Trading Systems  |  MAR 2005

Sound Systems by Robert Pelletier and Sabrina Carle

Stocks & Commodities V. 23:3 (30-35): Sound Systems by Robert Pelletier and Sabrina Carle Too often, trading systems are based on coincidence rather than on sound scientific or mathematical principles. Here’s how you can create a trading system based on logic. Just before the 2004 US Presidential election, people across the United States were talking about the predictor that had called the Presidential winner for an amazing 16 campaigns. From 1936 through 2000, the success or failure of the Washington Redskins football team on the Sunday before Tuesday’s Presidential election had successfully predicted the election’s outcome. If the Redskins won, the incumbent’s party retained the White House. If the Redskins lost, the incumbent’s party lost. Every single time. When the Redskins lost to the Green Bay Packers on October 31, 2004, George W. Bush’s reelection bid seemed doomed — if you believed the hype, that is. Although we seriously doubt that anybody bet the farm on this predictor, it was an interesting diversion that had pundits from both parties wondering if the streak would extend to 68 years. By now, everyone knows that the predictor was wrong this time. Even as you read this, President Bush is settling in for four more years in the White House, and for the first time in the history of the Washington Redskins, the team failed to predict the Presidential winner. Astonishing!

by Robert Pelletier and Sabrina Carle