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Hello autofx
I followed your link to FXCM and read what they had to say. I'm not exactly sure how it's supposed to support your claim that mechanical systems rule. First of all, I'm not sure that hedge funds possess any sort of superior knowledge. In the stock market at least, only a precious few ever manage to beat the S&P500. Secondly, if we attribute superior skills to them, then isn't it remarkable that they seem to be shifting strategies from mechanical systems to discretionary ones? I have no idea if it's true and I really don't care, I'm just quoting from your link.
While I'm at it, I don't believe in the old 'cut your losses and make your profits run' either. It contradicts my personal experience. I have written over 100 and testet well over 200 systems in MetaStock in all sorts of instruments. The funny thing is, 90% of all systems deteriorates badly once stop losses are introduced, and about 60% of them are improved by introducing profit stops. As the song goes "Would somebody please explain / The reason for this strange behaviour".
Happy holidays,
Smurf
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