V.18:5 (8-17 ):Letters to S&C

V.18:5 (8-17 ):Letters to S&C
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Letters to S&C

The editors of S&C invite readers to submit their opinions and information on subjects relating to technical analysis and this magazine. This column is our means of communication with our readers. Is there something you would like to know more (or less) about? Tell us about it. Without a source of new ideas and subjects coming from our readers, this magazine would not exist.


The letter to the Editor in your February 2000 issue titled "Candlesticks Formulas" and your response hit the nail on the head of what your magazine is all about - giving your readers trading ideas to develop on their own. You then asked other readers to share their tips. But then, later in that section, when reader Dwight Cook does exactly that in the letter titled "Backtest Results," your response seems to have completely missed the point. His system of using a simple moving average crossover to trade mutual funds worked great in his backtest. All you had to do was backtest it against the same sample of data that Jay Kaeppel used in his study to find out if it was comparable. I think what Dwight really wanted to know was whether his system works better than Kaeppel's in the same sample period (at least, that's what I wanted to know).

Next, I agree that backtesting is indeed an area with no easy answers. I often find that if a system is optimized in a backtest and then forward-tested on new data, the results are very revealing. A forward-test cannot be curve-fitted, and a good system should hold up with a hit rate and percent return that is close to the backtested figures.

I hope this is helpful to your readers.

TODD COLBECK,via E-mail Whale Securities New York,NY

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