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Author: heihojin Big red star, 1000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 113  
Subject: Re: Commodity Investment Patterns... Date: 3/7/2001 12:07 PM
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I do know that he was following charts back to the early 1980s, and that we all can access this data/ charts, and determine for ourselves if the patterns seem to work.

Assuming that we agreed upon a set of rules that defined certain strategies, then we could certainly backtest it. Whether the results of the backtest would be useful or statistically significant is another question, one that I am currently unqualified to answer.

Keep in mind, though, that KR has personally deviated from the original TWMPMM strategies. Although TWMPMM itself is still the same as it was ten years ago, and although he still exhorts that "you don't need any course other than TWMPMM," he himself has stated that he no longer trades based on chart formations. That begs the question, "Why?"

In general, I have noticed that you can see the 50% rule working in regular stocks as well...the only problem is in knowing when the retracement has started, in order to determine where the retracement point would be.

Without prescience, anyone will have a difficult time predicting when a "retracement" will occur.

The explanation given during one of his online chats, to the best of my recollection, was "Pick any point on the chart. If the current price hasn't previously retraced 50% to that point, then it will." IIRC, KR has cited specific instances in which he has opened a position against the main trend and held against the main trend with no stop-loss set. Now, he may have enough cash in reserves to cover the margin - but providing this as an example to others of how to trade raises my eyebrow.

He may possess an inherent ability to predict commodity futures price movements, but he isn't teaching it. The message between the lines is: "Go with your gut. Stops are for wimps." And while his gut may be pretty damn skillful at timing the market, there's no guarantee that my gut will be.

If KR is truly trading like he says he is, holding positions against the trend based on a blind faith in some universal law of 50% retracement, then IMO he is destined for a headlong collision with disaster. If he leaves himself no outs, all it takes is one cataclysmic mistake; just ask Victor Niederhoffer.


heihojin
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