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  • #141
  • Aug 12, 2009 10:11pm Aug 12, 2009 10:11pm
Quoting gbppip
No argument, Mate. But please do not twist my words.

Do not get FOOLED BY RANDOMNESS.

Money management does not provide an edge. What iMM does is allow you to exploit market movements. Learn how to make THE BLACK SWAN work for you rather than against you.
Just a thought, you may want to spend some time a read Hanover's posts over the years. I know I've spent a few hours here and there looking over his posts.
Don't wish it were easier, wish you were better. ~ Jim Rohn
  • #142
  • Aug 12, 2009 11:34pm Aug 12, 2009 11:34pm
The market is not random, it behaves AS IF it were random because we can't know all the information and the driving forces at once- a better term is CHAOTIC. Mandelbrot makes this distinction in "Misbehavior of Markets." (Maybe this distills the argument above?)

I hear a focus on "prediction" when I read this discussion on randomness. Here's something that helped me get over feeling the need to predict: You can either predict the outcomes of the market (NFP will show a big loss or price will break out of the triangle to the upside) or you can weigh the risks to the upside or downside (i.e. say IF something happens THEN price may move this much). In the first case, you could be 100% right about the outcome but price may not move enough in your direction if at all and you could lose money. That's because you also have to consider what's PRICED IN.

Because the market prices in outcomes (both technical and fundamental), the potential payoff in the direction of the pricing-in will be different (less) than that of the other side.

My point is that, even though whatever price does next is 50-50, the probabilities of it moving a certain amount in one direction vs. the other is not random. This is in essence, what one must consider when forming an edge.

What this means is that your profits and losses are at any given moment driven by randomness but over time they are based on skill (Not big news for those who have read Douglas' Trading in the Zone, but hey, we have to remind ourselves of simple things sometimes, right?)

Hope this helps, and I recognize that Hanover and Gbpip are experienced traders so this is directed to readers in general.

All the best,

Kris Matthews
  • #143
  • Aug 13, 2009 12:24am Aug 13, 2009 12:24am
Quoting gbppip
Do not get FOOLED BY RANDOMNESS.
Yea I have read the book.

All I got from it was a disgruntled mathematician who was not able to predict the market direction with a mathematical equation or formula. The book happened to be written after Empirica Capital took a series of losses in 2001. Surprise, surprise.

Nicholas Taleb's hedge fund then collapsed in 2004
  • #144
  • Aug 13, 2009 1:35am Aug 13, 2009 1:35am
These random/chaotic/predictable/unpredictable debates can go on for months and they're rarely conclusive, but does it really matter to a trader?

As gbppip said, we can't know what will happen next. When we enter a trade all we can do is manage it, we've entered not knowing the outcome with any certainty so the market might just as well be random. Sure, we base our trades on our own perception of probability (a traders crutch to pull the trigger and take the risk), but as we can never be sure of an outcome we try and plan for every eventuality, usually looking at the downside first. If price goes in our favor fine, we exploit it. If price goes against us we either trade out of it or take a loss. Add in the mix sensible money management and you have a recipe for overall profitability.

We plan our trades on not knowing the outcome anyway, irrespective of whether the market is actually random or not, so in effect it makes no difference to us as traders either way does it, apart from maybe a psychological one.
  • #145
  • Aug 13, 2009 1:42am Aug 13, 2009 1:42am
aii..i have some question hope u can help me or who know the answer can help me

1) which curreny gonna give a trader money per day when a trader floating their currency ?

2) what is the best indicator that really can help a beginner?

3) is it any company that manage forex account for the client?

4)how exacly we can know the time to buy or sell...

tqqq very much

Quoting fxtrader29
I saw this topic and thought it would be a worthwhile discussion topic.
http://www.forexfactory.com/news.php?do=news&id=187395[font=Verdana][size=2]

[size=2][font=Verdana]I am a CPA accountant, and I had a mentor in this business. In Australia, CPA’s are required by law to have a mentor so that...
  • #146
  • Aug 13, 2009 1:43am Aug 13, 2009 1:43am
Quoting pipmutt
These random/chaotic/predictable/unpredictable debates can go on for months and they're rarely conclusive, but does it really matter to a trader?
Of course because trading random markets would be futile.

Markets are not random. Simple example: News on the front page of this site will move price [NFP, FOMC for example]. If market would be random, that wouldn't happen.

End of discussion
  • #147
  • Aug 13, 2009 1:48am Aug 13, 2009 1:48am
This thread was about mentoring and it's benefits, but I recall seeing in this thread that someone was trading from signals given by the mentor.

That's nice but how is that teaching someone to take credit for their own decisions and some good "punishment" from losses?

I personally find mentors good up to a certain point, yet I'll still say that "students" should spread their wings and fly from the nest, they can't eat worms brought by momma bird until they die.
  • #148
  • Aug 13, 2009 1:52am Aug 13, 2009 1:52am
Quoting mikkom
Of course because trading random markets would be futile.

Markets are not random. Simple example: News on the front page of this site will move price [NFP, FOMC for example]. If market would be random, that wouldn't happen.

End of discussion
You're right, news events cause traders to trade, but analysts can have completely different views on the implication of that news and trade in opposite directions. You only have to watch expert analysts and economists on any of the financial news channels before a major news event to see differences of opinion, all of them sound plausible

Trading random markets wouldn't be futile, we treat every trade as if the market was random anyway, regardless of whether it is or not.

I'm not arguing whether the market is random or not, I'm just saying as traders it doesn't really make any difference to us apart from maybe psychologically.
  • #149
  • Edited 2:04am Aug 13, 2009 1:54am | Edited 2:04am
Quoting pipmutt
We plan our trades on not knowing the outcome anyway, irrespective of whether the market is actually random or not, so in effect it makes no difference to us as traders either way does it, apart from maybe a psychological one.
True, we may not know the outcome if you look at each trade on its own. On the other hand if one has a system that has a positive expectancy, then in a sense you do know the outcome of all your trades put together. Over the long term you make more money than you lose.
Don't wish it were easier, wish you were better. ~ Jim Rohn
  • #150
  • Aug 13, 2009 2:10am Aug 13, 2009 2:10am
Quoting LasVahGoose
True, we may not know the outcome if you look at each trade on its own. On the other hand if one has a system that has a positive expectancy, than in a sense you do know the outcome of all your trades put together. Over the long term you make more money than you lose.
Right, so what makes a system have a positive expectancy? The system itself, or the way we as traders handle the trades the system generates?

90% of the people who follow the same system will probably lose, why?
  • #151
  • Aug 13, 2009 2:28am Aug 13, 2009 2:28am
Quoting pipmutt
Right, so what makes a system have a positive expectancy?
By employing a method that has an EDGE.

Quote
The system itself, or the way we as traders handle the trades the system generates?
A system is your method, your MM, and your rules. The system defines how the trades are handled. The method generates the signal, you execute, control your risk, and follow your rules.

Quote
90% of the people who follow the same system will probably lose, why?
If they are losing they are not following the system. The system / method may not be psychologically compatible with the individual, but that has no bearing on a winning system in and of itself. A winning system in winning system (i.e. has a positive expectancy).
Don't wish it were easier, wish you were better. ~ Jim Rohn
  • #152
  • Aug 13, 2009 2:33am Aug 13, 2009 2:33am
Quoting ssnakezor
This thread was about mentoring and it's benefits, but I recall seeing in this thread that someone was trading from signals given by the mentor.

That's nice but how is that teaching someone to take credit for their own decisions and some good "punishment" from losses?

I personally find mentors good up to a certain point, yet I'll still say that "students" should spread their wings and fly from the nest, they can't eat worms brought by momma bird until they die.
Mentors don't give students trading signals, they teach exactly what you say they should, for students to spread their wings and fly from the nest.

Don't confuse a mentor with some half-baked training system someone is selling
  • #153
  • Aug 13, 2009 2:38am Aug 13, 2009 2:38am
Quoting LasVahGoose
A system is your method, your MM, and your rules. The system defines how the trades are handled. The method generates the signal, you execute, control your risk, and follow your rules.
Ah right, ok, I was thinking 'system' as in something which generates buy/sell indications.

I guess the next question is how much of that system's edge is based on the probable direction of price, and how much faith does it put in that analysis?

(Talking of trading, I had better go and do some!)
  • #154
  • Aug 13, 2009 2:44am Aug 13, 2009 2:44am
Quoting pipmutt
Right, so what makes a system have a positive expectancy? The system itself, or the way we as traders handle the trades the system generates?

90% of the people who follow the same system will probably lose, why?
It depends. To what extent is the system mechanical or discretionary?

In a system that's completely mechanical, the entries and exits are clearly and objectively defined. Two traders who make the same entries and exits will make the same P/L (apart from broker pricing vagaries). So if their P/L is markedly different, clearly at least one of them is not following the rules.

If a system (or method, plan, approach, strategy, call it what you will) is discretionary, then it can't be objectively traded (or tested). Hence different traders will make different entries aned exits based on their own market interpretation, and their P/L will obviously differ.

If (as you suggest) 90% of those who follow a certain system lose, then what does that tell us? Either the system is impotent, the rules are ambiguous, or only 10% of the traders are capable of maintaining the necessary discipline.
  • #155
  • Aug 13, 2009 2:50am Aug 13, 2009 2:50am
Quoting pipmutt
I guess the next question is how much of that system's edge is based on the probable direction of price, and how much faith does it put in that analysis?
You lost me. What are you asking? There are all kinds of different ways to trade. Trend Following and Breakout are two that come to mind.

When you have an EDGE there is no faith in analysis.

My definition of an edge:
An Edge is a system or method that gives a higher probability of one outcome over another with positive expectancy.
Don't wish it were easier, wish you were better. ~ Jim Rohn
  • #156
  • Aug 13, 2009 3:15am Aug 13, 2009 3:15am
Quoting pipmutt
Mentors don't give students trading signals, they teach exactly what you say they should, for students to spread their wings and fly from the nest.

Don't confuse a mentor with some half-baked training system someone is selling
Pipmutt, You weren't the smartest mutt in the litter were you?
Mentors show their students how to trade with real live examples. It is the best teaching method because the student is actively involved in the trade. Someone said that it is EARNING WHILE WE ARE LEARNING.

You are inferring that Jacko's Trend trading as some half baked system. You can say whatever you like because you have a bee up your arse about Jacko's success and reputation here. But he has been consistently profitable for over 3 years as seen on these forums.
http://www.forexfactory.com/showpost...4&postcount=85
And as members of his group we can see that he has been a BIG winning trader since he started his mentor group.
And he has been absolutely DESTROYING the market in the last couple of months. I have been learning AND making a fckn big pile of money.

Sure, we have been learning his method from him by watching him trade. He is a Master Trader. He explains all his trades with us on his blog 24-48 hours before the trade.
We see his trades because he SMSes them to us BEFORE the Euro gets to the target and then he SMSes us again as the trade is done.
If you want to call that a signal service, I say you are biting your arse again.
He repeats that he is not a signal service. He is a genuine big time trader who shows us all his trades in advance and as he does them.
And if you are stupid enough NOT to make some money using the smarts of an big winning trader, then you are a mutt
  • #157
  • Aug 13, 2009 5:02am Aug 13, 2009 5:02am
Quoting hanover

If (as you suggest) 90% of those who follow a certain system lose, then what does that tell us? Either the system is impotent, the rules are ambiguous, or only 10% of the traders are capable of maintaining the necessary discipline.
For a mechanical system which is profitable for the 10% I would have to go with number three, "maintaining the necessary discipline".

As the outcome of a trade is unknown all we can do is allow for that fact when we plan it. If we can't predict direction with any certainty then my argument is the market may just as well be random for all the good it does us, it's 'unrandomness' isn't exploitable because we always have to allow for the unknown to happen.
  • #158
  • Aug 13, 2009 5:06am Aug 13, 2009 5:06am
Quoting LasVahGoose
You lost me. What are you asking? There are all kinds of different ways to trade. Trend Following and Breakout are two that come to mind.

When you have an EDGE there is no faith in analysis.

My definition of an edge:
An Edge is a system or method that gives a higher probability of one outcome over another with positive expectancy.
Right there is no faith in the analysis, you accept it for what it is, a probability indicator to help us choose whether to go long or short. We (should) all accept the market could go either way so we base our trades accordingly. If price goes in our favor fine, we exploit it. If price goes against us we either trade out of it or take a loss.

So how does it affect us whether the market is random or not, it's not going to affect how we plan a trade or how we handle the trade once we're in it.

It seems to me that most profitable systems place more emphasis on managing a trade and it's risk, and less emphasis on trying to predict direction. They accept that price could go either way and have a built in contingency plan if price goes against us.
  • #159
  • Aug 13, 2009 5:24am Aug 13, 2009 5:24am
Quoting mongreldog66
Pipmutt, You weren't the smartest mutt in the litter were you?

...

And if you are stupid enough NOT to make some money using the smarts of an big winning trader, then you are a mutt
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  • #160
  • Aug 13, 2009 5:46am Aug 13, 2009 5:46am
Quoting pipmutt
For a mechanical system which is profitable for the 10% I would have to go with number three, "maintaining the necessary discipline".

As the outcome of a trade is unknown all we can do is allow for that fact when we plan it. If we can't predict direction with any certainty then my argument is the market may just as well be random for all the good it does us, it's 'unrandomness' isn't exploitable because we always have to allow for the unknown to happen.
Fair enough. I've stated my opinion - that if the market was random, nobody could possibly profit - and I don't want to argue semantics.

Let's just agree to disagree, and leave it at that.
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