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Clemmo's Trading Odyssey

  • #81
  • Edited 3:01pm Aug 15, 2019 2:49pm | Edited 3:01pm
I'm going to change my daily focus to an experiment. It will likely fail. It is an attempt to use PJ charts to trade a very small account (50$ starting equity) that is restricted to 200:1 leverage with a broker that has sizable commissions, spreads and a minimum 0.1 trade lot size. The exception to this is Bitcoin which has a huge spread but can trade 0.01 (mini) lots.

Entries will need to be nearly perfect and the first few trades will need to be babysat (watched carefully and closed intraday, which is not my preferred style).

If I can recover this account to starting equity (3750 or thereabout) it will close a chapter on my early, clueless, painful (random) trading. And I'll have another account with which to make live experiments.

And If I can't - oh well.

https://www.forexfactory.com/showthread.php?t=941191
  • #82
  • Aug 18, 2019 6:48pm Aug 18, 2019 6:48pm
What's the point of asking for feedback on Forex Factory if you're just going to ignore me when I give it? Anyway, poll responses on FF should be anonymous.
  • #83
  • Aug 19, 2019 7:49pm Aug 19, 2019 7:49pm
Does the market have entropy?

I was playing around with this neat little gizmo which I quickly decided is not really useful btw, but the subject of the thesis is entropy and so I got to pondering if this has any relationship to the real market as we know it.

Do markets have 'entropy'? What would entropy even mean in forex (or equity) terms? Is it related to the decay in trendiness over time? Of course entropy is an important concept in physics, related to the arrow of time and how all real physical systems must tend towards disorder unless energy is expended to do work to reverse disorder, but this in turn accelerates entropy. The net result is that the rate of entropy is more or less constant, throughout the universe and will eventually result in the heat death of the universe.

Maybe entropy in market terms would refer to the gradual increase in efficiency, as we learn more about human nature, algo nature, and the tricks that brokers and central banks pull. This effective rise in 'market IQ' makes trading more difficult and forces the bottom tier of traders out of the market entirely while the top tiers consolidate and fight over a more hotly contested profit margin.

One of the themes of the 'Market Wizards' books by Jack Schwager is hearing how the pit traders in the 1970s used to make money basically at will, because hardly anyone knew anything, and if you knew a little about options or TA you had a big advantage over the general market. Over time those advantages dried up when market players became aware of them. A lot of those industry veterans say that trading is a lot harder now. Is that entropy?
  • #84
  • Aug 25, 2019 6:30am Aug 25, 2019 6:30am
A new conjecture.

Any thread on Forex Factory, whether it's a system or the introduction of an indicator, a coding request, or a conspiracy theory will be inversely popular to its overall intelligence/probability of success. In other words, the dumbest ideas get the most traction. The herd seems to flock to anything that is either oversimplified or overly complex, based on superstition, voodoo and magical thinking, or just plain wrong. On the other hand there are some hidden gems on this forum that are completely crickets.
I'd make a compendium/directory but according to the precept of my theory, no one would read it.
  • #85
  • Aug 25, 2019 4:59pm Aug 25, 2019 4:59pm
Quoting clemmo17
A new conjecture. Any thread on Forex Factory, whether it's a system or the introduction of an indicator, a coding request, or a conspiracy theory will be inversely popular to its overall intelligence/probability of success. In other words, the dumbest ideas get the most traction. The herd seems to flock to anything that is either oversimplified or overly complex, based on superstition, voodoo and magical thinking, or just plain wrong. On the other hand there are some hidden gems on this forum that are completely crickets. I'd make a compendium/directory...
I'll read it, you're quite entertaining. Lol. Yes FF is like an eclectic mix of magazines at a Dr surgery. There's the well read trash mags that offer eye candy and light distraction, and the odd thread that's like a national geographic containing a plethora of interest. For me I think it's safest to consider FF a light distraction.. but I like your introduction of entropy, very Nat geo. How about entropy and the pathological nature of some users on this thread... personally I find the psychological pathology here quite fascinating- egos clashing, egos boasting...though it has quietened down recently which is nice, is there behavioural entropy at play? I would say yes. I'm sure there will be some new players to disrupt the system soon enough.
  • #86
  • Aug 25, 2019 7:49pm Aug 25, 2019 7:49pm
Haha, yes, well done. It's the calm before the storm. A new herd of beasts will pass through once the equity markets go flat.

Hmm, well how to compile that list. I guess I'll have to go through all of my 'followed' list and try to recall what got my interest. Top of mind is anything by Parisboy and Copernicus though. Lots of reading but well worth the effort.
  • #87
  • Aug 25, 2019 8:38pm Aug 25, 2019 8:38pm
All the punters are lining up to sell gold. Hopefully they're ready to endure a rise up to 1660 before they see any relief.
  • #88
  • Aug 25, 2019 10:40pm Aug 25, 2019 10:40pm
I just came across this while watching a video about the golden ratio on YouTube. You don't usually expect to find enlightenment in the YouTube comments section, but then again, WHY NOT?

"Fractal designations of natural phenomena allow for highly-ordered complexities that fit within small spaces. Meaning that highly ordered complex processes (life) by necessity require their roots in irrationality, or chaos, in order to be expressed effectively." - NewAge Boogaloo

This is an eloquent description of the markets if I've ever heard one and to 'grok' that the irrationality of market participants and the irrationality of numbers are not only semantically but ACTUALLY linked is...mind-expanding?
  • #89
  • Edited 7:10pm Aug 28, 2019 12:38pm | Edited 7:10pm
Luv your thread Clemmo. I have been having a good read...lot's of laughs. Really like your posting style. I can see a physicist tucked away somewhere in you :-)

I personally think that when I see fractals as a fundamental pattern of any complex system, I have an underlying suspicion that something deep and connected is going on. They are a bit too regular for my liking...and there are specific rules at play that define them. Complex systems themselves have a degree of autonomy and self-regulation going on that creates structure from its constituent parts. For example a system whose patterns are confined by a higher order geometry. Like the fractals in nature arising from a deeper geometrical connection in a higher order symmetry....or the fractals in the markets being a 3 dimensional expression (price up, price down and time) of a 4 dimensional reality (our 3D +1T context which defines the arena of where the participants play).

There is a reason why so many of the world's river systems meander. It ain't no mystical serpent god that creates them. If you can understand the principles at work, then you can trade them with an edge. The edge lies in your models being a better representor of the underlying reality.....than your competitors. Eg......If I wanted to travel to another galaxy, I would take Einstein's equations of gravity with me than Newtons. That would give me a slight edge to Roger Ramjet who likes Newton as Einstein's models are a better descriptor of a wider domain in which gravity exists. I would have an edge over Roger and eat him for breakfast :-)
  • #90
  • Aug 28, 2019 2:10pm Aug 28, 2019 2:10pm
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you 'll never know why it works.. it just works! - myself (lol)
  • #91
  • Aug 28, 2019 6:09pm Aug 28, 2019 6:09pm
Quoting HeyYou
{image} you 'll never know why it works.. it just works! - myself (lol)
C'mon H. You need a dopamine high. Here......*passes pipe*.....smoke this :-)

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  • #92
  • Aug 29, 2019 2:39am Aug 29, 2019 2:39am
Quoting Copernicus
Luv your thread Clemmo. I have been having a good read...lot's of laughs. Really like your posting style. I can see a physicist tucked away somewhere in you :-) I personally think that when I see fractals as a fundamental pattern of any complex system, I have an underlying suspicion that something deep and connected is going on. They are a bit too regular for my liking...and there are specific rules at play that define them. Complex systems themselves have a degree of autonomy and self-regulation going on that creates structure from its constituent...
Have you read Mandelbrot's paper on 'Multifractal Trading Time'? Worth the time. Even better if you can get your hands on a copy of "Fractals and Scaling in Finance'. I'm still trying to get to grips with it, but I'm convinced it's a treasure trove for the practical (applied) quant-like trader.
  • #93
  • Edited 4:10am Aug 29, 2019 3:29am | Edited 4:10am
Quoting clemmo17
{quote} Have you read Mandelbrot's paper on 'Multifractal Trading Time'? Worth the time. Even better if you can get your hands on a copy of "Fractals and Scaling in Finance'. I'm still trying to get to grips with it, but I'm convinced it's a treasure trove for the practical (applied) quant-like trader.
Haven't read either yet...but will get my hands on them. Cheers C :-)

A good vid on fractals below...the orderly side of chaotic systems.

Inserted Video


PS When you see fractals arise it is evidence of a non-linear system and when you have that evidence you can then apply inverted thinking. If you don't see them in a system, then the system is more than likely a simple system which is very predictive....and not a complex one which can turn chaotic on a hairpin. I describe this inverted thinking below.

Given that the financial markets express non-linearity with power laws, you can demarcate Gaussian and Euclidean structure (arising from linear laws) as a distinct zone from the zone that exists outside it (that which lies outside that term of reference (non-linear power law region)). Once you have defined the zones you only trade the abnormal outlier region (non-normal zone) and disregard that which lies within the Gaussian envelope. I hope that makes sense. An efficient market lies within a Gaussian description. If you trade within that envelope you will encounter randomness (noise). The only signals worth trading in this noise are mean reverting in nature. Luck will most likely define that outcome or a slight edge from mean reversion. This luck and tendency towards equilibrium is actually helped by money management methods such as grid and martingale methods....but when markets go non-normal (aka in transition).....you are *roo***ed*... Therefore define that region which is normal and within Gaussian expectations and demarcate that zone that lies outside in the fat tails. Then only trade the fat tailed component with an asymmetrical trading strategy that 'cuts losses short and let's profits run. There is your edge in a complex system that exhibits non-linearity.....*kabooom tish*

You don't need to understand complex mathematics to do this. You just predate on events that lie outside the simple maths and incorrectly applied Gaussian conclusions. Go for the Taleb approach. So many freakin' predictors out there think they understand the rhythm of the markets....but are left standing naked when markets go non-linear....and the markets do this very frequently under diversification ....:-)

PPS Luv Parisboy's envelope approach. Not sure how I missed that gem of a thread.
  • #94
  • Aug 29, 2019 9:32am Aug 29, 2019 9:32am
I think you will love Mandelbrot. I agree, the key to trading well is to stay on the right side of non-linear (wild) fractal expansion. To trade only when the market is due to revert. Of course it is always reverting and trending on some fractal dimension. It's taken me years to wrap my head around it but I think I'm coming along. The next step for me has to be automation since I can only do so much with my feeble mind and body. I've had so many chances to learn to code in my life and I squandered them all, sadly. Well, they say you're never too old and I guess we'll find out.
  • #95
  • Aug 29, 2019 10:50am Aug 29, 2019 10:50am
Quoting clemmo17
I think you will love Mandelbrot. I agree, the key to trading well is to stay on the right side of non-linear (wild) fractal expansion. To trade only when the market is due to revert. Of course it is always reverting and trending on some fractal dimension. It's taken me years to wrap my head around it but I think I'm coming along. The next step for me has to be automation since I can only do so much with my feeble mind and body. I've had so many chances to learn to code in my life and I squandered them all, sadly. Well, they say you're never...
A pro trader (scientist and surfer) who has had remarkable success in addressing fractal patterns directly under full automation is Bill Dreiss. He has one of the top long term performing funds in the world. More about him here. His fractal wave algorithms are not unlike Elliott wave, but less subjective in nature. He is one of the only Fundies who approach the market this way....A real inspiration. Cheers Clemmo and all the best. :-)
  • #96
  • Aug 30, 2019 1:15am Aug 30, 2019 1:15am
Quoting Copernicus
but are left standing naked when markets go non-linear....

Ha ha ha C, remember this thread 3 years ago ?

https://www.forexfactory.com/showthr...37#post8810037


well , I'm using the same HH/LL system, with the same parameters.... and guess what, it still work!

REturns are much lower than 10 years ago because apparently the market is more efficient now. However TP's work better overall and system diversification won't help, it just lower drawdown. but hey I don't care about DD lol that's why I'm a retailer.

Trading multiple pairs also doesn't help, I'd rather stick to the most volatile. as long as there's short term momentum the system works.

So let me predict in peace lol (you know that I respect you)
  • #97
  • Aug 30, 2019 1:31am Aug 30, 2019 1:31am
Quoting HeyYou
{quote} Ha ha ha C, remember this thread 3 years ago ? https://www.forexfactory.com/showthr...37#post8810037 well , I'm using the same HH/LL system, with the same parameters.... and guess what, it still work! REturns are much lower than 10 years ago because apparently the market is more efficient now. However TP's work better overall and system diversification won't help, it just lower drawdown. but hey I don't care about DD lol that's why I'm a retailer. Trading multiple pairs also doesn't help, I'd rather stick to...
Fairy 'nough H. Wait till Dad get's home. You are probably due for a thrashing/tic :-)

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  • #98
  • Aug 30, 2019 1:38am Aug 30, 2019 1:38am
Quoting Copernicus
{quote} Fairy 'nough H. Wait till Dad get's home. You are probably due for a thrashing/tic :-) {image}

So you don't believe me ?

I'm just being honest....hahahaha
  • #99
  • Aug 30, 2019 1:41am Aug 30, 2019 1:41am
Quoting HeyYou
{quote} So you don't believe me ? I'm just being honest....hahahaha
Na mate. I believe. Just kiddin' as per usual with one of my mates (aka HeyYou) :-)
  • #100
  • Aug 30, 2019 11:50am Aug 30, 2019 11:50am
Quoting HeyYou
{quote} Ha ha ha C, remember this thread 3 years ago ? https://www.forexfactory.com/showthr...37#post8810037 well , I'm using the same HH/LL system, with the same parameters.... and guess what, it still work! REturns are much lower than 10 years ago because apparently the market is more efficient now. However TP's work better overall and system diversification won't help, it just lower drawdown. but hey I don't care about DD lol that's why I'm a retailer. Trading multiple pairs also doesn't help, I'd rather stick to...
How do you pick/determine the most volatile?
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