Black Swan

If you are using Black Swan for trading information I would like to chat.

Lou

Still interested?
I've almost finished "Fooled by randomness" [I think author is the same] and have a bunch of ideas how to apply it to overreacting market [especially remarks on newsreaders impresed me ]

If you like Nassim Nicholas Talebs books then you may also like Traders, Guns and Money by Satyajit Das. He also debunks a lot of so called market wisdom, and its a most amusing read.

Hi,

Would you please elaborate more about how to use black swan theory for trading information or give me some directions for literature. I have looked up the term in google but I still don't know how to use it for trading. That is the first time I hear about that and would like to know more

Thanks

Sorry, I should have been more specific.

This is what I was referring to. They have a free service with very good and timley information.

Black Swan Capital <[email protected]>

Ohhh....I see. I won't be needing this but thank you for replying anyway.

good trading.

Interesting website. Had to laugh at the names of the principals , Jack and John Crooks ! Should have been lawyers with names like that. I wonder what Mr Taleb would make of it.

To me the whole Black Swan concept is simply a type of contrary trading. I think a lot of traders fail to realise that trading is simply buying and selling, nothing more, despite the attempts of many charlatans (advocating Gann, Granville, Elliot to name a few) to dress it all up as rocket science in order to sell you a (expensive) service. Trading requires us, as traders, to make a decision. Buy or sell. Imagine that instead of turning on your PC you had to walk to the bank with a bag stuffed with notes and convert them to another currency? Would your decision be the same ?

I think the point of the black swan is to remind us not to be cocky and think we know better then the market and to have some level of protection in place, just in case that unexpected event wipes you out. May the charlatans drown in swan shit !

Hi Lou
I took a few minutes to go through that web site and their interpretation of utilizing the Black Swan theory and Popper's work. Their methodology (http://www.blackswantrading.com/methodology) seems to diverge quite a bit from classical black swan thinking. I would have expected a black swan methodology to focus on long tailed equity curves or at the very least mention leveraging rare events with high payoffs (like out of the money options). Surprisingly however, the methodology page only mentions pattern recognition, wave analysis, oscillators - seems like standard TA stuff. At a minimum the methodology seems to be out of sync with the theme described on the home page as well as with the name of the company

Looking forward to hearing your feedback if you demo the service ( although how you would evaluate this kind of service in a few weeks is beyond me unless we have a black swan happen during the demo).

BTW, I am a real noob so I might have completely misunderstood Black Swans

Hmmm.... look at how much they charge for their "expertise". I ask myself this. Why are they not trading and making a tank of cash ? Is this the old adage 'if you can't do it then teach it'? (And I say that with no disrespect to real teachers only to charlatans who seek to blind us with bunk. There are good traders who write books). Our job is to sort the wheat from the chaff. I bet the Crook brothers are laughing all the way to the bank... and guess who's on the receiving end ? Wouldn't give them the steam of off my ......

As far as I undesteand correctly back swan trading bases on unexpected events in the market as a consequence of what is overreaction [caused by many many stop loss taken]. The black swa trader for me is someone who hount for such moments to trade against stop loss, when they judge that market is alredy overreacted [so it's like buing on a dip caused by unexpected bad news followed by price decrease and massive SL excersise].

On top of it I have my own concept based on randomness of market [same randomness that is the base of black swan event - black swan is kind of event that is possible only statistically [like 0,0001% probability or less].

So my second point is that most of economic news move market far too far, and in most of a case price goes back at the end of a day.

Now I see I missed Lou's point as I mean theory i red about in "Fooled by Randomness" by Nassim Taleb and now am trying to use in my trading. I should probabily open separate discussion on this topic.