Replies to post #648 on Rule-Based Trading Systems

[Little Chico]

Blue Trend line.....


I don't know if I am interpreting it correctly, but it appears that a trader's account might double in two years, based on past performance. If true, I would expect my Rydex account to do that in about one year, because of 2x leverage, which agrees with my preliminary estimations.

I agree, however, that all systems tend to have their bad periods when market forces confound our attempts to develop a fail safe system of prediction.

Chico

[KovuLK]

All re: regression to trendline & scaling in


capt_jmj says in part:
over time we will regress to the blue trendline shown on the graph in the iBox
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Which means...I said, which means...look at me in my eyes...stop thinking about anything else...that IF you are scaling in you should be careful. By scaling in I mean that on each buy/short you increase the amount invested. Why to take care? You could finally get into a maximum amount you want/can invest on a particular trade and then it goes bad taking back much of your 'scaled in' gains. This happened to me once upon a time. Not fun.

Thanks
kovu