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Re: lostcowboy post# 524

Wednesday, 08/18/2004 7:01:14 AM

Wednesday, August 18, 2004 7:01:14 AM

Post# of 796
"PS: I doubt if I get to a profit of $135,756,473.25, but the fun is in trying! Right now it is able to beat AIM if the correct hi and low points are used, but it still falls behind Synchrovest."

Who needs a system if the 'correct' high and low points can be known. They can't. That's the flaw in your system. Using a number scale as a first phase for developing a system is fine, but really you need to test it on actual historical data. In the real world, very volatile stocks are risky, but are perceived to have high growth potential. When your expected low is $4, you may see on the next cycle, that the low only reached $4.15, and you watch the stock then go back up towards the expected $10 high, but no one is willing to pay that much now, so it tops out at $9.75. Three possibilities exist for this stock based on how successful an enterprise the company becomes. One, it's range contracts to a point where it becomes a boring low volume stock. Two, it achieves success, and soars to $100 while you wait patiently for it to fall to $4 (maybe if it splits enough time, you will see your price). Three, the company fails, you gleefully bought at $4, only to see it fall to $.01, where you finally sell.
You need to pick stocks of companies that are operating successfully and will continue to do so in the future. If that is the case, why sell all your shares at any point. Keep a core position and trade around it. That is the approach of AIM. Don Carlson has posted on the AIM board about 'Husky' which seems to perform better than AIM in many cases. Myst's X-Dev is yet another system for improving upon AIM. But all of the systems depend upon you not choosing stocks of companies that are destined for bankruptcy.

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