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In-Reply-To: <200110172048.f9HKm1D52555@xxxxxxxxxxxxxxx>
Yep, you're right as has already been pointed out to me - thanks Kim! (:-)
Unfortunately my original question was hiding a rather more complex one and
trying to simplify one part of it lead to the confusion. However, here's the
situation, please LMK if this makes sense. Or not!
The two systems were designed to compliment each other and when they were
opposing each other in the market there was no way of telling which would
win - if there was, you'd only go with that system. However, both have stops
and in testing it was found that the system which was "wrong" got stopped
out while the system that was "right" carried on to make a profit. This
proved more profitable than having the systems stop each other out of the
market.
Cheers,
Ian
> > you can make money running two systems which can be L&S at the
> > same time like this: Assume a L position and the market goes up
> > and then triggers a S position. The market then moves down to a
> > middle point making both sides profitable.
>
> OK, let's say system 1 goes long at price A, then system 2 enters a
> short position at price C, and then the market retraces to B.
>
> With your two-system approach, you have two positions: system 1 has
> a profitable long with B-A open profit, and system 2 has a profitable
> short with C-B open profit. Your total profit on the two systems is
> (B-A) + (C-B) = C-A. The current market value (B) is irrelevant; as
> it moves up system 1's long gains value while system 2's short loses
> exactly the same value, and vice versa if the market moves down.
>
> That is **exactly** equivalent to a system that goes long at A, exits
> and goes flat at C, and then the market retraces to B. That single
> position also has a profit of C-A.
>
> I think you're still a little confused...
> Gary
>
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