The Scotsman or Bagpiper is a system I was taught over 25 years ago for trading daily price bars. I have made a lot of money with it. Recently I decided to attempt to codify it more precisely to make it "idiot proof". I decided to do so publically.
Often the system gives "pretty good" reversal or continuation indications at the open of the day, but the signals may not be definitely confirmed until the close of that day or sometime during the following day.
I have learned in this recent choppy market environment that this excellent system cannot be made idiot proof and requires an informed judgement when it is issuing a "probable" buy or sell signal. This I do for myself by relying upon sentiment and other trading information.
For example, there was a "probable buy" on Thursday's open (May 4) which was not completely confirmed until 3/4 of the way through Friday. That's not good enough for utilizing the Bagpiper's strengths. A full intra-day service could do it, as I do for myself, with stops or watchfulness. But I do not want to run such a service.
I'm sorry for the distraction this has caused you and me. But at least I've learned a few things from this exercise. One is that what good traders or investors do cannot easily be taught as a simple skill or reduced to a mechanical signal generator. Secondly, really good advisors are worth the money if they provide timely and winning investment or trading advice. It's very hard work to do it and get it to you in a truly timely manner.
This experiment of mine has detracted from my overall message on this blog, and I am discontinuing it. I will be travelling a lot more as well, and it would be difficult to keep the Bagpiper going. So he is going to retire to his rocking chair next door and give me a toot when he thinks we could get the next reversal.
For purposes of a a final record, the last sell was at 1213 SPM6 and the last buy 1329 for a 16 point or handle loss. This reduced the record from December 1 2005 to a 87.5 gain. On a cash basis the SPX gained 61.1 points from the December 1 2005 close to Friday's (May 5) close, so the Bagpiper had a ~43% better yield than a simple buy and hold position over that period on that basis and despite his whipsaws and late signals.
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