V.10:6 (283-285): Reversing For Dollars by John Sweeney

V.10:6 (283-285): Reversing For Dollars by John Sweeney
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Reversing For Dollars by John Sweeney

Harebra ined ideas bein g a plentiful ite m in my daydreams, the idea tha t I mentione d in April's Settlement tha t I implement a n automa tic reversin g tra de at my maximum a dverse excursion ( MAE) stop point had less than a 2% chance of survival after analysis. I tested it anyway. (To spare your digging out old issues, this idea is ex plained in Figure 1.)


Anyone who dropped in on this Settlement without having read the last five must be wondering what in the world I'm talking about. Briefly, I defined a basic, underlying trading rule in the November 1991 Settlement with no more than a casual observation from a chart. That turned out to be profitable. Next, I showed how to measure the system's behavior to put in stops at the right place (December). Then I tested the system (January) successfully on five years of data. Emboldened, I next tried to define an add-on trade—a separately capitalized trading opportunity triggered by the underlying trade, only to fail (February). I had better luck in March and April finding a viable add-on strategy. In April, the whole reversing discussion began, culminating here.

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