What I have learned from this (ongoing) trade is that in the
future it is up to me to make assessments of the major trends
before automatically making any SPY System entry signal. I sorta
did that this time and decided to take multi-entry because of
percieved risk of trend shift. Normally I would take single
entry.
SPY System results would obviously be excellent if starting
trading March 9, 2009, or in any similar multi-year uptrend. The
danger is that the last long of such a long rally could possibly be
a big loser if a trend shift occurs during the trade, as it
did this time.
So in critiquing my own performance, I have to ask myself why
did I even take a multi-entry SPY trade in the face of 1) Mar 9
rally completed EW count in April 2) huge H&S staring me
in the face on S&P daily chart 3) Significant divergence
on weekly chart.
Yet in spite of what I know about these warning signs, I didn't
take enough caution.
My Point: Taking every SPY buy/sell signal based on 9:1 success
rate is not
alwaysprudent. Self, don't check your brain at the door. Be
cautious any time a long trend could be ready to reverse.
SPY System is mechanical. It does it's job. It looks like most
trades are 90% "safe". But most is not all and I don't have to take
every trade. In other words, I could profit fine from the SPY
system just like it is with no "improvements" as long as I have a
rational assessment of the probability of a long term trend
shift.
I hear you Doug but only after a number of trades will you be
able to look back and say if you improved the performance of the
system. I was trading automated systems for a while and I
frequently came up with "logical" reasons why a signal was not
right and I would not take the trade. Over time though I was wrong
more often than not so ultimately I had to ask my wife to keep an
eye on the systems to make sure the signals were properly executed
etc. I went and did other trades and we did better overall for a
good stretch in 2009 till the systems stopped working -- that was a
nice period, sigh!
Major Trend Shifts and yhe SPY System
Posted by dougmil on 10th of Aug 2011 at 12:40 pm
What I have learned from this (ongoing) trade is that in the future it is up to me to make assessments of the major trends before automatically making any SPY System entry signal. I sorta did that this time and decided to take multi-entry because of percieved risk of trend shift. Normally I would take single entry.
SPY System results would obviously be excellent if starting trading March 9, 2009, or in any similar multi-year uptrend. The danger is that the last long of such a long rally could possibly be a big loser if a trend shift occurs during the trade, as it did this time.
So in critiquing my own performance, I have to ask myself why did I even take a multi-entry SPY trade in the face of 1) Mar 9 rally completed EW count in April 2) huge H&S staring me in the face on S&P daily chart 3) Significant divergence on weekly chart.
Yet in spite of what I know about these warning signs, I didn't take enough caution.
My Point: Taking every SPY buy/sell signal based on 9:1 success rate is not always prudent. Self, don't check your brain at the door. Be cautious any time a long trend could be ready to reverse.
SPY System is mechanical. It does it's job. It looks like most trades are 90% "safe". But most is not all and I don't have to take every trade. In other words, I could profit fine from the SPY system just like it is with no "improvements" as long as I have a rational assessment of the probability of a long term trend shift.
Doug Milliken
I hear you Doug but
Posted by bkout3 on 10th of Aug 2011 at 04:21 pm
I hear you Doug but only after a number of trades will you be able to look back and say if you improved the performance of the system. I was trading automated systems for a while and I frequently came up with "logical" reasons why a signal was not right and I would not take the trade. Over time though I was wrong more often than not so ultimately I had to ask my wife to keep an eye on the systems to make sure the signals were properly executed etc. I went and did other trades and we did better overall for a good stretch in 2009 till the systems stopped working -- that was a nice period, sigh!
the three day chart of
Posted by dylan398 on 10th of Aug 2011 at 04:35 pm
the three day chart of the SPY...doesn't look promising for a rally near term....