trading account with your broker and invest the exact amount in both your real account and your paper account, except that the paper account makes trades exactly as the system generates them whereas the real account is managed the way you normally tend to manage it. I suspect that most people will be surprised at how the paper account will gradually outpace the live account. At least, most people who are not extremely adept traders, but then again, these don't need a mechanical system.
say what?
Posted by perthx on 6th of Jul 2011 at 11:44 am
"...most people will be surprised at how the paper account will gradually outpace the live account."
You must be looney, or just stated it backwards. The "live" account if based on the SPY system will outpace your individual tweaks in a 'paper' acxcount. Every tweak so far examined here is weaker than just following the systems as is.
I'm afraid you read backwards.
Posted by algyros on 6th of Jul 2011 at 11:56 am
I'm afraid you read backwards. Try again.
And just to be clear,
Posted by algyros on 6th of Jul 2011 at 12:04 pm
And just to be clear, I wasn't talking about tweaks. Tweaks are systemic. I was talking about the tendency to override the rules but not taking trades, closing out trades early, etc. based on one's sense of where the market is going.