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No more BS - What have you learned?

  • #541
  • Sep 22, 2010 11:13am Sep 22, 2010 11:13am
"No more BS... What have you learned?"

What I learned is that you can give a simple solid proven system to people and they still won't be able to follow it. And that 95% don't have the capacity to make it work.

Take for example the simple solid proven system:
Save 10-20% of you income and pay your mortgage as soon as possible.
If you have a spouse, one partner's income pays the mortgage and the other partner's income are to be used for daily living expenses.

Such a simple solid proven system and 95% of people are not doing it. More likely, if you are reading this (whoever you are), you don't have any savings. More likely you don't even have a budget.

And this is the crucial point:
If one doesn't have any skill in managing their own personal finance, (IMHO) I believe they are already handicapped in their trading. Your own personal finance is a reflection of your underlying skills and emotional quotient regarding with money (and money management).

You see, if you get the urge to shop for pleasure (buying things you don't need), you end up buying things rather than saving your money. You put pleasure first over the necessity... More likely you will break your money management rules. It is the same psychological processes that will occur while you trade. You will end up over trading, over leveraging and uncontrolled greed (emotions)... because deep inside, whether you can admit it or not, it makes you feel good. That's why I also believe that a detachment from materialism is also a crucial point in trading.

So remember: If you can't save 10% of your income in a year, then you don't have the emotional quotient to trade successfully.
  • #542
  • Sep 22, 2010 11:58am Sep 22, 2010 11:58am
Quoting Turveyd
No S10 history going back that far as it doesn't do history, price had risen nearly 50pips ( so was chasey ), but trend was up, trend pulled back to 240wma and turned back up with buying strength so I joined it and sometimes it goes 8pips as was this case and sometimes it runs up another 30pips, them be the breaks.

Out for +2 rather than let it slip back to a loss.

I can do this many times per day and get loads of +2 - +8's, very few losers and a fair few 30pip moves.
Turveyd,

Thanks for the reply my friend. I'm finding all these posts from traders and their different views quite interesting. It seems that whatever works for you is the name of the game. Simple, complicated and everything in between seems to work.

Happy Pipping,

Johnny
  • #543
  • Sep 22, 2010 12:04pm Sep 22, 2010 12:04pm
Quoting Fudomyo
You don't need to believe stuff works, you need to know you can make money with it even if it's mediocre.

Everyone uses different tools differently. It comes down to the operator.
You could just trade 2 MAs and be profitable if you understood not to trade during tight consolidations, near critical support, or during times of low volatility. If you don't apply conditions to tools, then they will fail because no tool works 100% of the time, because the market itself doesn't work 100% of the time.

So, part of it comes down to recognizing...
Fudomyo,

Excellent.

Johnny
  • #544
  • Sep 22, 2010 12:36pm Sep 22, 2010 12:36pm
Quoting ha-pattern
I share this trait. It's kind of a 1'TF-only trader thing. The reason for the apparent nonsense, at least as I can figure now, is to narrow in on one easy way to capture any move:...
ha-pattern,

Thanks for the post. Interesting reading.

Johnny
  • #545
  • Edited 1:25pm Sep 22, 2010 12:36pm | Edited 1:25pm
I'm not sure exactly why Seiden is teaching so I'll reserve judgement, and since I haven't bought his product I'm not endorsing his methodology. I know he is a supply/distribution trader, which has it's merits, but it's a nuanced form of trading therefore can't be systemized into a black box solution for everyone, like the casino example you cite.

I think that's the basic misconception behind trading systems in general. People need to do something long enough to recognize and act upon the exclusions. So while you can lay out the basic blueprint of a trading methodology, it is up to the individual how deeply they understand and build upon it's inner workings.

Here's a good example. Divergence indicators.

Divergence indicators are a decent tool, and can make money for "most" traders, but most traders put a divergence indicator on their chart without exploring the true depth of the tool. They see it more or less as a moving average that lags behind price and get very poor results from it.

They don't know how to set it up properly to identify supply and distribution cycles within an overall trend, they don't understand how the level shifts operate depending on direction of trend, etc.

Many aspects of the tool are completely ignored. This PDF is just a primer on divergence indicators, and I would say that a good portion of retail traders don't have this level of knowledge under their belt concerning their use.

http://www.getfreeebooks.com/wp-cont...ermination.pdf

Here's a simple setup I put together for an example using 3 Jurik smoothed MAs and an RSX that I built based on a composite index. (what I actually trade is different, but this is just to illustrate a point)

This particular RSX has 3 wave forms, Pink is trend median, with a slower and faster cycle to identify overall trend + minor reversals with a triangulated MA envelope to identify OB OS conditions on the faster trend cycle.

It takes a bit of time to understand how the RSX identifies peaks and troughs, and it's not something someone can learn in an hour or two. But once it's understood, and by using it in corroboration with the signal lines on the chart, one can weed out false signals and have a greater advantage of remaining in a trade for the right duration and exiting closer to a reversal.

But it really all comes down to how a trader sees themselves. If they see themselves as a functionary looking for something to tell them which button to push they will lose, but if they see themselves as the arbiter who has specialists to advise their process, then their decisions will be more sound.

So, whether Seiden is giving people an edge or not is besides the point, because in this context his statement isn't false. It's something we witness around us on a daily basis in how many people approach their work, which is what I think he meant.

Quoting Sauron
That's a false statement.
If you explain a technique with a clear edge, the most of the people using it will make money. Not all of them will make a lot of money because only a few are able to use at its full extent but the vast majority will understand it and use it profitable.

Imagine that a casino would give 5 units if you choose the right color at the roulette and will take 4 units from you if you're wrong. Maybe there are some idiots who lose but the most will figure it out. Some geeks will optimise the results with Kelly or other formula....
Attached Image (click to enlarge)
Click to Enlarge Name: rsx.gif Size: 38 KB
  • #546
  • Sep 22, 2010 1:02pm Sep 22, 2010 1:02pm
Quoting Fudomyo
. If they see themselves as a functionary looking for something to tell them which button to push they will lose, but if they see themselves as the arbiter who has specialists to advise their process, then their decisions will be more sound.

.
Red light green light syndrome.

Another great post thanks Fudomyo
Time hides Nothing
  • #547
  • Sep 22, 2010 1:04pm Sep 22, 2010 1:04pm
Quoting JohnnyBSmart
Cindy,

You may need to posts instructions on how to get the most pips out of this indicator. At what key points do we go Long or Short? .
hm I thought that part was obvious
Time hides Nothing
  • #548
  • Sep 22, 2010 1:38pm Sep 22, 2010 1:38pm
hi ha-pattern,

I agree. SR and TLs are core.

I was just posting a rudimentary MA cross setup to illustrate a point. I don't actually trade that way. lol

Like you said, we have to set DD limits, or at least offset them. I think retracing to a Daily TL would be a stretch, so working MTF with the 15M 1H 4H pullback ranges usually don't require as much pain on a swing trade. I usually take a partial TP near a key SR level, will countertrade trade the pullback, and re-enter using the earnings for the next leg up, that way I can increase my account balance along with the lot size as the trade progresses.

In a consolidation, working the lower TFs makes sense on intraday but it's a pretty exhausting way to earn a living.


Quoting ha-pattern
Enjoyed the post.

A couple of issues such as compounding, when you say using the 1' or 1H is the same, or the lagging and imprecision combination of indicators and TF's respectively, bother me.
These being minor, though, I'll try to relate what you say about MTF and indicator trading with what I do.


Charts move from point A to point B; whether the distance is greater or less than usual, a technical reason can be crafted from surrounding chart area to explain that move and a trade started to take advantage of that reason....
  • #549
  • Sep 22, 2010 4:41pm Sep 22, 2010 4:41pm
Quoting Fudomyo
I know he is a supply/distribution trader, which has it's merits, but it's a nuanced form of trading therefore can't be systemized into a black box solution for everyone, like the casino example you cite.
Here is another non bs comment: Anything that can not be systemized and tested is not an edge. If the rules are not clear, they don't offer anything but endless speculation. Only once the rules are clear and defined, you can tell if the result has a positive bias or not.
  • #550
  • Sep 22, 2010 4:49pm Sep 22, 2010 4:49pm
Quoting mikkom
Here is another non bs comment: Anything that can not be systemized and tested is not an edge. If the rules are not clear, they don't offer anything but endless speculation. Only once the rules are clear and defined, you can tell if the result has a positive bias or not.
interesting

but this would imply that the edge could be programmed into an EA?

Are you suggesting the only real edge you could have must be something that could be executed by a computer?
Time hides Nothing
  • #551
  • Sep 22, 2010 4:50pm Sep 22, 2010 4:50pm
Quoting CindyXXXX
hm I thought that part was obvious
Cindy,

Just thinking about some Newbs I've run into on FF.

Johnny
  • #552
  • Sep 22, 2010 4:54pm Sep 22, 2010 4:54pm
Quoting CindyXXXX
interesting

but this would imply that the edge could be programmed into an EA?

Are you suggesting the only real edge you could have must be something that could be executed by a computer?
Basically yes. Not necessarily executed but it must be testable by mechanical method.

I'm not saying that some people can't make a lots of money only by "feeling the market" but what I claim is that every one of their methods can be systemized as long as the person who is defining/creating the system knows what the right questions to ask are.
  • #553
  • Sep 22, 2010 4:56pm Sep 22, 2010 4:56pm
"Feeling the market", lol, love that phrase.
  • #554
  • Sep 22, 2010 4:56pm Sep 22, 2010 4:56pm
Quoting mikkom
Basically yes.

I'm not saying that some people can't make a lots of money only by "feeling the market" but even their methods can be systemized as long as the person who is defining/creating the system knows what the right questions to ask are.
Darn us non programmers must be @#$@ out of luck!
  • #555
  • Edited 5:18pm Sep 22, 2010 5:04pm | Edited 5:18pm
Quoting Deusomega
Darn us non programmers must be @#$@ out of luck!
as I said, it's possible to make money by "feeling the market" but how can you really know how well your method really works if you can't test it? This is exactly the reason why there is so much psychological BS on every book and forum - it's because traders have to rely and trust on something they can't prove or can't actually be sure of.

Has anyone else noticed that all psychological trader stuff always says that you should always follow your rules? It all basically states that you should define your system and trade accordingly ie. systemize it. And if you systemize your rules correctly, you can test them. By manual work with charts if you can't program - that's what many people in the past have done.
  • #556
  • Sep 22, 2010 5:06pm Sep 22, 2010 5:06pm
Quoting mikkom

I'm not saying that some people can't make a lots of money only by "feeling the market" but what I claim is that every one of their methods can be systemized as long as the person who is defining/creating the system knows what the right questions to ask are.
I disagree on this and yes I'm a programmer, try programming a EA to understand PA or when not to trade and too much pattern recognition to program basically EA's can't think.

I'm considering a 50/50 deal though, I say take the next available Long via mysetup the trade it as you see fit, go away come back later and 1 long taken at the right time with a high odds on it being a profit, or a small loss.

I need a EA system which supports 10S or Tick ( I'll code around the Tick to generate S10 )
Nothing to it, but to do it!!! Stick to the plan FOOL!!!!
  • #557
  • Sep 22, 2010 5:13pm Sep 22, 2010 5:13pm
Quoting Turveyd
I disagree on this and yes I'm a programmer, try programming a EA to understand PA or when not to trade and too much pattern recognition to program basically EA's can't think.
Being programmer does not mean that you can think analytically. Actually programming is the easy part.

About PA, all the things you might call PA can be separated and tested separately for non-random effects after separation. You don't have to have a combination of random rules that you call PA to test if one element of it has a non-random effect. You just have to be clear to yourself what you actually are looking for.
  • #558
  • Sep 22, 2010 11:10pm Sep 22, 2010 11:10pm
Quoting mikkom
Being programmer does not mean that you can think analytically. Actually programming is the easy part.

About PA, all the things you might call PA can be separated and tested separately for non-random effects after separation. You don't have to have a combination of random rules that you call PA to test if one element of it has a non-random effect. You just have to be clear to yourself what you actually are looking for.
Here's an interesting question for you.

Is trading more like Chess or Go?


In 1995 IBM created Deep Blue, a Chess computer which competed against Grand Champion Kasparov. While IBM was able to create a computer that had the computing capacity to play and win at chess, the computational variables necessary for a program to defeat a Go Champion are still no where in sight.

Here's why.

Chess has possible board configurations of 10 to the 120th power, and Go has possible board configurations of 10 to the 174 power which is a lot more zeros.

More importantly, Chess is a game that is primarily tactical, with only a modest strategic component, and Go is a game of strategy, with incisive, complex, integral tactics.

Chess is almost entirely analytical (left brain), whereas Go utilizes analytic (left brain) and artistic/pattern recognition (right brain) functions.

So, if we were to compare Chess and Go with trading, trading is more similar to Go because it relies on strategy and pattern recogniton alongside incisive tactics.

The computational capacity to create the level of intelligence that could replicate this capability is still a long way off, and if you factor on top of that the amount of possible configurations that exist in trading, the time line becomes longer.

This is why an EA can't be used for empirical proof that a system is valid. All tools are purely tactical, none are strategic, so without human strategic intervention they all would fail in the long run. We can test their tactical merits, but not the actual success of them as a system.

So, it has nothing to do with "feeling" versus logic, it goes back to the idea of the trader as arbiter versus functionary. Once you remove the strategic element from the equation the results become skewed.

Anyway, I think this is a point that is completely overlooked in the ongoing debate surrounding systems, and also why I think looking for holy grail EAs is a waste of time. Learning to play Go would probably produce better results for people's trading in the long run.
  • #559
  • Sep 22, 2010 11:17pm Sep 22, 2010 11:17pm
Quoting Fudomyo
Here's an interesting question for you.

Is trading more like Chess or Go?


In 1995 IBM created Deep Blue, a Chess computer which competed against...
Somebody, get this man a cigar. Fucking brilliant summation.
  • #560
  • Sep 23, 2010 12:34am Sep 23, 2010 12:34am
Quoting Fudomyo
In 1995 IBM created Deep Blue, a Chess computer which competed against Grand Champion Kasparov. While IBM was able to create a computer that had the computing capacity to play and win at chess, the computational variables necessary for a program to defeat a Go Champion are still no where in sight.

Here's why.

Chess has possible board configurations of 10 to the 120th power, and Go has possible board configurations of 10 to the 174 power which is a lot more zeros.

20 years ago no computer has been able to beat Kasparov at chess. They have more power now but don't forget that it was not the power who beat him but the computer used the database with the previous games of him. So they devised a clever EA which looked at the old patterns and used them profitable.

Go has nothing special, maybe you like it more and find something mystical about it which can't be put in a formula or, even a formula could be devise, we don't have the computation power right now to beat the best players. We will have it for sure, as the Moore's Law is still valid and Go will remain at the same level of complexity.
But Go is not a game which makes the headlines and maybe there was no interest in investing resources to break the code. This is a better and rational explanation.

If we come to the realms of trading, it is possible to devise an EA which trades profitable. It is enough to find one to prove all of the naysayers wrong but you can't prove that there's no profitable EA. And mikkom is right, you can trade profitable by picking trades based on experience but in the end you use some rules which a clever guy can write down and make an EA with them. If that's not the case then 3 possibilities remain:
1) the strategy is not profitable = has no edge
2) the trader doesn't actually understand why he is winning = he'll lose on the long run
3) the programmer is stupid
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