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Where is the science? Where are the statistics

  • #41
  • Jul 15, 2009 6:27am Jul 15, 2009 6:27am
Quoting Turveyd
The problem is A B and C is open to interpretation
Right, and that's why trading is as much an art as it is a science.

Give me a brush and a tin of paint and I'll knock out a picture of something vaguely resembling fruit in a bowl......it's how one uses the tools which makes the difference, not the tools themselves, one is pretty much worthless without the other in my opinion
  • #42
  • Jul 15, 2009 6:56am Jul 15, 2009 6:56am
Quoting pipmutt
Right, and that's why trading is as much an art as it is a science.

Give me a brush and a tin of paint and I'll knock out a picture of something vaguely resembling fruit in a bowl......it's how one uses the tools which makes the difference, not the tools themselves, one is pretty much worthless without the other in my opinion

Thats why there isn't a EA which works long term, markets are just too chaotic they need a brain to decide to trade or not trade a setup.
Nothing to it, but to do it!!! Stick to the plan FOOL!!!!
  • #43
  • Jul 15, 2009 7:04am Jul 15, 2009 7:04am
Quoting pipmutt
So is trading a science, an art, or a combination of both?
For me personally, it's a combination, but I think that I could quantify my approach sufficiently to code a pretty close approximation (although I'd anticipate some rather tricky coding ), and then refine it incrementally over time, to more accurately incorporate all of the variables in my strategy.

Topherhk88 is apparently very successful, and seems to have a heavily 'science' based system. IMO his posts give great insight into the rationale, and systems development techniques, employed by a mechanical trader. For three of his posts, see here, here and here. An absolute must read, IMO. And Merlin's thread here. Pipmuncher, if you're looking for some 'science', these links might be a worthwhile place to start.
________________

Quoting Turveyd
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
I'm neither knowledgeable nor bold enough to disagree outright, but I wonder whether enough small fish ever use a system to worry the heavyweights that move the billions. James16 (for example) seems to have a lot of followers, and the method (after several years) still seems to provide some kind of edge. If I understand Gaston correctly, retail traders form no more than 2% of the total market, and even if all of them decided to place their orders around a certain S/R point, it would have minimal self-fulfilling effect. See his post here.

I'm not arguing for the sake of it, just trying to point out that for any one view posted, there always seems to be somebody with an opposing one. Since both parties can't be right, I'd guess that it's safe to assume that at least 50% of the folk who post here (myself included, possibly!) simply quote what they've read elsewhere, rather than making the time and effort to conduct their own definitive and empirical research.
  • #44
  • Jul 15, 2009 7:26am Jul 15, 2009 7:26am
Quoting hanover
For me personally, it's a combination....
For me as well, and although the nuts and bolts of my strategy are technical there is an element of discretion. I like to think I add in my bit of character into the mix which makes it personal (good or bad!)

Thanks for the links you posted, those guys have an opinion and as a fellow trader I respect it. People have different views, it's what markets are made up of, no-one has the monopoly on ways to make money in this business

I'm actually in the process of wading through your previous posts, there's some very interesting contributions, thank you for those.
  • #45
  • Jul 15, 2009 7:27am Jul 15, 2009 7:27am
Quoting hanover
For me personally, it's a combination, but I think that I could quantify my approach sufficiently to code a pretty close approximation (although I'd anticipate some rather tricky coding ), and then refine it incrementally over time, to more accurately incorporate all of the variables in my strategy.

Topherhk88 is apparently very successful, and seems to have a heavily 'science' based system. IMO his posts give great insight into the rationale, and systems development techniques, employed by a mechanical trader. For three of his posts,...

I hate the perpepuation of myth's, thats my own findings as I frequently stumble across a good system to see it turn into a trader killer, maybe there trading it against over big fish.

If only 2% and even with the basis 98% of that 2% are losing all of there money, it doesn't sound as if there is enough money for the big fishes profits and all the big fish profit over all so there income is our money at the end of the day, so dunno how true 2% is. And Big fish have alot of costs, building, bonus's big enough to buy ferrari's and not care.
Nothing to it, but to do it!!! Stick to the plan FOOL!!!!
  • #46
  • Jul 16, 2009 7:15pm Jul 16, 2009 7:15pm
Quoting pipmuncher
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 gambling?
Any suggestions?
You should read this book described here
http://www.bearcave.com/bookrev/genius_fails.html
it is the real story of Long Term Capital Management that had a former Chairman of Salomon Brothers (one of the leading investment banks on Wall St) who teamed up with two Nobel Prize winners in Economics and Econometrics who had formulated the Black Scoles method of using quantitative /scientific methods to trading. They were also joined by a vice chairman of the US Fed Reserve. They were joined by Stanford's William Sharp (famous for developing the sharp ratio to measure risk). All up, a brilliantly qualified group of quants and traders.
The result was a trillion dollar disaster that almost sank the US financial markets in 1997 and the US govt did a very well hidden bailout. Not a good advertisement for scientific systems. Some say that the current crisis had its roots dating back to that fiasco.
  • #47
  • Jul 17, 2009 12:19am Jul 17, 2009 12:19am
Pip trading can be done scientifically it does not have to be artful... youll be crucified on forum boards for being different ... but trading is a personal thing... do it how you feel you understand it best... if thats scientifically then do it like that... im a statistical trader... it works.
  • #48
  • Jul 17, 2009 12:46am Jul 17, 2009 12:46am
Hey Pipmuncher,

if you want some stats check out this old thread.

http://www.forexfactory.com/showthread.php?t=27624
  • #49
  • Jul 17, 2009 3:17am Jul 17, 2009 3:17am
Quoting domino
Pip trading can be done scientifically it does not have to be artful... youll be crucified on forum boards for being different ... but trading is a personal thing... do it how you feel you understand it best... if thats scientifically then do it like that... im a statistical trader... it works.

To be fair as 98% allegedly lose, it's likely wise to be different!!
Nothing to it, but to do it!!! Stick to the plan FOOL!!!!
  • #50
  • Jul 17, 2009 12:00pm Jul 17, 2009 12:00pm
Quoting Turveyd
To be fair as 98% allegedly lose, it's likely wise to be different!!
I remember a paper being published that put it at around 85% that fail.. and 15% succeed... I think that trading in total sum of all markets... I would think FX has a higher drop out rate.

i think it comes down to garbage money management no discipline
  • #51
  • Jul 17, 2009 12:20pm Jul 17, 2009 12:20pm
Quoting domino
I remember a paper being published that put it at around 85% that fail.. and 15% succeed... I think that trading in total sum of all markets... I would think FX has a higher drop out rate.

i think it comes down to garbage money management no discipline
ability to not be clouded by emotion..must be the hardest thing to overcome, hence the drop-out rate
  • #52
  • Jul 17, 2009 12:23pm Jul 17, 2009 12:23pm
Quoting domino
I remember a paper being published that put it at around 85% that fail.. and 15% succeed... I think that trading in total sum of all markets... I would think FX has a higher drop out rate.

i think it comes down to garbage money management no discipline

Hard / Impossible to compile the exact number, but 98% wouldn't surprise me sadly.

No the real reason is, everyone tries to pick tops and bottoms cause they look easy afterwards, where as in real time and reality it's near impossible to do and means your generally trading against the trend so all break outs will be against you. Small profits and big losses!!

Forex is a day trading tool, it doesn't hold it's trends for long enough so for longer holds your better off with less risky stocks, so H4 trend players are at a disadvantage where as even M1 scalper that I am did used to trade Stocks of D1 charts mainly.

And not many can take the speed of the market and think clearly when it's moving ( my issue ), irrelevant as to the TF used on your charts I'll add.

Stock Options likely have the highest losing rate though, great in a trending market suicidal in a sideways market.
Nothing to it, but to do it!!! Stick to the plan FOOL!!!!
  • #53
  • Jul 17, 2009 12:25pm Jul 17, 2009 12:25pm
Quoting nAVIN2007
ability to not be clouded by emotion..must be the hardest thing to overcome, hence the drop-out rate

That too, which also explains the hugely profitable Demo accounts syndrome where everything you touch wins.

Trading is easy if not for Fear and Greed!!
Nothing to it, but to do it!!! Stick to the plan FOOL!!!!
  • #54
  • Jul 17, 2009 12:54pm Jul 17, 2009 12:54pm
Quoting Turveyd
That too, which also explains the hugely profitable Demo accounts syndrome where everything you touch wins.

Trading is easy if not for Fear and Greed!!
that concept does actually scare...i mean my trading on demo is seriously profitable, live better be similiar
  • #55
  • Jul 17, 2009 1:15pm Jul 17, 2009 1:15pm
Quoting nAVIN2007
that concept does actually scare...i mean my trading on demo is seriously profitable, live better be similiar

Well thats upto you to keep it the SAME exactly, don't fall into the ohhhh I'm up 6pips I'll take it to be sure scenario, then reverse your trade which then loses 50pips.

Which is the other issue, the take 10pips profit and be happy, then lose 50pips and try to forget about it brigade then based on the 10pips boast there great!!
Nothing to it, but to do it!!! Stick to the plan FOOL!!!!
  • #56
  • Jul 17, 2009 4:34pm Jul 17, 2009 4:34pm
Quoting nAVIN2007
ability to not be clouded by emotion..must be the hardest thing to overcome, hence the drop-out rate
The fear and greed factors are the bigggest reasons why traders fail. The big difference I see when watching Jacko trade is his patience and he is unflappable. Nothing seems to throw him off balance He takes his losses on the chin with the same cool attitude as his wins. It is the most important thing I have learned from him. After talking to the brokers where I trade, most professional traders are almost unconcerned about their losses, because they know that it is part of the game
  • #57
  • Jul 18, 2009 12:57am Jul 18, 2009 12:57am
Quoting jamiewhite
The fear and greed factors are the bigggest reasons why traders fail. The big difference I see when watching Jacko trade is his patience and he is unflappable. Nothing seems to throw him off balance He takes his losses on the chin with the same cool attitude as his wins. It is the most important thing I have learned from him. After talking to the brokers where I trade, most professional traders are almost unconcerned about their losses, because they know that it is part of the game
I do agree i try to apply the 4 stages of learning..the peak being when u can trade effortlessly and be profitable (like driving a car..u just do it witout thinking how to do it) jacko at some stage id want to read his material..theres so much to learn.
but i do think the more u know what u do works the more diluted the emotions get..i bet traders such as jacko are extremely confident in there edge and know what leverage is suitable to cover the emotions...cause i guess every1 has there price
  • #58
  • Jul 18, 2009 1:04am Jul 18, 2009 1:04am
Quoting Turveyd
Well thats upto you to keep it the SAME exactly, don't fall into the ohhhh I'm up 6pips I'll take it to be sure scenario, then reverse your trade which then loses 50pips.

Which is the other issue, the take 10pips profit and be happy, then lose 50pips and try to forget about it brigade then based on the 10pips boast there great!!
will try buddy....been workin on keeping things the same..i just hope real money doesnt cloud my decisions..i cant be worse than b4 thinking of going live but its always August that finishes me off...
  • #59
  • Jul 19, 2009 4:34am Jul 19, 2009 4:34am
Quoting nAVIN2007
will try buddy....been workin on keeping things the same..i just hope real money doesnt cloud my decisions..i cant be worse than b4 thinking of going live but its always August that finishes me off...
How long have you been Demoing this time mate ???

For the trading you do, get yourself a $0.1 per pip account I guess, and work up from there.

august is a low volume highly volatile month!!
Nothing to it, but to do it!!! Stick to the plan FOOL!!!!
  • #60
  • Jul 30, 2009 5:59pm Jul 30, 2009 5:59pm
Quoting pipmuncher
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 gambling?
Any suggestions?
For very obvious reasons you wont find such systems fully revealed on a public forum (or anywhere else on the net). But if you ask for it, you will get 100 replies saying that you can't apply science in trading.
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