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His current article has merit for a number of reasons. Longtime readers know that I constantly stress the importance of having a trading plan with fixed rules, rules that enable you to back-test a technique and prove to yourself that at the very least, the method in question shows a historical positive probability of success. In addition, backtesting, especially by hand, helps you gain a feel for the pros and the cons of the trading plan, which is something that computer testing can never give you.
Krausz's article comes up strong on a number of points. First, the article has fixed definitions that are converted into rules. The trading signals are clearly defined, leaving the trader with the task of following the trading plan. Second, the plan has a documented level of success, going back over five years' worth of trading. As always, there is no guarantee that the plan will make money in the future, but at least you know what the details are of past performance. Finally, the definitions and rules are simple and simply stated, which helps you have a solid understanding of the plan on an intuitive basis. This is important, as this can again help you stay with it through both the good times and the bad.
Why would a trader reveal a good working method? This is a common question that I see posed frequently about our work. Those critics assume that anything that someone may be willing to share can't be of any real value; otherwise, why would they release it to the public? The logic goes one step further, in that a sound trading plan would be rendered useless by everyone using it.
I've answered these questions before, and I'll do it again. My comments on that issue are as follows: First, it is for some reason remarkably difficult for people to take someone else's work and implement it exactly as the plan calls for. For some reason, people just cannot help but massage a plan to some degree, perhaps to personalize it in some way. That's why the notion that a viable trading plan will suddenly become useless after wide release is hard to fathom.
In closing, let me state that the most important aspect of our feature this time is for you to gain the value of a validated trading plan. Krausz moves technical analysis to the next level, using action points based on rules. He then back-tests the plan to demonstrate value. This is a three-step process, steps that, if you apply them, can make you successful. And why do you read STOCKS & COMMODITIES?
