Q: Do brokers help to trade?
A: No. Goldman Sachs, Morgan Stanley Dean Witter, Merrill Lynch, etc. are all brokerage firms. No matter how stately or dignified the name, these firms still generate their profits from customer commissions. Their advice is useless. Trading as a trend follower is a slower strategy involving far fewer trades than a day trader could imagine. Consequently, broker selection has far less importance than short-term trading which is hinged to execution and low commissions.
Q: Are the following technical indicators used: Gann, Fibonacci, moving average stochastic, MACD, Bollinger, Williams, RSI or ADX? A: No. These techniques rely on predictive entry/exit indicators. Predictive techniques are futile. If you learn only one lesson from the TurtleTrader site, stop the focus on only entry/exit indicators. It is a sure way to the poor house.
Q: Does Turtle trading involve prediction, picking tops and bottoms or reading chart patterns?
A: No. Trend following does not predict, it reacts. The method does not seek to predict when the next important move will occur, or when a particular market will enter a choppy phase. More.
Q: Should I believe academics who always talk about markets being random?
A: Highly educated people sometimes know just enough to hesitate pulling the trigger. You must have the techniques, but you must also have the guts to play the game. The markets may be random, but the Turtle system is designed to profit from random unpredictable market trends.
Q: What is your opinion on systems testing firms such as Futures
Q: I believe in Warren Buffett and the use of buy and hold strategies. What is wrong with that?
A: The Nasdaq market crashed in 1973-74. The Nasdaq reached its high peak in December 1972. It then went straight down by nearly 60% hitting rock bottom in September 1974. We did not see the Nasdaq break free (for good) of the 73-74 bear market until April 1980. What good did buy and hold do you from December 1972 through March 1980? You made no money as a buy and holder. You would have made more money during this period in a 3% savings account than blindly following a buy and hold strategy. More recent evidence.
Q: What about someone who promises 70% accuracy in a system? A: What if someone promises that 70% of the time you win, but you make little when you win. But, the 30% you lose, you get killed. See the point? The goal of trend following is not necessarily to be right about a market direction. Would a trading strategy that won 80% of the time, but made you only a few pennies for each winner be the best system to follow? What if the 20% of the time you lost, you lost thousands on each trade? Winning percentage has little relevance to profitable trading. The goal is to make the most money, not have a highest winning percentage.
Q: What do you think of new trading techniques involving artificial intelligence, genetic algorithms, neural nets? A: These techniques are designed to predict the future which is impossible.
The class of those who have the ability to think their own thoughts is separated by an unbridgeable gulf from the class of those who can not.
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