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Thinking Outside the Box!?!

  • #21
  • Nov 29, 2010 4:12pm Nov 29, 2010 4:12pm
Quoting vx13
This the greatest thread on this site hands down, bar none.

As for my idea, it comes from an old book I read. The name escapes me....
I think the discussion would be more interesting if other could think outside the box.. maybe this thread shows the majority of traders think inside the box and since the saying is the majority lose money.. there is a correlation hmmmm.

but yeah we already had a fun discussion on trading drunk so maybe thats the secret lol
  • #22
  • Nov 29, 2010 4:18pm Nov 29, 2010 4:18pm
Quoting newyear498
I think the discussion would be more interesting if other could think outside the box.. maybe this thread shows the majority of traders think inside the box and since the saying is the majority lose money.. there is a correlation hmmmm.

but yeah we already had a fun discussion on trading drunk so maybe thats the secret lol
I definiltey agree. The thread I'm currently working with is using a fairly unique idea as the basis of the topic. It's interesting whether it will work or not.
  • #23
  • Nov 29, 2010 4:55pm Nov 29, 2010 4:55pm
There are times when going with the crowd is a bad idea; identifying such times requires skill and an ability to 'think out of the box'.

There are other times when going with the crowd is the safest move; identifying such times usually only needs commonsense.

Quoting newyear498
I have seen coin toss strategy's be tested and they are profitable as long as you have 1:2 money management..
So THAT's how millions are made...
  • #24
  • Nov 29, 2010 5:09pm Nov 29, 2010 5:09pm
Quoting Marv
There are times when going with the crowd is a bad idea; identifying such times requires skill and an ability to 'think out of the box'.

There are other times when going with the crowd is the safest move; identifying such times usually only needs commonsense.



So THAT's how millions are made...
I'm not saying to go against the crowd obviously we want to be where the money is heading so if everyone buys we want to be buying as well.. just exiting sooner..and when I say think outside the box I am saying using different methods then the same old ones such as always waiting for a moving average to cross etc.

also I would not personally use the coin toss strategy.. but I have seen test where it does end up being profitable.. its certainly not millions.. more like small gains..

I would personally rather find high probability and good MM trades..
  • #25
  • Nov 29, 2010 6:18pm Nov 29, 2010 6:18pm
Quoting newyear498
I'm not saying to go against the crowd obviously we want to be where the money is heading so if everyone buys we want to be buying as well..
And I'm saying that in some occasions, it's better to go against the crowd, and when everybody buys, you sell. This is a form of outside the box thinking which, if applied correctly, can be rewarding.

Also, I like what you said:

Quoting newyear498
I think if there is a good way to trade the market it is about finding out a flaw in the human behavior when it comes to trading and milk that flaw.
and I personally hate the fact that computers and algorithms seem to be taking over these days.
  • #26
  • Nov 29, 2010 6:39pm Nov 29, 2010 6:39pm
Quoting Marv
And I'm saying that in some occasions, it's better to go against the crowd, and when everybody buys, you sell. This is a form of outside the box thinking which, if applied correctly, can be rewarding.

Also, I like what you said:



and I personally hate the fact that computers and algorithms seem to be taking over these days.
Interesting articles.. Its scary because then there are going to be hackers who get inside information on the banks programs and will become millionaires lol

I have a feeling letting computers take over is going to lead to some crazy out of control market crash or something.. opps computer glitch 3 weeks after the latest update causes 3 major banks to sell all there shares!!!

computer hacker virus causes banks to sell everything while the hacker lets his shorts hit rock bottom smiling

good stuff!
  • #27
  • Nov 29, 2010 6:43pm Nov 29, 2010 6:43pm
Quoting vx13
I definiltey agree. The thread I'm currently working with is using a fairly unique idea as the basis of the topic. It's interesting whether it will work or not.
I'm sorry what is the basis for the idea?

I looked at the thread but I will need to sit and read it once over when I get a moment
  • #28
  • Nov 29, 2010 7:07pm Nov 29, 2010 7:07pm
None of these ideas are outside the box. Financial markets are little more then a game with a defined set of rules. The suggestions thus far are simple different strategies for playing the game given the rule set.

What your looking for is called the metagame. Metagaming is a broad term usually used to define any strategy, action or method used in a game which transcends a prescribed rule set, uses external factors to affect the game, or goes beyond the supposed limits or environment set by the game.

Try thinking about how you can use the rules against the other players.

Try finding instances where the rules can be broken and how you can benefit when they are.

Try using what you know about the other players to anticipate their moves and beat them to the endgame.

It can be done... I do it every day. It requires developing an advanced mindset regarding the subject and it won't be easy to achieve. Then again, things that are worthwhile in life rarely are.

Luck be with you.
  • #29
  • Nov 29, 2010 7:31pm Nov 29, 2010 7:31pm
Quoting Darkstar
None of these ideas are outside the box. Financial markets are little more then a game with a defined set of rules. The suggestions thus far are simple different strategies for playing the game given the rule set.

[color=black][font=Verdana]What your looking for is called the metagame. Metagaming is a broad term usually used to define any strategy, action or method used in a game which transcends a prescribed rule set, uses external factors to affect the game,...
Nice I enjoy your view and thanks for steping the thread up a bit.. I would love to hear your explanation when you mention that "I do this every day" just to get an insight in how you turn the rules on the big players?

I will need to do some thought on your topics, but very insightful

Thanks!
  • #30
  • Nov 29, 2010 7:47pm Nov 29, 2010 7:47pm
In Wall Street Warriors series, session I, episode 2 or 3, a very serious guy talks about a trading system based in the patterns of African elephants migration corridors. Anyone knows something more about this? I am very curious.

Several years ago (10 may be or more) I read and article in Forbes about a scientist creating what he called a totally new science related to geometry or something like that (sorry it was a long time ago) and I remember he talked about patterns in sea shells as a definitive answer to the markets. Since them I am looking but so far I was unable to find any, so I have no choice than to stick to the charts.

Good trades to all.

Pepe
  • #31
  • Nov 29, 2010 8:30pm Nov 29, 2010 8:30pm
Quoting privatefr
In Wall Street Warriors series, session I, episode 2 or 3, a very serious guy talks about a trading system based in the patterns of African elephants migration corridors. Anyone knows something more about this?...
I am 99% sure the reference you made to sea shells has to do with fractles.. and yes fractles are being applied to the market and in fact work pretty damn well if you look into Bill Williams books about using fractles.. and that guys a millionaire investor
  • #32
  • Nov 29, 2010 10:26pm Nov 29, 2010 10:26pm
Quoting privatefr
In Wall Street Warriors series, session I, episode 2 or 3, a very serious guy talks about a trading system based in the patterns of African elephants migration corridors. Anyone knows something more about this? I am very curious.
I saw that episode. Was he the Astronomer guy that predicted the markets? Im sure there is a relation to a successful trading system and a pattern we can observe in life like the elephants migration.. BUT its bound to happen when we take in to account how many patterns in life do not follow successful trading systems.

My $.02 on thinking outside the box: I'd say more like an average of <2% of traders are profitable in the market at any given time. Markets undoubably move in cycles where majority is made up of traders who are constantly turning over to fuel the zero-sum game. Hope that makes sense. lol
  • #33
  • Nov 29, 2010 10:47pm Nov 29, 2010 10:47pm
Quoting EmeraldEyes
I saw that episode. Was he the Astronomer guy that predicted the...
I used to think the market was zero sum but I have learn recently it is not zero sum.. because technically 10% could make money and 90 could lose.. or 80% could make money and 20% could lose..

in order for zero sum we need 50 to lose 50 to win more like in options

don't worry I thought same but recently I learn its not that way
  • #34
  • Nov 29, 2010 10:52pm Nov 29, 2010 10:52pm
I have the mindset that its zero-sum with money traded rather than individual traders. Do you mean the winning 10%'s $$ would have to overcome the 90%'s $$ traded? ie; a minority having the power to fill the majority of the orders?
  • #35
  • Nov 29, 2010 10:59pm Nov 29, 2010 10:59pm
Quoting EmeraldEyes
I have the mindset that its zero-sum with money traded rather than individual traders. Do you mean the winning 10%'s $$ would have to overcome the 90%'s $$ traded? ie; a minority having the power to fill the majority of the orders?
No I just mean.. a zero sum market means for every person losing money there is one making equal money.. in the forex thats not true its not zero sum

a person in forex can be making money and two could be losing money..

because in options you have a buyer and seller so theres always that zero sum market..

but forex I could be making money of you the bank and the guys in japan or I could be losing money and its going to you the bank and japan

overall zero sum market is a false term for forex.. but most the core ideas remain the same.. yeah the majority of people making money in forex is bank, brokers, government.. most the losers are individual.. its always been that way and is simple to see when you open your eyes to wallstreet making millions as we lose our 401k's

but at the same time its also easier to be a fly on the monster back as an individual trader.. and get in and out with your money if you know what your doing

  • #36
  • Nov 29, 2010 11:14pm Nov 29, 2010 11:14pm
Quoting newyear498
No I just mean.. a zero sum market means for every person losing money there is one making equal money.. in the forex thats not true its not zero sum
I'm looking at it through currency amounts. For every dollar gained, there has been a dollar lost (w/o spread). Or how do you see it in that sense?
  • #37
  • Nov 29, 2010 11:20pm Nov 29, 2010 11:20pm
Quoting newyear498
.. in the forex thats not true its not zero sum

a person in forex can be making money and two could be losing money..
Zero sum has nothing to do with the number of participants in a transaction. It's zero sum when all the gains and losses of all the participants add up to zero. A trader could make $1000 and that money came from 3 others losing $250, $500, $250. Its the sum of all the gains and losses that are relevant.
  • #38
  • Nov 29, 2010 11:33pm Nov 29, 2010 11:33pm
Quoting Lonestar
Zero sum has nothing to do with the number of participants in a transaction. It's zero sum when all the gains and losses of all the participants add up to zero. A trader could make $1000 and that money came from 3 others losing $250, $500, $250. Its the sum of all the gains and losses that are relevant.
maybe your right.. but overall I think the reason they declare stock market is not zero sum market is because more people put there money in and more business get created which causes wealth to be created.. but not 100% sure..
I suppose stocks could not be zero sum while forex is..

anyways this is post on zero sum.. http://www.investopedia.com/terms/z/zero-sumgame.asp

Lets not get into zero sum much more tho unless its in context that supports this threads focus

  • #39
  • Nov 30, 2010 12:19am Nov 30, 2010 12:19am
Futures are easy to understand as zero sum because every contract has both a long and short position holder, but that is by no means a requirement for a market to be zero sum. On a price basis ALL financial markets are zero sum, including stocks, houses, bonds, currencies, etc. You can see it when you examine how profits and losses are distributed across time.

The parts that makes the stock and bond markets positive sum are the dividend and interest coupon payments. Both draw money from non-market participants and distribute it to the owners of the securities allowing said owners to withdraw more value from the market then was placed in the market by all other participants in that security. (Damn thats a mouthfull...)

There are many great insights that you can learn about the market from thinking about the zero sum nature of things. Generally the strategies are of a longer term nature, but it's definitly an outside the box concept.
  • #40
  • Nov 30, 2010 12:46am Nov 30, 2010 12:46am
We are all inside the Box, or inside the game. So by definition, we are forced to acknoweledge and respect the rules of a game.
Kind of like being in this reality and disregard force of gravity.
Outside the box, is like Bernie Madoff, disregard rules of the game.
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