BarroMetrics Views: The Thin Line II
Let’s recap the context:
- We have a diverse results from the application of a rule based discretionary method. We are talking about divergence in positive expectancy i.e. one group had a negative expectancy and another strongly positive.
- Both groups can be said to have executed their trading and money management rules on a consistent basis.
- Most of the students trade FX. Ultimate has a process for trading the pair with one strong instrument and a one weak one. For this reason, many of the trades were of the same instruments.
- Most traded end-of-day.
In short, we have a proven robust method and the usual culprits for the wide ranging results, method, timeframe, instruments, position sizing, consistent execution etc have been taken out of the equation.
Why did I care about the difference?
One of my goals is to make a difference. I felt that if the usual culprits out of the equation, the reason may provide an important stimulus for trading success. If true, the insight may ramifications for each trader. And so, for the reason, the difference and its reasons was also important for you the reader.
Before I start the discussion….one more piece of context.
Ultimate is based on the Wyckoff Model with Barros Swings defining the timeframes. Market Profile ideas add value when in a mark up or mark down phase; the Ray Wave provides a roadmap to the developing structure - this helps identify when the end of a trend or correction is probable.
But above all, Ultimate is based on the Wyckoff idea that the principles behind price action are more important than the model or its patterns. The principles allow us to change the model when conditions dictate; and this principle, in this QE environment, had allowed me to make the changes to my plan to successfully trade the stock market indices.
Monday, I’ll complete the series; and in the blog, reply generically to the questions raised in the emails rather than provide individual replies.