I don’t doubt that Quill’s right/wrong ratio far exceeds the right/wrong ratio of around 35% for classic, trend-following systems, because Quill is a superb discretionary trader far more than he is a ‘by-the-rules-and-only-by-the-rules’ trader. Another way to say that is this. Quill doesn’t have a trading system as much as he IS the trading system.
Hence, few --if any-- will achieve his same right/wrong ratio by trying to follow his rules exactly, as it is easy to demonstrate by coding any variation of ‘Simon Sez’ you want into a backtester. My complaint about ‘Simon Sez’ (and its variants) is NOT that they aren’t good trading systems, but that they can’t, won’t, and don’t offer far better results than other trend-following system. (Anyone who wants to believe otherwise is an easily decevied fool.)
I like the idea that underlies ‘Simon Sez’, and I’ve created dozens of versions, some of which I’ve made money with by following their signals, some of which I’ve made money by overriding their signals, and sometimes I’ve lost money by not sticking to the rules. That’s the tricky problem: deciding when experience and informed judgment should over-ride the rule set of a system that has generally proven its worth across a statistically meaningful basket of tradables and data sets. I don’t have a good answer to that, because no one does, because markets aren’t simple, deterministic systems, but complex, dynamic systems that can exhibit emergent properties and where good judgment matters and is often needed to override otherwise sound policies.
As for AI, I don’t use it. The present versions are just rehashes of experiments run in the early '70’s (when I was doing my grad work at Berkeley), and they still aren’t getting useful results in fields that matter to me.
I think you were right Arindam about using Simon as a Reversion to the mean. It seems to work very well for that. So buy when you see the first green bar after the smiley face and the RSI is around a 30 or below.
"… using Simon as a Reversion to the mean. It seems to work very well for that. "
Andy,
The investing/trading situation --and trying to make predictions about the direction of prices-- is actually more complicated than that, as the linked video suggests. For sure, when the bulls are running, nearly every long bet will work out, sooner or later. Ditto shorts when the bears are in charge. But what of the other two market phases, ‘basing’ or ‘topping’? Another way to describe them is ‘chop’, and one had better prepared to be wrong at least half the time.
Again, to repeat what I said in another thread. Quill has been able to achieve what maybe only one in twenty who attempts it has been able to achieve. He can support himself from his trading. For that, he deserves praise and respect. But it must be admitted and recognized that what he says about how he makes buy/sell decisions --and how he actually makes them-- aren’t exactly the same.
He gets away with what he does, because he’s a shrewd, smart, experienced trader, not a simple rules follower, who uses judgment when he has to or when it makes sense to do so. That doesn’t mean no one could benefit from listening to him. But what he says has to be tested and adapted/adopted to meet the probably differing means, needs, skills, interests, and opportunities of those who’d like to borrow his systems.
Have you ever tracked an animal Quill? I think of this sort of like that. You start off as a beginner, someone tells you what to look for, and off you go with help from the person telling you how to do it. Then you are out doing it yourself learning more and more. The only way you get good at it is by following and doing and then lot’s of practice. A lot of people never get good at it because either they get bored, and stop trying, or they just can’t get in touch with the nuances.
I’ve never done any tracking. (I’m not against guns. It’s just that my Dad didn’t hunt, as didn’t his Dad. So I never learned to.)
Wood-working? That was something all us kids learned from him, as did my kids from me, each of whom had their own place in my shop and the freedom to do what they wanted (within reasonable safety limits). Also, learning styles differ hugely. Some want to figure things out on their own. Others prefer a great deal of guidance and oversight before they are cut loose.
