Monthly Archives: June 2012

Fooled by Randomness, Over-fitting And Selection Bias

There are software programs that allow combining technical indicators with exit conditions for the purpose of designing trading strategies that fulfill desired performance criteria and risk/reward objectives. Due to data-mining bias it is very difficult to differentiate the random strategies from those that … Continue reading

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Another Major Failure of Chart Pattern Analysis

Another major chart pattern, this time in Russell 2000 Index, has just failed. Chartists are dumbfounded by the failures of even the best of chart patterns recently. Some have come to understand what is happening but some others still resist not realizing … Continue reading

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Fasten Your Seatbelts

According to my analysis and early signals I received yesterday, we may get a major rebound and a rally of the S&P 500 Index from these levels with a target close to 1,363. This analysis holds unless a major change in fundamentals takes place … Continue reading

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Automated Discovery of Trading Systems

There are many ways of accomplishing automated trading strategy discovery. The idea is simple in principle and I have described it in more detail in my (out-of-print) books since 1999. In a nutshell, historical data series are used to discover robust … Continue reading

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First They Criticized Bernanke, Now They Are Begging Him

The DBC daily chart indicates that we are entering in a pre-deflation zone. We may also notice that loud voices against more quantitative easing are not heard with the same frequency as before. In my opinion, this is because of … Continue reading

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Trailing Stops and Curve-Fitting in Trading System Development

Traders use a trailing stop to let profits run and cut losses. This type of order sets a suitable stop-loss order at a percentage below (above) market price after a long (short) position is established. The intention is to limit losses while preserving profits. This … Continue reading

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