Letters To S&C by Technical Analysis, Inc.
I'm so glad I subscribe to STOCKS & COMMODITIES. What great reading from great minds! I would like
to encourage Tushar Chande to write more articles describing his ideas. I enjoyed his past articles in S&C and I would like to read more. I also enjoy any article that deals with trading longer-term positions, such as
EUGENE T. McENERY III
TESTING AND HARD WORK: KEYS TO SUCCESS
Technical analysis and trading systems are often considered pseudo-sciences. One reason for this reputation is the widespread use of misapplied scientific methods such as curve-fitting and the use of anecdotal examples as proof. Another reason is that technical analysts sometimes act as though they're members of a secret society or modern-day guild, who believe they have special technical analysis secrets that only they know, and that allows them to garner abnormally high profits from the markets. The truth is, most of the so-called secrets, or trading ideas and techniques, are already in the public domain. What's difficult is determining which of the trading systems in the public domain work and which don't. This work requires testing the various systems and analyzing the results on out-of-sample data.
I believe it's possible that someone could give away a great system for free, and yet the lemming crowd -those
traders who hunt for the Holy Grail instead of working, testing and perfecting the ideas they already
have - would completely ignore it, not placing any value in a system that didn't cost a large sum of money. In
my opinion, many trading systems that have been presented in STOCKS & COMMODITIES can give as good
results as any high-priced system you can buy. In a secret guild, the obvious is dismissed because it's not
secret and thus is deemed valueless. The "secret guild" mentality perpetuates the myth that if something is free
or obvious, it can't possibly be any good.
See Dennis Meyers's "The siren call of optimized trading systems" in this issue. In this article as well as in
his past articles, he presents the results of rigorous system testing. -Editor