The Lego Trading System, 07/17/06
My son and I were building with Lego's today and we wondered,
"Can you build a machine without moving parts?"...
Eventually, we convinced ourselves we could and we built a brick separator which, when you dropped Lego bricks on it, would separate them into piles of big and small bricks.
...
Naturally, we next wondered,
"Can you build a trading system without moving parts?"...
We're not so sure. We can use our separator idea for the entry signal (think of a construction of OHLC bars and a separator designed to let a single pattern through), but it seems we need a switch of some kind for the exit. Switches were hard for us to design w/o moving parts.
Still, we congratulated ourselves on replicating buy and hold.
...
In the examples above, we relied upon a 'data stream' of Lego bricks moving through our stationary separator/filter to power our machine.
And reversing that idea led us to the thought experiment*,
"Can you build a trading system, that may itself move, but that doesn't rely on the movement of prices?"*Inspired by Dr. Steenbarger's "May You Stay Forever Young"