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Trailing stop can be very useful during real trading but its use during trading system development and especially by programs that automatically design trading systems is highly questionable because of the potential of curve-fitting a price series.

In this example of machine generation of trading systems, the steps are presented for discovering price patterns to develop a position trading system for GBPUSD spot currency. The patterns are discovered using the Price Action Lab search function in an in-sample of daily historical data. The in-sample results ...

The steps are presented here for discovering price patterns in DIA (SPDR Dow Jones Industrial Average) historical daily data using the Price Action Lab search function, testing the results in an out-of-sample and then creating a trading system. It is shown that Price Action Lab can identify ...

I will name this the “Trading System Inversion Paradox”. The paradox says that being a consistent loser in the markets is as hard as being a consistent winner. The proof of this apparent paradox is very easy and requires high school level math. ...

Surrounded by robots, he knew the end was near. He was one chartist against 1,000 HFT robots, one man trying to predict the future against 1,000 robots that create the future. He pulled out his last chart and he looked ...

I avoid economic analysis because the subject is too complicated and far away from a true science although when I was in graduate school I found it fascinating. More fascinating to me was the fact that most economists tried to ...

The lesson is never start a fight with the FED. When it comes to bonds, the FED is the boss, not some bond fund managers who are just the humble servants of the FED although they often commit the original financial sin of trying to overthrow the ...

Another list of “lessons” I don’t need. Update: May 16, 2022 (Fixed a few typos and made minor corrections.) The list of lessons was reported by Pragmatic Capitalism and it was attributed to Bruce Berkowitz of Fairholme. I haven’t checked the source ...

Technical trading is not as easy to define nowadays as it was in the 1980s when it become popular. It is no longer limited to technical analysis and indicators but encompasses a wide variety of methods. Most of the methods are well-known, ...

This is a short introduction to the use of margin and leverage. After defining the relevant terms and clarifying common misconceptions I present a simple formula for calculating the amount of capital that is required for minimizing the probability of ruin when trading highly volatile markets ...