Another disadvantage is you will face drawdown when the system gets chopped and whipped in sideways, non trending markets. Now, the big trends will compensate but it depends on your tolerance to drawdown. If you want to smooth your equity curve, you can take the following and use it as a filter:When in your positions set a stop at a 1 or 2 week high or low and go flat - then enter the market on the next 4 week trading signal.The next is a disadvantage that traders see which is not really one - but most traders will think it is.
This system is not trendy or complex.For some reason traders like glossy packaging, colored graphs and fancy names but in the hard world of trading, where only real dollars count, this makes no odds - its money in the bank which is the only criteria a system is judged on.Complexity and trading success is a myth. Since trading began, 95% of traders lose 5% win and this is DESPITE all the advances we have seen in forecasting, number crunching spped of data delivery and computer processing, so this all hasn't helped - makes you think doesn't it?
The system was actually devised by one of the legends of trading, considered the grandfather of modern trend following - Richard Donchian. He is acknowledged as a trading legend, so it's been created by someone who knew the game of trading and numerous well known savvy traders have used it and admired it - like Richard Dennis.Now if it's good enough for them it's good enough for you and me.
