Does fear help maximize profits when markets go down?

Discussions about personal psychology for the individual trader.
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PTCM
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Does fear help maximize profits when markets go down?

Post by PTCM » Tue Apr 20, 2004 1:12 am

Whenever the markets go down and market participants experience fear, my trend following strategies performed significantly better in terms of both profit factor and percentage profitable.

This phenomenon has been happening over and over again, and I've been adding positions when trend velocity increases on the down side right after I took the short entry points.

Overall, it added some values to my equity curve. Does fear help trend followers when markets go down or create a better environment for short entry points ?

Does anyone experience similar P/L patterns when trading trend following strategies ? I feel that it's easier to pull money from the market whenever buyers experience fear.

Just wondering what the turtles believe on this subject and does it make sense to trade bigger on short entry points, if both back testing and forward testing indicate that the strategies perform better in terms of proft factor, win/loss ratio, and percentage profitable ???

Do you guys believe that position size should always be symmetrical, even though we know that uptrends and downtrend do not behave the same way ???

Forum Mgmnt, what do you think ?
Many thanks!!!

Forum Mgmnt
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Post by Forum Mgmnt » Tue Apr 20, 2004 7:10 am

does it make sense to trade bigger on short entry points, if both back testing and forward testing indicate that the strategies perform better
Assuming that the testing indicates this to your satisfaction, and each of us is responsible for determining what that means for us individually, I say yes, absolutely.

I always do what my testing indicates will work better. That's the whole point of testing.

- Forum Mgmnt

P.S. I should state for the benefit of readers that I would never change my own trading just based on someone else's assertion here or elsewhere without doing my own testing first.

So my response here is in no way a suggestion that the conclusion PTCM draws is right for you or me. It very well could be and I certainly will do some investigation into this myself. So please, do your own testing first.

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