Achilles Fixation

Nothing in this world can take the place of persistence.
Talent will not; nothing is more common than unsuccessful people with talent.
Genius will not; unrewarded genius is almost a proverb.
Education will not; the world is full of educated derelicts.
Persistence and determination alone are omnipotent.

~Calvin Coolidge

Sigmund Calvin Coolidge
Sigmund B. Coolidge
Sig B. Coolidge
Sig B. Cool
...Cool!

Increasing the winning percentage of the CMI 2.0 is secondary to fixing the 'Achilles Heel' that had shown itself during the April 'flash crash' period. Caught on the wrong side of a down market put the system in a position that it could not correct within a reasonable amount of time. The only 'out' would have been to cut losses when panic set in.

I don't paper trade much since I expect that the research done prior to setting a trading plan in motion will be more than adequate. When it's not, as was discovered in April, no panic selling was allowed and the earlier year-to-date gains were reduced by 13%. Not allowing myself to cut and run gives me more incentive to correct the defect and improve the system...even if it puts a dent in the trading account.

One earlier attempt to assist the CMI using my 'FrankenTurbo' did not work so well. The CMI is of the independent sort and likes to work alone. I am now testing an obscure little add-on, a sort of guidance system, that may keep the CMI from developing a stubborn streak, and reverse the trade when trouble arrives. When my initial testing is done, I'll put it in the sandbox (or quicksand box in this part of the jungle) and see if the CMI plays nice.

Results have been better than expected so far. See the scatter diagram below. This is an update from the one done in April.




The red arrows indicate the areas that are targeted. These are the trades that resulted in higher than average losses, and much wasted time. The good news is that adding a 'guidance system' may also reduce the group of small losing trades indicated by the pink arrow at bottom left of the diagram.

Note the dark blue arrow. This is an example a well executed trade; a big gain in a short amount of time. The aqua arrow in the top right shows a freak trade that would not quit during that bull market period in 2009. Another one of those would be welcome. That blue dot is getting a little lonely up there.