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Where is the science? Where are the statistics

  • #21
  • Jul 14, 2009 4:31pm Jul 14, 2009 4:31pm
Quoting bmchunu
What kind of scientific evidence have you ever found in any FINANCIAL markets??
I would suggest you take your hard earned cash and stash it under the bed!

It is scientifically impossible to 100% prove any system in Forex or any other financial market for that matter. There are just too many factors that are beyond yours and everyone's control. There is only one today, and there will never be another day like today. You can flip a coin a million times in a controlled environment, but you cannot repeat the exact same conditions that made a currency...
Hey, if it helps him control his fear, who are we to criticize? Besides, I don't think munch said anything about 100%. If he finds a market inefficiency that gives him a statistical edge (entirely possible) that would be awesome. Even awesomer if he shares it with the rest of us!
  • #22
  • Jul 14, 2009 4:44pm Jul 14, 2009 4:44pm
Quoting pipmuncher
I will publish my findings in this thread in due course.
If you do what you need to do to obtain a statistically valid conclusion, I'd quite confidently predict that the very last thing you'll be doing is publishing anything on a public forum. You'll be too busy making money, and you'll have way too much contempt for people who wont put in the work themselves to even consider throwing them a bone.
  • #23
  • Jul 14, 2009 4:45pm Jul 14, 2009 4:45pm
Quoting opie999
Hey, if it helps him control his fear, who are we to criticize? Besides, I don't think munch said anything about 100%. If he finds a market inefficiency that gives him a statistical edge (entirely possible) that would be awesome. Even awesomer if he shares it with the rest of us!

I've got 1 Stastical Edge that is!!

But sadly, using it in a live trading way and trusting it and taking the hits when it doesn't work all makes it kinda tricky still.

Peace of cake on a demo account without fear or greed though, so it is proven in a live trade scenario.


It had a jump from @70% win rate to @80% Win rate last week, which certainly increases confidence.

I'd like 90% sadly don't think it's possible though
Nothing to it, but to do it!!! Stick to the plan FOOL!!!!
  • #24
  • Jul 14, 2009 5:18pm Jul 14, 2009 5:18pm
This type of thread frequently leads to all kinds of cliches, generalizations and each trader's assumption that there is only one optimum way to trade....... his or her own.

-- There are invariably folk who will post that entries are unimportant; that exits are where the money is made.

-- There are invariably folk who will post that you can be profitable with any method, because mindset is all that's necessary.

-- There are invariably folk who will post that trading is an 'art', not a 'science'. (I see that's happened already)

-- There are invariably folk who will post that you can only make money with 'price action', and not with indicators.

-- There are invariably folk who will post that it's impossible to make money scalping, that only the longer timeframes are reliable.

-- There are invariably folk who will post that it's impossible to make money trading news announcements.

-- There are invariably folk who will post that automated systems and EAs can't possibly work.

-- There are invariably folk who will post that win size (RR) is more important than win rate.

-- There are invariably folk who will post that you should average down, and/or avoid using stoplosses.

-- There are invariably folk who will post that basket trading is the only way to profit.

And so on.

For every one of these arguments, there are counter-examples: real life evidence of profitable traders whose philosophy, or approach, differs from the above.

Conclusion? Take your pick, and follow your own path. Profit is the only objective consideration. In other words, the bottom line is your, um, bottom line.
  • #25
  • Jul 14, 2009 6:07pm Jul 14, 2009 6:07pm
I couldn't have said it better, there are thousands of ways to make money but millions of ways to loose it.
The breaking of a wave cannot explain the whole sea.
  • #26
  • Jul 14, 2009 6:28pm Jul 14, 2009 6:28pm
What's this I hear about Exits, if I've spent nearly 5 years getting my entrys perfected how long to perfect my exits ??

Always another hurdle in this game hey!!


Nothing to it, but to do it!!! Stick to the plan FOOL!!!!
  • #27
  • Jul 14, 2009 6:56pm Jul 14, 2009 6:56pm
Quoting Craig
I couldn't have said it better, there are thousands of ways to make money but millions of ways to loose it.
I only count 1 way to do each
Living the adventure in my head.
  • #28
  • Jul 14, 2009 7:42pm Jul 14, 2009 7:42pm
And there are invariably folk who will sum up an entire thread beginning to end with one post...like David ...LOL

Geez...I am probably one of the least qulified posters to answer this given the fact I never finished college (and Im sure most of you here have) but YES you can be a succefull trader without being great at statistics, and science I am living prof of that, when it came to both those subjects I failed



Quoting pipmuncher
As a newcomer to FF I have enjoyed reading through page 1 of the more popular threads and reviewing the various systems and strategies.
My background is very much in science and as such I would require evidence (before investing my hard earned cash) that any particular system had been thoroughly tested and had been proven statistically to be a winner over time.
There would also have to be clearly defined parameters for entries and exits.
Has any thorough hard scientific analysis of forex trading systems been undertaken or is it really just glorified...
It's me...
  • #29
  • Jul 14, 2009 8:16pm Jul 14, 2009 8:16pm
threads: vsa - volume spread analysis
internet searches: harmonic trading, wd gann, stock market structures, cycle-trader, sacred science, thedanielcode, jm hurst, richard wyckoff, elliott wave,
  • #30
  • Jul 14, 2009 8:27pm Jul 14, 2009 8:27pm
Quoting hanover
This type of thread frequently leads to all kinds of cliches, generalizations and each trader's assumption that there is only one optimum way to trade....... his or her own.

-- There are invariably folk who will post that entries are unimportant; that exits are where the money is made.

-- There are invariably folk who will post that you can be profitable with any method, because mindset is all that's necessary.

-- There are invariably folk who will post that trading is an 'art', not a 'science'. (I see that's happened already)

-- There are...

And can add in something like thread posted by tdion, pure LUCK.

I dont see post from tdion quite some time.. He still around?
  • #31
  • Jul 14, 2009 9:04pm Jul 14, 2009 9:04pm
Quoting Razzle
If you do what you need to do to obtain a statistically valid conclusion, I'd quite confidently predict that the very last thing you'll be doing is publishing anything on a public forum. You'll be too busy making money, and you'll have way too much contempt for people who wont put in the work themselves to even consider throwing them a bone.
Spot on, Raz. And who could blame him?
  • #32
  • Jul 14, 2009 9:08pm Jul 14, 2009 9:08pm
Quoting akukaya
And can add in something like thread posted by tdion, pure LUCK.

I dont see post from tdion quite some time.. He still around?
Good question. Maybe he discovered the HG and just can't be bothered. Ah well. Best of luck to you Tom, wherever you are.
  • #33
  • Jul 15, 2009 12:21am Jul 15, 2009 12:21am
Quoting hanover

-- There are invariably folk who will post that trading is an 'art', not a 'science'. (I see that's happened already)
'...an art as much as it is a science...', opposed to either one or the other. If trading was purely science then why are the majority of people losing money, there are plenty of profitable trading strategies around the net which have been extensively backtested on historical data.
  • #34
  • Jul 15, 2009 12:35am Jul 15, 2009 12:35am
Quoting pipmutt
'...an art as much as it is a science...', opposed to either one or the other. If trading was purely science then why are the majority of people losing money, there are plenty of profitable trading strategies around the net which have been extensively backtested on historical data.
I'm really interested in this viewpoint the the trader fail rate is due to some sort of inherent psychological malaise in the general population, do you have evidence to back this up? I'd also be grateful if you could point me at some of these 'plentiful' profitable systems (of course with some track records to back up the claim), because I'll get onto coding them up ASAP!
The breaking of a wave cannot explain the whole sea.
  • #35
  • Jul 15, 2009 12:55am Jul 15, 2009 12:55am
Quoting Craig
I'm really interested in this viewpoint the the trader fail rate is due to some sort of inherent psychological malaise in the general population, do you have evidence to back this up?

I'd also be grateful if you could point me at some of these 'plentiful' profitable systems (of course with some track records to back up the claim), because I'll get onto coding them up ASAP!
Your second sentence answers your first question and gives you all the evidence you need!

There are several very popular strategy threads on these (and other) forums, they're packed to the rafters with hopefuls. These strategies obviously work for their authors but not for all the followers, why?

If successfully trading any of these strategies was just down to applying science then like you say they could be automated, but they aren't, why?

If you give a bunch of traders a clearly defined set of trading criteria they will invariably produce different results, in fact wasn't there a clinical experiment done in some US university somewhere which proved that point?
  • #36
  • Jul 15, 2009 1:58am Jul 15, 2009 1:58am
I must admit I don't keep an edge eye on the system threads, but I don't think I've seen anybody offer up much of a record past a MT4 history for the past couple of weeks, in fact many of the popular threads have proven to be scams. I'm not saying it's all this way, but all the successful traders I know don't sit around giving away systems on forums, because the systems are their livelihoods, logical really.
The breaking of a wave cannot explain the whole sea.
  • #37
  • Jul 15, 2009 2:13am Jul 15, 2009 2:13am
Quoting Craig
in fact many of the popular threads have proven to be scams.
That topic's too hot for me, I don't dare to comment


Quoting Craig
all the successful traders I know don't sit around giving away systems on forums, because the systems are their livelihoods, logical really.
I agree, plus it probably took them a lot of time and money to get where they are.

Having said that, trading is a very solitary business, some people have a need to share their success with others and shout about it....or they could just be very nice people who enjoy helping others! There's another possibility, perhaps experienced traders know that it's not the strategy alone which makes a profitable trader, it's how the trader uses it. Which brings us back to the science/art debate....
  • #38
  • Jul 15, 2009 3:10am Jul 15, 2009 3:10am
Quoting pipmutt
There are several very popular strategy threads on these (and other) forums, they're packed to the rafters with hopefuls. These strategies obviously work for their authors but not for all the followers, why?

If successfully trading any of these strategies was just down to applying science then like you say they could be automated, but they aren't, why?
With respect, I don't think it's necessarily as simple as this.

Some of the systems posted are totally mechanical, indicator-based. Hence there's no ambiguity in the entries and exits, and the most likely cause of 'follower' failure must be faulty mindset. But, as Craig points out, with a mechanical system, an EA could be coded, eliminating mindset from the equation. If the system is really profitable, then there's absolutely no reason why the EA wouldn't be equally so. Of course, that's assuming that the system captures an inefficiency or otherwise somehow delivers a long-term edge. A lot of mechanical systems - whether manual or automated - suffer from over-optimization, and consequently don't last the test of time. That's got nothing to do with mindset failure of the followers.

Some of the systems involve more-difficult-to-code 'abstracts', like 'trend', momentum, S/R. Furthermore, to whatever extent subjective interpretation is necessary, then the followers' failure might not be due to mindset, but ineffective mentorship, i.e. ambiguity in the original poster's expressing the concepts involved; an inability to impart their 'market knowledge'.

In some cases the entry rules are explained, but exits are left to the discretion of the follower (e.g. "there are several ways of playing a pinbar"). Incomplete information does not necessarily point to a fault in the follower's mindset.

Many of the systems invite responses for enhancement. Such a system being proposed is at best, untested, and at worst, completely tentative. The first page is frequently filled with "great system, thanks for sharing" posts. But several pages into the thread, the system has changed out of all recognition, leaving followers understandably confused. I would estimate that, given the test of time, the vast majority (more than 90%?) of the methods in FF's Trading Systems area will eventually fail. One can hardly blame newbies for hopping from thread to thread, from system to system.

Sad to say, it gets more complex than this. There are those who believe that a trading 'plan' must be flexible or adaptable. To me, that's very open-ended statement. Where does one draw the line between 'legitimate' modification of the rules/principles, and a gradual drifting away from the plan into unsubstantiated guesswork?

Beyond this, there are those who believe that profitable trading involves 'intuition'. The more discretionary the process becomes, the more scope there is for educational ambiguity. And again, what is the qualitative difference between intuition and guesswork?

If trading is all about psychology, then why do EAs fail? Is it because 'price action' concepts are too difficult to code? Is it because EAs lack intelligence or 'market knowledge'? If so, well there are plenty of "keep it simple, let's trade naked" advocates out there, yet (given that EAs are immune to faulty MM and/or mindset), the problem can only be that the EA is too simple, i.e. a failure to include variables that are apparently self-evident to the experienced human trader. Or is the high EA failure rate because they lack flexibility or adaptability? If so, it's back to my point a couple of paragraphs ago.

I suspect that many mindset problems are somehow rooted in ineffective methodology (or 'approach', 'plan', 'strategy' – call it what you will). Profit equates to success, which leads to growing confidence, and the right mindset will gradually and instinctively ensue as a by-product of the reward generated. Conversely, an impotent method will lead to disillusionment, frustration, and ill-discipline. Of course poor MM and ill-discipline will empty an account faster than an unprofitable method. But that in no way guarantees that the method itself is profitable.

I'm (hopefully!) not as confused as all of this might seem. Just trying to point out how many differing and contradictory views there are out there, and that some of them must necessarily be rooted in ill-logic.
  • #39
  • Jul 15, 2009 6:33am Jul 15, 2009 6:33am
Quoting hanover
I'm (hopefully!) not as confused as all of this might seem.
It all sounds perfectly logical.

So is trading a science, an art, or a combination of both?

If it's purely science then why is it that so many people fail, they can't all have mindset and psychological problems. Surely it would simply be a case of following the instructions on the tin and producing the end result. If you do A, B, and C then you'll end up with X, how hard could that be?
  • #40
  • Jul 15, 2009 6:43am Jul 15, 2009 6:43am
Quoting pipmutt
It all sounds perfectly logical.

So is trading a science, an art, or a combination of both?

If it's purely science then why is it that so many people fail, they can't all have mindset and psychological problems. Surely it would simply be a case of following the instructions on the tin and producing the end result. If you do A, B, and C then you'll end up with X, how hard could that be?

The problem is A B and C is open to interpretation and even if not something other than X will likely happen anyway.

I've found systems that work near on perfectly, sadly everyone else catches onto the system so the big boys change the rules and the system goes from near perfect to suicide over night

Still good fun though, kinda!!
Nothing to it, but to do it!!! Stick to the plan FOOL!!!!
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