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Meditations on Extremistan - Nassim Taleb

  • #261
  • Edited 2:27pm Mar 31, 2025 1:51pm | Edited 2:27pm
Quoting Urahara-san
{quote} About to start looking for my passport
Bwahaha... I didn't think you were from Kenya. My experience in stock trading wasn't long, only about two years, and it didn’t generate anything except a little money. However, I contributed meaningful ideas that influenced the IDX (Indonesian Stock Exchange) and traders in my country, especially by introducing many of Nassim Nicholas Taleb's concepts there. There's no significant profit unless you have at least $100,000 (USD) in capital.

For a moment, I wanted to play with Call or Put Options—here, they are called Structured Warrants. But oddly, the IDX did not offer a single Put Option, only hundreds Calls. That meant there was no prospect of profiting from what NN Taleb suggested in my country—at least not yet. However, when I just checked the website again, they had started offering them, though only 2 Put Options on just 2 companies. Hopefully, more will come in the future, and this is very exciting to trade. They just released it on March 10 after such a long time without a single one.

Those two companies are preparing for a stock value crash. That is what is called in probability rare events: mathematically certain to happen, but we do not know when it will occur. It can be used as a hedge, and also for speculation. Actually, since October 2023, these two stocks have been in freefall.

https://www.idx.co.id/id/data-pasar/...tured-warrant/
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  • #262
  • Mar 31, 2025 2:23pm Mar 31, 2025 2:23pm
Quote
History and societies do not crawl. They make jumps. They go from fracture to fracture, with a few vibrations in between. Yet we (and historians) like to believe in the predictable, small incremental progression.

- Nassim Nicholas Taleb in The Black Swan
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  • #263
  • Mar 31, 2025 2:25pm Mar 31, 2025 2:25pm
Quoting RoelsMajor
{quote} Bwahaha... I didn't think you were from Kenya. My experience in stock trading wasn't long, only about two years, and it didn’t generate anything except a little money. However, I contributed meaningful ideas that influenced the IDX (Indonesian Stock Exchange) and traders in my country, especially by introducing many of Nassim Nicholas Taleb's concepts there. There's no significant profit unless you have at least $100,000 (USD) in capital. For a moment, I wanted to play with Call or Put Options—here, they are...
I tried to change that but it was hard work and I am lazy.
I did not think you can have put option without call. How is that even possible?
Bullish on Heaven and Ruble
  • #264
  • Mar 31, 2025 2:34pm Mar 31, 2025 2:34pm
Quoting Urahara-san
{quote} I tried to change that but it was hard work and I am lazy. I did not think you can have put option without call. How is that even possible?
No, that's not the way. There is plenty of information about call and put options on the internet.

In general:
Call Warrant is structured warrant that gives its holder the right to buy underlying securities at certain price and certain period of time.
Put Warrant is a structured warrant that gives its holder the right to sell underlying securities at a certain price and within a certain period of time.

So, you can have either Call or Put Warrants separately; you don’t have to own both.
Then, both are further divided into the European Style or American Style models.
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  • #265
  • Mar 31, 2025 2:52pm Mar 31, 2025 2:52pm
Quoting RoelsMajor
{quote} No, that's not the way. There is plenty of information about call and put options on the internet. In general: Call Warrant is structured warrant that gives its holder the right to buy underlying securities at certain price and certain period of time. Put Warrant is a structured warrant that gives its holder the right to sell underlying securities at a certain price and within a certain period of time. So, you can have either Call or Put Warrants separately; you don’t have to own both. Then, both are further divided into the European Style...
I get that. What I mean is, if they provide call options, mustn't there be the opposite side of that call. Not everyone is going to call. Get what I mean?
Bullish on Heaven and Ruble
  • #266
  • Edited 7:05pm Mar 31, 2025 2:59pm | Edited 7:05pm
Quoting Urahara-san
{quote} I get that. What I mean is, if they provide call options, mustn't there be the opposite side of that call. Not everyone is going to call. Get what I mean?
In the real world, the practice is that everyone loves having Call Options because they offer small and quick profits, so they don’t have to wait long. Meanwhile, Put Options have little demand because it takes a long time to wait for rare events. Everyone in the stock market remembers the crazy Bullish people, but what about the Bearish ones? Isn't that right? Just owning $100 in put options, if timed right, can yield $100,000, whereas owning $100 in call options, at best, would only make $100—just like Forex trading.

Then this is not a zero-sum game, just like Forex. In fact, Forex is an Extreme Whales Game. So, get rid of that mindset first. Now, in Options, the ones who pay are those who issue these products, namely the market participants or players (The Markets), which consist of banks and securities firms, and other large capital owners.

Note:
Don't misunderstand, this as a term referring to an institution, organization, or individual, while the machine that rolls the dice every day in the Stock Exchange is also "The Markets" (sophisticated computer systems owned by each exchange to process every order and roll the dice, with slight variations across the world, even though the specifications are set by the World Federation of Exchanges). In Forex, it is the Interbank rate, also run by advanced algorithmic computers, though I still don't understand whether they are centralized.
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  • #267
  • Mar 31, 2025 3:08pm Mar 31, 2025 3:08pm
Quoting RoelsMajor
{quote} In the real world, the practice is that everyone loves having Call Options because they offer small and quick profits, so they don’t have to wait long. Meanwhile, Put Options have little demand because it takes a long time to wait for rare events. Everyone in the stock market remembers the crazy Bullish people, but what about the Bearish ones? Isn't that right? Just owning $100 in put options, if timed right, can yield $100,000, whereas owning $100 in call options, at best, would only make $100—just like Forex trading.
I'll have to learn more about options but that is wild. 100 and 100000
Bullish on Heaven and Ruble
  • #268
  • Edited 3:31pm Mar 31, 2025 3:17pm | Edited 3:31pm
Yes, it does sound crazy, but it's real, say accumulation of $1000 Puts for example, not really $100; It does take a long time, but when it's "in the money," the process is lightning-fast. Crypto can be like this, but it's merely a pump-and-dump game, not certainty. Forex might achieve 4000%, but almost all strategies involve insane drawdowns of -90% Gold Trading. That’s the essence of hidden opportunities.

https://www.forexfactory.com/thread/...1#post15117851
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  • #269
  • Mar 31, 2025 4:11pm Mar 31, 2025 4:11pm
Quote
The test of originality for an idea is not the absence of one single predecessor but the presence of multiple but incompatible ones.

- Nassim Nicholas Taleb - in The Bed of Procrustes
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  • #270
  • Mar 31, 2025 9:12pm Mar 31, 2025 9:12pm
aDtr 21 Today
14 Pairs
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  • #271
  • Edited 8:15am Apr 1, 2025 8:02am | Edited 8:15am
Did not open any trades today, just observing. However, from the selected pairs, the three with the highest aDTR all became "Concave over time after the London Open." So, the "edge" keeps repeating, and a 1/3 aDtr target profit can be achieved.

It’s the same for the other 14 pairs, plus EURUSD and GBPUSD—all became Concave over time, except for just one pair, USDCAD (ranging narrow range). USDCAD might move (trending) after The Red News.
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  • #272
  • Apr 1, 2025 8:59am Apr 1, 2025 8:59am
Adjust the KillZone indicator settings for Range 3, changing the session end time from 24:00 to 23:59. I discovered that if this adjustment is not made, the extension line will not stretch for 8 hours until the market closes and a new day begins.
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  • #273
  • Edited 10:12am Apr 1, 2025 10:01am | Edited 10:12am
Quoting RoelsMajor
Adjust the KillZone indicator settings for Range 3, changing the session end time from 24:00 to 23:59. I discovered that if this adjustment is not made, the extension line will not stretch for 8 hours until the market closes and a new day begins. {image}
And USDCAD got hit by the Red Nuke. Actually, all 16 currency pairs dropped today. Why is everyone selling on April 1st? Lol. Some pairs have started to bounce back, but the outcome by the end of the day probably won’t be much different.
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  • #274
  • Apr 1, 2025 1:03pm Apr 1, 2025 1:03pm
Two bullets of fate

Two 0.5%-weighted fate bullet units were launched southward as the London session was ending, with the hope of riding the flow of price winds to their designated target. However, during their journey, the bullets abruptly reversed course northward before slowly curving and turning back toward the south. Along the way, one bullet nearly reached the boundary of the territory where it would shatter into fragments, forever unable to return southward and reach its target. Will it reach its target or shatter into pieces due to the limits of its endurance? Lets see… Lel
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  • #275
  • Edited 5:48pm Apr 1, 2025 5:30pm | Edited 5:48pm
Quoting RoelsMajor
Two bullets of fate Two 0.5%-weighted fate bullet units were launched southward as the London session was ending, with the hope of riding the flow of price winds to their designated target. However, during their journey, the bullets abruptly reversed course northward before slowly curving and turning back toward the south. Along the way, one bullet nearly reached the boundary of the territory where it would shatter into fragments, forever unable to return southward and reach its target. Will it reach its target or shatter into pieces due to the...
Both bullets then reversed direction as the wind shifted northward. After passing through the nearly windless rollover zone, the wind began blowing fiercely to the north. One bullet shattered into pieces, while the second abruptly stopped mid-path. Dragon has already signaled Convexity—indicating the dominant wind direction is now northerly. Both bullets failed to hit their targets.

Hence, a loss of two positions totaling -0.87%. The "consistent'' winning streak has been halted. Lol

Note: Move SL to BE seems useful in this case, but it's just a mentality. Maybe trading near the London Close is not too good.
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  • #276
  • Apr 2, 2025 8:21am Apr 2, 2025 8:21am
There have been numerous instances of Dragon Convex and Concave Curves emerging over the course of today following the London Open. However, this provides more time to observe subsequent currency movements in Range 2, though this does not necessarily mean that entries in Range 1 or Range 3 are less good. Entry timing is crucial; if the entry is too far from the Dragon, the price may reverse, and if a retrace occurs, it may not be ideal for the SL (Stop Loss). Additionally, the Top and Bottom Levels of the KZ Range Indicator help identify S/R (Support/Resistance).
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  • #277
  • Apr 2, 2025 8:56am Apr 2, 2025 8:56am
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Quote
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  • #278
  • Edited 3:57pm Apr 2, 2025 9:59am | Edited 3:57pm
Timing Entry and Perfect Entry.

Timing Entry and Perfect Entry seem to occur when a trade is opened not too far from the Dragon curve—either one or two bars breaking above the Dragon, or sometimes during a retracement—to ensure a stronger SL (Stop Loss).

Images 1 and 2: EURAUD. Possibly a Perfect Entry.

Images 3 and 4: USDCAD. The entry was not optimal; it could have been a break-even (BE) SL if entered on the first or second bar above the Dragon curve instead of getting hit by nuke stop hunting. USDCAD also wasn’t actually the best pair to trade today—the range was at the boundary, and the 1/3 of the aDtr was exactly 33.

Images 5, 6 and 7: GBPAUD, not meant for martingale but to learn entry timing.

In theory, it's not difficult, and recovery is also quick.
In practice, in gaming prop firms, it's very tough, and profits often get stuck. Maybe because of the many rules.
Lol
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  • #279
  • Apr 2, 2025 10:47am Apr 2, 2025 10:47am
Last test. Trying to take back what USDCAD has already taken. This pair has been consolidating mostly above the trend and above the whole level. The range is still around 46, compared to the usual 98, so there might be further decline. SL 33 pips (0.5%, 1 unit), No TP.
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  • #280
  • Edited 1:45pm Apr 2, 2025 1:24pm | Edited 1:45pm
EURCAD today became a good example in the theory book...

1. Dragon became Smile (Convex)
2. Consolidation below half level and below Dragon
3. Ascending Wicks
4. Support Level @ Range 2 Low
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