Moral Hazard?

    Posted by pdani on 9th of Aug 2011 at 03:20 pm

    To me, the worst aspect of this trade is the big divergence between it and the regular tone/bias of the site. It feels very strange - I really feel stupid - to be in a trade like this, while the regular posts and nightly comments point to the exact opposite. It's one thing to have different commentators give different opinions about the market - that's quite normal - but it's quite different to get literally opposing views on the same site! Your own indicators, charts and graphs - short and medium term -  all pointing down and yet we are deep into this. In my opinion this is what you guys need to really think about and discuss - how to resolve this dichotomy/incongruity/dissonance/divergence - how to incorporate your own indicators into the system. I say this in the spirit of friendly advice - I am here and staying here, love you guys etc. etc. - it's too bad we had this black swan event so early in the official life of this system - hopefully it will come back at least partially and the future will more than make up for it.

    Can't speak for BPT, but...

    Posted by burkmere on 9th of Aug 2011 at 03:49 pm

    this issue has been addressed many, many, many times by BPT.  The System looks to extract points at highly probable junctures.  In uptrends, it will generally go long at optimal times and in downtrends, it will go short after a bounce (generally, as I understand it).

    This time, as Matt explained, it went long right north of the 200dma, but when the spx fell through the 200dma, it kept buying in. In the past few instances where there's been a big waterfall decline (and corresponding drawdown) , the system was able to either sell on a big bounce for a small loss, or even for a large profit.

    This time there was a large decline below the 200dma and it appears that after a rally back up, the spy still won't get over the 200dma so there will most likely be  a "sell" and probably a loss to the trade. (Let's hope that it's not a very large loss..I did the multi-entry so I'm hoping for close to 1260 which will get me out ok).

    So, it is, indeed, logical that the overall picture could be of a declining market, for example, while the SPY SYSTEM is still in a long trade.  This probably doesn't happen very often...I think the System will usually go long in uptrends and short in downtrends, but I think at junctures where the market is switching from one trend ot the next, it's trickier.

     

     

Newsletter

Subscribe to our email list for regular free market updates
as well as a chance to get coupons!