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Trend following systems

  • #1
  • First Post: Aug 5, 2010 2:29am Aug 5, 2010 2:29am
Hi

Well as the topic says, i am wondering if it is possible that banks and big investors would like the sheeple, that is us unconnected not super rich averages joes that has been fooled by mass media more or less, to invest in worthless, really bad trend following systems just to increase liquidity?

In that case, would these banks/big players actually hire/incite people to come up with and spread such systems, telling people to "stick to them" even tough it might not be going to good, hoping that it eventually will, loosing money to the market meanwhile?

As you might already guess, i have my answers to these questions, but please i would like discussion about this. If nobody seems willing to discuss this, that would also be an answer, and in that case id like as many of you as possible to know about it.

One love!
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  • #2
  • Aug 5, 2010 3:34am Aug 5, 2010 3:34am
The only way to find out for sure is if one is profitable. A profitable trader can then validate what the media has been preaching.

From my own personal experience there are lots of BS... and I mean a lot. But then again, I know profitable traders from all sorts of disciplinary approach. That's one thing a can truly vouch for; a lot of people have been fooled into a certain way of thinking.

Not necessarily by the big banks, but from small traders who never make it in trading and then starts selling systems to those gullible people. It's like taking candy from a baby. Sometimes its the people's fault for believing without ever dissecting and investigating the truth.

Big boys releasing false beliefs and info to supply more money and liquidity to the system... I wouldn't be surprised. I've seen corruption at the executive levels, and it happens on a daily basis on all sector of business and life. When one have a lot of money, one can easily find any desperate person to do one's dirty work for a price.
  • #3
  • Edited 7:41am Aug 5, 2010 6:16am | Edited 7:41am
Quoting CrucialPoint

From my own personal experience there are lots of BS... and I mean a lot. But then again, I know profitable traders from all sorts of disciplinary approach. That's one thing a can truly vouch for; a lot of people have been fooled into a certain way of thinking.
Do you have any illuminating examples in mind, omitting such information that would be "problematic"?

Things what i have in mind as BS when it comes to "systems" right now is probably pretty much everything out there.
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  • #4
  • Aug 5, 2010 10:35am Aug 5, 2010 10:35am
Quoting yaed
Do you have any illuminating examples in mind, omitting such information that would be "problematic"?

Things what i have in mind as BS when it comes to "systems" right now is probably pretty much everything out there.
There's actually no point of pointing out these BS, unless you want to turn this thread into a circus. I mean, anyone will go and defend their beliefs with such intense convictions. I, for one, is doing it, right this very moment.

Anyone can take any information and defend it. That's how they do in a court of law. Whether you commit murder or not, I can find evidence of you being guilty as well as being innocent. Heck, I can make you think you are guilty even if you truly are innocent.

The most important of all is to know what are the true intentions of an information being released. And where are the standing point of view the information are coming from. Again, not all information are intended to destroy. But rest assure, most information are released to make money (or for personal gains); from religious beliefs, politics, social, science to personal benefits.

I hope your thinking is as broad as I hope it is, so I would like to leave you an explanation that would explain it all:


"There are no definite guarantees in any/every aspect of life. The only way to live life is to live it knowing that there are no guarantees and you live it to your best." ~CrucialPoint

I remember a financial advice in the market about investing in strong (blue chip) companies for long term investments, as the best strategy for a retirement plan. Place your money in strong companies and leave it there for 30 years and you will be living comfortably when you retire. Heck, it was publicized throughout the media that any investment savvy 18 year would tell you that this is the most secured way to financial freedom. Even highly intelligent people were investing in blue chip companies.

But, what are the real reasons of producing such information... more commissions... or was it simply a random act of kindness? What happened to those at retiring age (60-65yo) in 2008-09 and had lost 75-80% of their money? It makes me sick knowing that I have more money than the 95% of Financial Advisors in the industry. And that the other 3% of the remaining 5% of Financial Advisors made their money through commissions and not through intelligent financial knowledge/experience.


"If one wants to be financially free, one needs to take full responsibility of their own financial development." ~CrucialPoint

  • #5
  • Aug 5, 2010 12:24pm Aug 5, 2010 12:24pm
Quote
But, what are the real reasons of producing such information... more commissions... or was it simply a random act of kindness? What happened to those at retiring age (60-65yo) in 2008-09 and had lost 75-80% of their money? It makes me sick knowing that I have more money than the 95% of Financial Advisors in the industry. And that the other 3% of the remaining 5% of Financial Advisors made their money through commissions and not through intelligent financial knowledge/experience.

Nicely said...Dow hit 1997 levels and S&P hit 1996 levels on March 9, 2009- The bottom of current rally.

But i have to say one thing- Super Long Term trend is always up in equities except Nikkei which felt hardly from 1989.

I mean if i am born in 1940 when Dow was trading at 40 and now today Dow is at 10,500..I would have made money and lots of it in 70 years.
  • #6
  • Edited 1:52pm Aug 5, 2010 1:29pm | Edited 1:52pm
Quoting yaed
Hi

Well as the topic says, i am wondering if it is possible that banks and big investors would like the sheeple, that is us unconnected not super rich averages joes that has been fooled by mass media more or less, to invest in worthless, really bad trend following systems just to increase liquidity?

In that case, would these banks/big players actually hire/incite people to come up with and spread such systems, telling people to "stick to them" even tough it might not be going to good, hoping that it eventually will, loosing money to the...
In my experience people at dealing banks and hedge funds don't spend a second thinking about what retail traders might be up to. More important is deal flow information and the like.

Those who peddle losing trading systems do so for two reasons: 1) It's a big market and there are many suckers out there, and 2) Failing at trading themselves they do what they can to make a few quid from the debris of their own failure.

Another problem with your hypothesis is the assumption that people need losing trading systems to lose money. Given a profitable trading system most people would mess it up anyway. On this site, for example, there are many profitable systems/methods available but by comparison relatively few who succeed at trading.
  • #7
  • Aug 6, 2010 1:30am Aug 6, 2010 1:30am
Quoting medici
Another problem with your hypothesis is the assumption that people need losing trading systems to lose money. Given a profitable trading system most people would mess it up anyway. On this site, for example, there are many profitable systems/methods available but by comparison relatively few who succeed at trading.
Well yeah it would seem very possible that one guy makes it with one strategy while another does not. I think this is because people think that they have a "system" but it is actually a lot less of simple system where you just follow some rules to some end, and more of experience, screentime and getting youre mind into a special way of thinking. I tried to explain some things to a well educated friend, and a lot of it really is otherwordly stuff to people who dont have theyre head in this 10 hours a day. When i though about how i would go about explaining it to someone its a bit hard where to start, i cant just point at the candles, i need to go through basic candle-reading they way i do it, which might take at least one full lesson in it self. And then perhpas start talking about formations, then unto averages and so on and on.
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  • #8
  • Aug 6, 2010 1:57am Aug 6, 2010 1:57am
Quoting CrucialPoint
The most important of all is to know what are the true intentions of an information being released. And where are the standing point of view the information are coming from. Again, not all information are intended to destroy. But rest assure, most information are released to make money (or for personal gains); from religious beliefs, politics, social, science to personal benefits.
Yes but this is what seems so perplexing to me, why is it that there are so many out there presenting "theyre system", which clearly is not founded on empirical evidence? I mean, what would i have to gain as a person to present something as great when there seems very little benefit in doing so? Is the only benefit people presenting a system without empirical evidence the extreme pleasure of someone reading theyre information? I seem lost on the motives here. I mean not everybody charges you for theyre system, not that i can see why anyone would pay for up if they gave it 5 minutes of thought.

And as you pointed out its a very silly thought that there could be such a thing as a certainty.

The way i see it breaks down to two wievs battling with eachother when it comes to sharing wisdom.

First and foremost i try not to be a scumbag in life, i know that moneywise it is profitable to be a scumbag, its actually how most of our money come into being. But i choose not to be one 3 months ago when the opurrtunity was ripe. I have never taken that choice in life and will never. Because im not a scumbag i want to give people of all the wisdom i can. The problem being that there are malicious intent on the web, i dont know exaclty who, but i know why, money as you mentioned. But lets say banks and big players probably have an eye on things to see that there will not be any average joe who makes too much money, say more then 50.000.000 $ a year, if you do, i can bet my right arm someone will try to have a look at youre "system", and changing theyres accordingly, without asking for permition.

And they way i see it, to make a bit of money through steady growth say 50 $ or 50.000.000 $, does not matter, the same operation can be undertaken. So its really sort of a responsibility issue too, i dont want to get people into trouble. And besides what if my wisdom dont help them one bit, which it probably wont, i would feel sort of responsible in my heart cause i dont want to be a scumbag and get people into trouble.
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  • #9
  • Aug 6, 2010 2:07am Aug 6, 2010 2:07am
Quoting kingfisher
But i have to say one thing- Super Long Term trend is always up in equities except Nikkei which felt hardly from 1989.
Yeah it's true, but understand your opinion is coming from a hindsight point of view. So it's all rosey from here. All I'm saying is that there are no definite guarantees. I wouldn't be surprised if some chap took all his money and invested it after reading your comment and then World War 3 breaks lose, or China do something unimaginable, and he loses all his money. It would be a classic trading example.

Quoting kingfisher
I mean if i am born in 1940 when Dow was trading at 40 and now today Dow is at 10,500..I would have made money and lots of it in 70 years.
Yes, but this is not your case It would be good and I would be very happy for you
There is one person I know who was probably riding this monster train... Mr. Warren Buffet.
  • #10
  • Aug 6, 2010 2:32am Aug 6, 2010 2:32am
Quoting yaed
Yes but this is what seems so perplexing to me, why is it that there are so many out there presenting "theyre system", which clearly is not founded on empirical evidence? I mean, what would i have to gain as a person to present something as great when there seems very little benefit in doing so? Is the only benefit people presenting a system without empirical evidence the extreme pleasure of someone reading theyre information? I seem lost on the motives here. I mean not everybody charges you for theyre system, not that i can see why anyone would...
You mentioned you studied philosophy and behavioural science. Same here, I love the these topics. I'm surprise.... you've never covered the topic on the human ego? because if you dwelve unto that topic, you wouldn't be asking these questions. I don't know about you, but do you have any friend (or know anyone) who has an over-inflated ego? Pay close attention to their words and actions and you wouldn't be surprise why they act the way they do. Even an average/normal person expresses their ego almost every minute.

But to answer your question simply.... They do it for Self validation, Self acceptance, a (false) Sense of accomplishment, Self expression, etc... These are all behavioural /psychological science.... very interesting topic indeed :nerd:And very important in understanding it if one wants to become a professional trader.

Quoting yaed
i would feel sort of responsible in my heart cause i dont want to be a scumbag and get people into trouble.
Well, not everyone has the same level of personal integrity like you my friend. I, for one, pray every night that the world would be in peace. And we even can't get some little peace here at the forums.
  • #11
  • Aug 6, 2010 3:01am Aug 6, 2010 3:01am
Quoting CrucialPoint
But to answer your question simply.... They do it for Self validation, Self acceptance, a (false) Sense of accomplishment, Self expression, etc... These are all behavioural /psychological science.... very interesting topic indeed :nerd:And very important in understanding it if one wants to become a professional trader.

Well, not everyone has the same level of personal integrity like you my friend. I, for one, pray every night that the world would be in peace. And we even can't get some little peace here at the forums.
Well i guess i knew why they do but didnt understand why, i still dont.
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  • #12
  • Aug 6, 2010 3:12am Aug 6, 2010 3:12am
Quoting yaed
Well i guess i knew why they do but didnt understand why, i still dont.
The "Why" can be answered by neuro-science If I remove certain chemical compounds in your brain you will become emotionless (objectively emotionless, not subjectively emotionless).
  • #13
  • Aug 6, 2010 4:11am Aug 6, 2010 4:11am
Quoting yaed
Well yeah it would seem very possible that one guy makes it with one strategy while another does not. I think this is because people think that they have a "system" but it is actually a lot less of simple system where you just follow some rules to some end, and more of experience, screentime and getting youre mind into a special way of thinking. I tried to explain some things to a well educated friend, and a lot of it really is otherwordly stuff to people who dont have theyre head in this 10 hours a day. When i though about how i would...
Good point. And I have given up trying to explain things to non-traders long time ago...
  • #14
  • Aug 19, 2010 2:40am Aug 19, 2010 2:40am
Well as the titles suggests, thats what i am wondering. I mean, lets say we establish that there is a stable trend on timeframe M5, my krux in this would be to calculate TP, the trend establishing itself seem quite easy, its just a matter of how strong a trend is strong enough. However when it comes to TP the practical krux is this:

Since there are A BUNCH of trendtrading systems, A BUNCH of central banks with theyre own targets and stability of currency, and A BUNCH of non systematic trading being done, how would one go about calculating TP? I mean all of these diffrent TPs would mean that TP levels in trend trading are extremely fickle, or am i missing something?

Of course i realise there are all sorts of ways of doing this, but do people consider theyre own way the only right way, and in that case why?

I have seen that people use such things as MA crossings, the returning of a CCI, RSI or MACD to a certain level, but i have never understood the logic behind that particular TP strategy, is it based on old data? Based on pretty much nothing at all? Based on feelings?

In fact i see this as such an insurmountable problem that i dont really see why anybody would trendtrade, so lets discuss this, if not for personal utilitarian/pragmatic reasons, so at least for amusment and general wisdom.
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  • #15
  • Aug 25, 2010 3:34am Aug 25, 2010 3:34am
Quoting yaed
Since there are A BUNCH of trendtrading systems, A BUNCH of central banks with theyre own targets and stability of currency, and A BUNCH of non systematic trading being done, how would one go about calculating TP? I mean all of these diffrent TPs would mean that TP levels in trend trading are extremely fickle, or am i missing something?
Yes. They are extremely fickle (and/or interchangeable)... As long as your profit exceeds your average losses... then, you have no problem.
Personally, I don't set TP. I let the market decide that for me. When momentum changes... then it is time for me to exit. And in different situations when there are high volatility, I would happily bank 50 pips (due to being a scalper).

Quoting yaed
Of course i realise there are all sorts of ways of doing this, but do people consider theyre own way the only right way, and in that case why?
Any person who thinks their way is the only way is seriously delusional and ignorant. Little knowledge is as dangerous as knowing nothing at all. In fact, limited knowledge opens more potential door of disasters.

Quoting yaed
I have seen that people use such things as MA crossings, the returning of a CCI, RSI or MACD to a certain level, but i have never understood the logic behind that particular TP strategy, is it based on old data? Based on pretty much nothing at all? Based on feelings?
Indicators are history based. What amateur traders don't understand is that there are Momentum of influx of buy/sell orders. Indicators, though history based, are designed to show you those changes in momentum.

It is no different from your car's dashboard indicators (RPM, Fuel, Tachometer, speedometer). They are also history based, an input of variables then calculated to produce a reading. Does reading your speedometer at 60ml/hr an indicator to hit the breaks? Reading your speedometer helps your decision making process in accordance to the traffic conditions. It is not a rigid decision of 'accelerate at 20 and break at 60'.

This is how amateur traders use indicators: enter/exit buy or sell. Professional traders use indicators as a decision making tool after assessing the market condition and then deciding when or where to enter/exit buy or sell.

Quoting yaed
In fact i see this as such an insurmountable problem that i dont really see why anybody would trendtrade.
So what is your alternative to trend trade?

Most people don't understand that even if one is trading swing, position, ranging, counter trend (or any other form of trading)... they are literally banking and profiting from a micro trend.

As long as price move from point:A to point: +/- B then a trader has the potential to profit. If price doesn't move from point:A then a trader has nothing to capture. A move from point:A to point:+/- B is a trend.
  • #16
  • Aug 25, 2010 10:37am Aug 25, 2010 10:37am
Quoting CrucialPoint
I have an IQ of 140-145... And it took me 6.5 years to figure all of these shit out! http://cdn.forexfactory.com/images/s..._the_floor.gif.

Dude i got 135 IQ how many years im gonna figure that shit?
Peace And Quite Is Utterly Malapropos Of My Departure . . .
  • #17
  • Aug 25, 2010 10:48am Aug 25, 2010 10:48am
Quoting Vegapunk
Dude i got 135 IQ how many years im gonna figure that shit?
As long as curing an addiction .
  • #18
  • Edited Aug 30, 2010 4:44am Aug 29, 2010 6:12am | Edited Aug 30, 2010 4:44am
Quoting CrucialPoint

So what is your alternative to trend trade?

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Well in a way technically there could be no such alternative if we say that trend is price becoming lower, or price becoming higher over so and so many units of time. But i consider such a definition of trend to be inadecate, it doesnt say anything other then the fact that price changes, wich really is just saying that price is dynamic over time.

The alternative is not an alternative strategy, is an alternative way of perceiving the graph, therefor the alternative is not alternative in action in itself but in perception, but there is such an alternative, and its this:



Since there is really no way of determining a trend if you dont asume TF, some MAs being on top of price or such, and i propose that in asuming these things you have already decided upon what it is you want to know before actually finding out what it is you want to know. I mean in quantum mechanics, and i think modern physics in general it is clear that our perception of reality is dependent on what instruments we use for gathering that information on which we operate and take decisions upon. So the instruments we use could be said to produce exactly what we are seing, change the instruments and what we see will change as an the effect of changing out instruments.

So heres what im thinking: The smallest unit, the atom (greek for indivisible) of price is the tick. So in the case of Alpari the atom is 0.1 pips. Of course the case can be made that its not the actual unit, and really its not but its aproximated to be, so in effect it is. Well anyway, since if we really wanted to talk about trend, to be as precise as possible, we would need to talk about ticks in 0.1 pip steps. And given as few and as simple instruments of sampling as possible, we would not use anything but this. And if we did, how could we possibly say there is a trend if price raises 0.7 pips in a second? Would we claim that a very small uptrend of just 0.7 pips took place and ended? In that case i dont really see the use of talking about trends since its not even enough to beat the spread?

Well anyway, im not sure if any of this is getting through the way that i am amused to think about it. But let me put it this way: If we are talking about a trend on a given timeframe and under given conditions, what we are really talking about is just those conditions and that timeframe, not about the trend itself, its really only a construct of our mind, a figment of imagination if you really go into it. So let me elaborate. Ill post a picture of my e/u H4 chart to show what i mean.

So i could say this to comment on recent events before the weekend: Price is trying to break through a downtrend since around 11th August, when i consider price to become in downtrend, bacause all MAs end up on top, pushing price down as seen. Since then we have been in a downtrend. Right before the weekend there seems to be a try to break through all MAs to reverse into uptrend. It would not seem probable that this will happen since the MAs isnt bunched together like in most reverses of trend, but it could of course happen.

If i say this i do it on H4 with a given set of candles in mind for my MAs, and with a given set of candles in history otherwise and so forth. I cant really say that this is the ONLY trend, there is of course trends here and there, the more you look for them the more of them you find. There are some to find on M1, M5, M15, M30 and so on, small and large trends, strong and weak, short and long. I cant really say with any certainty which trend is most interesting if im not looking at a particular timeframe. Well if i DO look at a particular timeframe with particular settings arent i only saying something about that timeframe and that trend? I mean im a being precise? Am handling the atoms here, the 0.1 pips? No i cant say that i am, im not really at all interested in any movements of smaller magnitude then say 30 pips. So really its an aproximation of an aproximation at best.

What this all means to me is that there really is no such thing as trends, at least not any that we can understand with any precision. I mean the trend is just a effect of the way we analyze something, its not actually there, we construct it as a fantasy.

But yeah of course i use trends, but i know and think about it everyday that its a fantasy in my imagination, its not actually there, we cant really say that we can see it.

Cheers and happy trading to all and everyone (though i really wish we didnt trade at all, and instead collaborated to make this world habitable and intelligent, since thats not about to happen for another say 100-300 years i dont have much choice.)
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  • #19
  • Feb 10, 2011 5:27am Feb 10, 2011 5:27am
Trend trading pretty much, in a nutshell means: Have a timeframe, put MAs on it, go with them, close at some point in time or some profit, dont close the trade so much or something something maybe add some more or something something if its not working out. Its about as accurate as it sounds.

Thats my opinion on this topic so far, i am sure there are a lot of uneducated, misconceived, non methodical, guesswork, psychops BS not based on any evidence at all sort of opinions, and perhaps a few opionions that does not fall into such a category concerning this. But the later i have yet to uncover.
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  • #20
  • Feb 10, 2011 5:57am Feb 10, 2011 5:57am
Quoting Vegapunk
Dude i got 135 IQ how many years im gonna figure that shit?
IQ is a measure dreamed up by insane racists, applied in their field of insanity. Conform to their insanity and become like them.
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