capt ...
I was hoping you would have read those articles. They are very educational; and is why the method is provided as coursework in risk management at New York University.
" ... one experiment proves nothing."
Logically, that isn't true. In particular, it is not true in the context of my post. The argument, between two very famous traders which caused the creation of this famous test case, was whether or not anyone (with little or no trading experience) could be trained to trade successfully versus the case that great traders are simply gifted. The outcome of the test showed that average people selected off the street could be taught to follow a simple mechanical trading system, and do so very successfully, earning an annual compounded rate of return of 80% over a four-year period. In fact, they did this by trading futures, which is a zero-sum game (and much more difficult to do successfully versus trading stocks or indexes, which are not zero-sum games).
The experiment did prove what Richard Dennis, the founder of the test group (and the most famous trader in the world at that time), set out to prove. The system used Donchian Channels to define the channel. It used ATR to determine stop losses. And it used position size to manage risk. That’s all it used as indicators and variables.
“If that particular method is still so spectacular, why isn't everyone using it?”
I used the word “spectacular” to describe the outcome of the test, not the trading model. At the time (25 years ago), it was the most famous trading experiment made in history. Many reports at the time used the word “spectacular”. Don’t take my word for it. Read some articles about it.
