The Counterpunch Stock System
It’s important to remember that just because you have taken a system through all the
elaborate steps of testing, you don’t have to trade it—although it might be tempting
to do so just to make all the hard work worthwhile. If a system isn’t good enough to
be traded, it isn’t good enough to be traded, and not all ideas will turn out to be prof-
itable enough in the end, no matter how clever they seemed when conceived.
However, just because you shouldn’t trade a system or strategy as it stands
here and now, doesn’t mean that all its parts are useless. Sometimes it may be a
good idea to combine various sets of old entry and exit techniques, with or with-
out filters, and test them as new strategies. After you have tested and developed a
few systems and strategies according to these guidelines, you probably will have
a basket of unused strategy combinations to choose from.
As a bonus for ending this book, and just to show you that there never is such
a thing as a bad idea and all ideas are worth saving, let me show you the results for
the last system I developed for Active Trader.
The entry idea is from a system I created for Trading Systems That Workto
be traded on the S&P 500 futures market, but without its original filter. The exit
rules are from a series of articles I wrote for Active Traderand published over the
period March through June 2002. Neither the entry nor the exits have ever been
applied to these stocks before.374 PART 4 Money Management
FIGURE 28.19
The equity curve for the counterpunch strategy.