The New Science of Technical Analysis

Conclusion

No trading methodolgy is perfect, and the many methods presented in this book are no exceptions. The techniques I have shared with you have been developed and refined in the most intense and rigorous laboratory conditions imaginable—the trading arena. As I have repeatedly emphasized throughout this book, necessity has truly been the mother of invention in my trading life. Nothing instills the challenge of creativity more than to see personal trading profits erode, only to be replaced with a series of sizable losses.

The goal of successful and profitable trading performance has been an elusive one for me to attain. In those rare instances when my trading juices and adrenalin are flowing most vigorously and my level of confidence is at its peak, I am most vulnerable. One particular example, comes to mind. On a summer day In 1989, many of the mechanical systems I had designed and developed at Tudor generated signals concurrently. Peter Borish, my counterpart at the company, and I were excited about the prospects. What occurred turned out to be one of my most humbling professional experiences. It began as a modestly profitable trade and evolved into a trip into traders' hell—we recorded the largest one-day account drawdown in our trading history. Fortunately, Peter and I had installed money management contingencies that curtailed our losses. Once again, I emphasize the inevitability of encountering just such unexpected events in this business. To reduce their impact, I recommend ...