DislikedpipEASY,
Thanks for the thread.
I was thinking about the use of "hedging", for lack of a better term, in your method. I am, like others here, in the US and can't take advantage of that in my account. However, I would like to see what you think of this possible solution. What if, for instance, I am long 10 positions and get a short signal. Instead of having 10 longs and 1 short, I instead cover 1 long and end up 9 positions long, net? This would continue as signals are given and a person would always be either long or short but not long and short...Ignored
I believe what you are thinking about is referred to as averaging in and averaging out. I think the way Graeme does it is better statistically and psychologically. With his system you do not have to be right about the main long term trend and you can be participating (as he calls it) much quicker if the main trend has in fact reversed. I would have to do some what if's. Possibly some backtesting to confirm this.
This system is harder than it looks. At least to me. You have to be REAL good with your entries. You will be making a lot of them and if your percentage is low it will eat a lot of pips.