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  • #101
  • Jun 5, 2014 4:05am Jun 5, 2014 4:05am
Ok, you can put it that way, but, what about past historical data where every thing you said can be exploited like ABCD, Gann, Fibonacci etc. All those things are for a statistical analysis. It is that that gives you the edge. If in the past you see that the price has always reversed from 2.37750 and price went there 4 times in 20 year span how likely will it be that it will reverse from there now?

Again, if you see that the 17 black showed 7000x in the past month how likely it is that it will show now when you are placing your bet on 17 black?
  • #102
  • Jun 5, 2014 4:09am Jun 5, 2014 4:09am
Quoting merquise
Ok, you can put it that way, but, what about past historical data where every thing you said can be exploited like ABCD, Gann, Fibonacci etc. All those things are for a statistical analysis. It is that that gives you the edge. If in the past you see that the price has always reversed from 2.37750 and price went there 4 times in 20 year span how likely will it be that it will reverse from there now? Again, if you see that the 17 black showed 7000x in the past month how likely it is that it will show now when you are placing your bet on 17 black?
That is exactly my point, my friend, the probability that it will show is exactly 50%, or 1 in 2. Just like it was all of the other times.
If you are good at something, never do it for free--Joker
  • #103
  • Jun 5, 2014 4:10am Jun 5, 2014 4:10am
Quoting jmn5611
{quote} I see all the W's and the M's. I even see an AB = CD. It is all good in hindsight. We trade the hard right edge. Yes, we can draw lines, and targets, and put up fibs, and draw a Keltner, put up a BB, and throw a Gann fan on there too. It all looks great in hindsight. Do we know for sure what the price will be an hour from this moment? Can it be done beyond that statistical probability of chance? No. I can't, you can't, lehmann couldn't, nor could Bear Stearns, LTCM got really fancy and they failed also. Merquise, trading is gambling. Now...
Indeed. The current "state" of a price move gives no clue for the direction of the next move.
It's a random walk with occasional "impulses" mitigated by conflicting positioning by all participants. This means that it's pointless to try to predict the next move.
All that can be done is to place a bet on the TRADER's OPINION, i.e. it's a gamble
If it were that easy .. well, you know the rest.
  • #104
  • Jun 5, 2014 4:28am Jun 5, 2014 4:28am
Quoting Mingary
{quote} Indeed. The current "state" of a price move gives no clue for the direction of the next move. It's a random walk with occasional "impulses" mitigated by conflicting positioning by all participants. This means that it's pointless to try to predict the next move. All that can be done is to place a bet on the TRADER's OPINION, i.e. it's a gamble If it were that easy .. well, you know the rest.
Ahh, but this hope, Mingary. More traders are moving away from entries and patterns and all that other stuff meant to blind us from the truth. We have to be able to participate in market activities. To do this, we have to keep our powder dry. To do that, we must lower our leverage and trade small. When we do get signals, we have to be able to take them, not because they work, but because they build one on top of another. Trading one in and one out is a negative sum game. The only way to tilt in our favor is be willing to ride any trends that do occur. That means we have to be open to long and short positions. Keep the drawdown static, add positions so that growth can occur exponentially. Over time, a trend will carve itself out, and you will be there to enjoy it.

Now there are some who will use heavy leverage and put up crazy numbers over a short period of time. Nothing wrong with speculation, just know it for what it is and don't use your life savings.
If you are good at something, never do it for free--Joker
  • #105
  • Jun 5, 2014 4:48am Jun 5, 2014 4:48am
Ah the Random Walk Hypothesis I've read about it and I disagree with it I'm on the other side, but we can debate it Let me brush up on some facts for and against it
  • #106
  • Jun 5, 2014 5:16am Jun 5, 2014 5:16am
Markets are not random. If they were you wouldn't be able to statistically and efficiently turn a profit. No trading system or method would work historically.

There thousands of ways to make money trading, some are inherently better than others, some are false positives.

You will find nothing on a free forum that will make you a better trader or give you the holy grail. Those that understand how to make money trading do not share their secrets willingly or for free, myself included...

Most traders fail at trading even the most successful systems because they are terrible at executing them, allow their bias to get in the way, or do not treat trading as a profession (but rather a gambling hobby).

Trading is not easy. Its incredibly hard. Being good at it is more about being disciplined and having the correct money management techniques mastered than the system you are trading. let me repeat that: its more important to understand how to quantify risk and execute accordingly than to have a system that "works well". Most traders blame their failures on "the system not working" (or not having found the holy grail) when in reality it is more often than not their own lack of ability to trade within defined risk parameters and with a level of discipline.

I am of course speaking to "speculative" trading methods, a term I use loosely. There are systems to trade that rely on arbitrage and basis trading, that are not speculative, but rather seek to exploit market short falls. Most speculation is actually gambling, you cross over that line from being a gambler to a trader when you have a statistical edge. If you cannot tell yourself what the edge is, you are a gambler and not a trader. In the end, even the best system in the world can result in losses when a trader does not execute it properly.

One last note: the simpler the better. Markets, while wildly complex when you consider the participation within them... but are actually really simple in their dynamics. A system with too many bells and whistles has a lot that can go wrong with it, while a simple system with only a few metrics, will likely succeed far better in the long run, because there are simply less moving parts. Its like any complex machine... the more parts that have to work together in order to have a successful result, the more pieces that are "able to break" and cause a whole system failure. The most successful system I trade relies on only two indicators (and they are not crazy ones either).

Trading a method or a system is also not about maximizing gains, it should be about minimizing losses - or rather- the risk/reward ratios... People are often so mislead by a systems statistics I had to post something about it... While we all want to make the most we can- we have to accept trading isnt about how much you make, its about how much you DO NOT LOOSE. If a system is going to make money, you should be more concerned with the draw downs and draw down period rather than trying to maximize the gains- this is commonly referred to as the "endowment model" for hedge funds... Google it.

Thats it for me... and the extent of knowledge I am willing to pass on. I have witnessed successful traders that use the craziest indicators (like lunar cycles) to produce a profit year over year... and what it always boils down to is having a set of rules that are followed to the T, never broken, and executing with the precision of a surgeon.
  • #107
  • Jun 5, 2014 5:28am Jun 5, 2014 5:28am
Heh while reading "Technical Analysis of the Financial Markets", JJM, there is a part there about Random walk theory and one funny quote from the book

Quote
A "random walker" would have a tough time convincing a holder of gold bullion that there's no real trend on gold chart
  • #108
  • Jun 5, 2014 5:33am Jun 5, 2014 5:33am
Quoting dhussey
Markets are not random. If they were you wouldn't be able to statistically and efficiently turn a profit. No trading system or method would work historically. There thousands of ways to make money trading, some are inherently better than others, some are false positives. You will find nothing on a free forum that will make you a better trader or give you the holy grail. Those that understand how to make money trading do not share their secrets willingly or for free, myself included... Most traders fail at trading even the most successful systems...
Great post!
Markets are not efficient, rather they are effective - Jones
  • #109
  • Jun 5, 2014 6:23am Jun 5, 2014 6:23am
Quoting mzvega
{quote} Great post!
Couldn't disagree more!
Surgical precision?
I surgeon doesn't guess where your appendix is ( not any I trust). and until you see the profits, you can only guess they will be there.
Following rules to a T is okay only when they are describing the current state of the market. When the market breaks your rules, you must rethink..
Risk/reward ratios are a misleading waste of time: Concentrate on where the market is going and keep your margin % high enough to take advantage of it. Money management = not losing back everything you've gained so for because the trade "looks good"
The only part I agree with is to keep it simple.

The fewer rules you have the better.

You can be a slob like me and still find a way that forgives your errors and gives you money for your efforts, however misbegotten.

(Now isn't this fun!)
  • #110
  • Jun 5, 2014 6:36am Jun 5, 2014 6:36am
Quoting Rap Skallion
{quote} Couldn't disagree more! Surgical precision? I surgeon doesn't guess where your appendix is ( not any I trust). and until you see the profits, you can only guess they will be there. Following rules to a T is okay only when they are describing the current state of the market. When the market breaks your rules, you must rethink.. Risk/reward ratios are a misleading waste of time: Concentrate on where the market is going and keep your margin % high enough to take advantage of it. Money management = not losing back everything you've gained so...

100% confident you don't make any money trading. Nice try troll.
  • #111
  • Jun 5, 2014 7:22am Jun 5, 2014 7:22am
Quoting Rap Skallion
{quote} Couldn't disagree more! Surgical precision? I surgeon doesn't guess where your appendix is ( not any I trust). and until you see the profits, you can only guess they will be there. Following rules to a T is okay only when they are describing the current state of the market. When the market breaks your rules, you must rethink.. Risk/reward ratios are a misleading waste of time: Concentrate on where the market is going and keep your margin % high enough to take advantage of it. Money management = not losing back everything you've gained so...


Quoting dhussey
{quote} 100% confident you don't make any money trading. Nice try troll.
Mr. Skallion is correct 100% -- needless to say I am the baddest troll in them parts.
BTW - The markets are random but it's irrelevant to whether one can make money or not ...
  • #112
  • Jun 5, 2014 7:40am Jun 5, 2014 7:40am
Quoting dhussey
Markets are not random. If they were you wouldn't be able to statistically and efficiently turn a profit. No trading system or method would work historically. There thousands of ways to make money trading, some are inherently better than others, some are false positives. You will find nothing on a free forum that will make you a better trader or give you the holy grail. Those that understand how to make money trading do not share their secrets willingly or for free, myself included... Most traders fail at trading even the most successful systems...
again we have someone who believes their way is the only way - read market wizards, look at the extreme differences in the approach of truly profitable traders.

As for your statement about drawdown, again totally untrue. On of the most successful funds of all time routinely has large drawdowns.

There is no one way, price goes up and down and there are no rules other than the rules you choose to put upon yourself and your own trading.

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tradewith60
  • #113
  • Jun 5, 2014 7:52am Jun 5, 2014 7:52am
This might be a good time to remember the old adage "If you argue with math - you're wrong." The fact is that mathematical gurus have gone back as far as 1950 forward examining distribution models, popular indicators and other factors we use in trading today. They found that in all markets, all of the popular indicators, fibs, support and resistance lines, etc. all ended up in a 50/50 probability of market prediction. So we see, the "secret" in trading lies in the "process", not the "prediction."
  • #114
  • Jun 5, 2014 8:02am Jun 5, 2014 8:02am
Quoting FrenchCuff
This might be a good time to remember the old adage "If you argue with math - you're wrong." The fact is that mathematical gurus have gone back as far as 1950 forward examining distribution models, popular indicators and other factors we use in trading today. They found that in all markets, all of the popular indicators, fibs, support and resistance lines, etc. all ended up in a 50/50 probability of market prediction. So we see, the "secret" in trading lies in the "process", not the "prediction."
Are these perhaps the Nobel prize winners who got together in the futures market and less than a year later had to declare bankruptcy?

One of the most sophisticated mathematical models of the planetary system had the earth as the center of the universe.

  • #115
  • Jun 5, 2014 8:08am Jun 5, 2014 8:08am
Quoting 60minuteman
{quote} again we have someone who believes their way is the only way - read market wizards, look at the extreme differences in the approach of truly profitable traders. As for your statement about drawdown, again totally untrue. On of the most successful funds of all time routinely has large drawdowns. There is no one way, price goes up and down and there are no rules other than the rules you choose to put upon yourself and your own trading. {image}

See I find again and again people I can agree with.

Nice to see a good lively discussion between people who just can't see what the other guy sees, without falling into a name calling situation.

But is hard to convince a guy who just raked in 300 pips in a half hour that he is wrong, wrong, wrong!

Maybe tomorrow I will listen more carefully to what those who disagree with me have to say.
  • #116
  • Jun 5, 2014 8:25am Jun 5, 2014 8:25am
Rap - they are not. These were various mathematicians - not traders. They just love the math.
  • #117
  • Jun 5, 2014 9:14am Jun 5, 2014 9:14am
Quoting Rap Skallion
{quote} See I find again and again people I can agree with. Nice to see a good lively discussion between people who just can't see what the other guy sees, without falling into a name calling situation. But is hard to convince a guy who just raked in 300 pips in a half hour that he is wrong, wrong, wrong! Maybe tomorrow I will listen more carefully to what those who disagree with me have to say.
I spent way too much time arguing that this wouldn't work and that wouldn't work - eventually I realized everything can work, if you know how to make it work.

When you approach the market as something that can not be quantified or controlled, I think you stand a much better chance of being profitable - although the majority seem to prefer the other approach.
tradewith60
  • #118
  • Jun 5, 2014 10:38am Jun 5, 2014 10:38am
Quoting FrenchCuff
Rap - they are not. These were various mathematicians - not traders. They just love the math.
Okay, I was in a beligerent mood and apologize. I happen to agree about the 50% bit, and the succint statement you made"
the "secret" in trading lies in the "process", not the "prediction."

If your method depends on whether you prediction is right or wrong you will lose.
If you have good ideas of what do when you are right, and what to do when you are wrong, things will be different

I had a banner day today. Could I have reasonably told you yesterday, or even early in the morning that it was going to be this good? Not on your life!

I was watching when I saw the numbers begin to charge around, moving so fast that my tps were hit and the pending trades I always have (just in case) were entered, their tps. were hit. I did try to keep up with some new trades of my own, and they went into profit and their tps were hit.

All I knew was that in a general sense, with the way I operate, Thursdays tend to be a good day for me.

Was I "striking with precision"? I was raking in money like a winning streak at a craps table. ( I imagine: I have never played the game).

Had I insisted on making the market conform to any kind of indicator based prediction. I would have been closed to many of the trades that were successful for me.

Just for grins I opened up my journal for May and counted four days over 200 pips.

I tend to think that if you don't get a banner day like this once in a while, there is a better method out there for you somewhere.

Most of the good days are Wednesdays and Thursdays, enough so that I have thought of being at screen only those two days of the week.

I look for the breakouts. and build wealth on their backs.

Other people successfully trade the retrenchments: Their methods and viewpoints have got to be radically different from mine.

Good trading to you, sir. If everybody agreed with everybody else, then how can anybody learn from their conversations?

Oh, and I too, recommend reading "The Market Wizards"!
  • #119
  • Jun 5, 2014 10:57am Jun 5, 2014 10:57am
Rap - one of the more interesting trading methodologies I've read here in quite sometime is the "Bilstein' method of trading. When it comes to conquering all of the variables that are factored into a trade - it is probably as good as anything else. Interesting.
  • #120
  • Jun 5, 2014 11:10am Jun 5, 2014 11:10am
Quoting Rap Skallion
{quote}with the way I operate, Thursdays tend to be a good day for me
And that's the kind of information that could be great in the long run. I trade tuesday to thursday, and only very rarely break that routine, because statistically I believe that they might be more reliable, the market seems to follow through on certain moves more. Now my idea might be wrong for someone else, but It seems to be right for me and that's all that matters.
Being a trader is lonely, but being a great trader is lonelier still
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