Frequently Asked Questions

Dr K Market Direction Model
How can I know that your rules that guide your model will continue to work?

The rules the Dr K Market Direction Model™ follow are not our rules, nor Wall Street’s rules, but the market’s rules. They represent statistically significant results culled from the major market averages going back more than 20 market cycles (back to the 1920s) as well as studies done on how the behavior of leading stocks and secondary indicators affect the market. The key in creating any model is to be completely objective and listen to what the market is telling you as you study the data. The ego and the need to be right have no place in the world of model-building. Once you have decided to use a model to guide your trading, thoroughly understand its weaknesses so you don’t end up abandoning it. Too many trend followers, as one example, had declared trend following dead at junctures when the market stopped trending, such as 2004-2006, 1993-1994, and 1976-1977. As 200 years of market history has shown, trends will occur often enough to keep the likes of William O’Neil, Ed Seykota, John Henry, and Bill Dunn gainfully employed.

Published: Jun 22 2010