Validity of Seasonal Trading John van Laar from the Netherlands
I have always been interested in seasonal trading. I have bought Frank Taucher's Almanac every year.
He claims good results, but there are so many trades in it. In his 1994 $upertrader's Almanac, there are 580 outright seasonal trades, 207 intra-market spreads, 389 inter-market spreads and 240 exotic spreads.
If you want to have positive results, you have to trade all the recommendations. You have to be a trader for a living to follow his recommendations and you need $100K for margin and drawdowns.
A method to reduce these hugh amount of trades is to filter the trades. Maybe there are members who use this technique. I'm interested in hearing from these traders.
A far better system of seasonal recommendations is the Moore Research Center, Inc., who publishes the Moore Research Center Report. This is a monthly report with seasonal recommendations - spreads and outrights. In this 60 to 70 page report, Moore gives trade recommendations and articles about trading, trading techniques, etc.
What is the most important: he gives reviews of last month's trades, with per trade the trade equity, peak equity and the largest drawdown. He has fixed entry and exit dates. In his review of the latest month, I controlled, he used the close of the day.
I have purchased two reports April and November 1993. The results are: April 1993 - Review of the last month's outrights: 36 trades: Closed 13 and Open 23. 13 trades Trade equity: $11,229.70 (without commission etc.) Largest drawdown $460. Review of the last month's spreads: 38 trades: Closed 16, Open trades 22. 16 Trades equity: $9,475.75 (without commission etc) Largest drawdown $2,710
November 1993 - The numbers are outright: 43 trades: Closed 16 and Open 27. 16 trades equity: $3,699.30. Max. drawdown $1,887 - Spreads: 41 trades. Closed 14, Open 27. Trade equity: $5,044.10. Max. drawdown $1,240
You see these are good numbers for the two random months.
I am not trading this year. Next year I hope to have time available to trade and will subscribe to the Moore reports and see how the results are for a whole year. If the numbers are good, I will follow the recommendations.
Perhaps my trading system can help fine tune the entry and exit dates. Maybe someone out there has experience with this matter of fine tuning? I agree with Ed Forys in the June issue of CTCN, that there is much garbage in seasonal recommendations. I think the Moore Institute is a good exception.
Last remark - I don't have any connections with Frank Taucher or the Moore Research Center.
Editor Comments
Thanks to John Hill for his two contributions covering Dr. Greenwald's System and his comments on Russell Sands and curve-fitting.
There is no way CTCN can tell for sure if Futures Truth performance reports are 800 exact and accurate. However, John Hill and George Pruitt are very highly regarded and are extremely honest. They also try to do as careful a job as possible in tracking all those systems and compiling their reports. Keep in mind their job is very difficult and complex and they do an excellent job under difficult circumstances and with a small staff.
In reference to John Hill's remark that all systems are in fact curve-fitted. I also believe that to be correct. It seems to me that there really is no way to design a system without a knowledge of past prices or past patterns. As a result, a certain degree of curve-fitting is inevitable.
However, if CTCN Members differ with that opinion, they are invited to share their opinion with all CTCN Members. Subsequently we can all benefit from an exchange of ideas about the important subject of curve-fitting.
About Wayne Roberts contribution covering Ira Epstein and CTCN confidentiality. I called Mr. Ira Epstein about it and he has a very good reason and explanation for the so called answering machine. His reasoning for it makes a lot of sense to me and his detailed explanation will be published in the August edition of CTCN.
Reference CTCN confidentiality, Wayne is absolutely correct. The opinions and statements made are for members only and NOT for the general public.
Ed Forys made an important contribution. Yes, you should never change the rules while a trade is in progress. Your Editor and many other traders have unfortunately in the past deviated from that advise, which then resulted in larger losses.
For example, canceling or changing a stop-loss order to a greater stop, because the original stop is close to being hit, on the belief the market will soon go your way. Doing that almost always fails and results in a small loser becoming a large loser, sometime becoming a disastrous loss.
Reference Mr. Kuhn's opinion of Precision. He is very fortunate that he received a refund. Most trading systems do not have a money-back guarantee if dissatisfied or unhappy with it's performance.
There are many reasons for that, including the fact there's usually no way to tell for sure if the system was actually removed from the buyers computer, plus the costs of filling the order, sending it out, and the support and other expenses involved. In addition, all systems, regardless of their prior track record or their cost, have losing time periods and drawdowns, which can sometimes last for a number of weeks, or even several months.
It's always possible a newly acquired system entered a losing period about the time you received it, and consequently you may want a refund. Keep in mind, it may take 6-months to a full-year to properly evaluate a system. That's presuming you make every trade, rather than pick-and-choose, as most traders unfortunately tend to do.
Also, many system developers (especially non-blackbox systems) feel that once you know their algorithm and trading techniques, you were privy to confidential information that only system owners are entitled to.
An Error Correction: Last month there was an article titled Five Vertical Bars by Kent Calhoun. It stated Donchian's 20-day channel breakout system made a buy when a market closed above the prior four weeks lowest low. It should have said buys were made whenever a market closed above the prior four weeks HIGHEST HIGH. It also should have also gone on to explain that sells were made when the market closed below the prior four weeks lowest low.
Thanks to all who made contributions to this issue of Commodity Traders Club News.
Note: We operate open member forums and
consequently reserve the right to publish some public type of communications
received. Please indicate "confidential" or
"not-for-publication" on any correspondence sent us
which you want kept private. Thank you.
Copyright by Webtrading.com - All
Rights Reserved. Webtrading/CTCN,
Phone 623-551-6832 . For comments about CTCN Home
Page design or connectivity, please contact our
Webmaster. This page is maintained by
Webtrading Internet
Services.
