A jump to the beginning - chaos and market forces

Indeed.



Narrowed but deep focus as the foundation isn't nearly effective as a wider foundation. Fractal nature of trees says a lot.

For the bulk of my trading "career" my focus was increasing accuracy and upping the winning percentage. I've always had good r:r so that wasn't issue. The biggest effect on my account came from widening the foundation and learning money/bank roll management. Martingale vs anti vs The Ralph Vince model blah blah blah. The next biggest effect on my account was mindset.

Going back to the Pythagorean Triangle in a previous post:



The longest side is not the logic (trivium) or dimensional (quadrivium). Its the 5 senses side. The perception side. It's a cliche saying that we trade our perceptions. Our perceptions are not only based on our market or trading perceptions but how we see the universe. How we see ourselves and our place in the universe. Many of our perceptions are based on how feel physically. Emotionally. Again, most of those perceptions have zero to do with trading yet in my experience have had the most dramatic effect.

yeah, what I am asking will definately not improve my trading. Still, I have the privilige to trade with most of them including Deutshe and can say that their Autobahn is relatively slow in my books . nevertheless, im always amazed how they can again and again comply to the same price in a few seconds.
seems, I have to look at 1 second as the time spend as of one of the sessions(like assia/london etc..and they find the equalibrium in that 1s session..

Deutshe has around 30% of the market in the last count few y ago..dont know where stands now but more or less aroundish.

You can do everything and everything can be used in different ways but there is always one way that gives better results.
You can use a moving average as entry signal or as a tool to gauge the trend.
You can use a bottle to store sand or you can use a bucket.
You can use a shovel to move soil or you can use your hands.
Whatever method you will use there will always be room for improvements.

talking about improvements
yes, there is always room to improve, every system every approach every design
but how much efforts to how much extent
assume your system is 70% percentage of perfection, you may use 30% of energy to accomplish it
but the rest 30% may cost your 70% energy to achieve.
if you know this, the efficiency drops lower than lower
are you still determined to pursue the goal or will you give up and maintain what it is now ?

13 psychological biases that explain why we make terrible financial decisions even though they 'feel' right

Something that I've just read in books but still interesting. All points are related to trading.
http://uk.businessinsider.com/9-psyc...biases-2015-10

Tq alexx, for your momentum pic, i hope im on right track

Thanks for what? I don't know you.
This is the second time I say this thread is not about posting trades, you can hope whatever you want, this is a direct ban.

you right alexx i might not know what i am doing


for those who pm me, like alexx said i might be wrong ,

but i will give hint, go and find this excell file, today i check its still there, that excell file are good to start, it contain something like this



bye

Just Messing with your Brain



I once flipped a coin 10x (7 heads and 3 tails). I flipped it 20x (12 tails and 8 heads).
Well, if the probability is 50%. The outcome is not 50%. Some guy explained to me that the probability is 50%, but this doesn't mean that you will get 5 heads and 5 tails.

So, what will you get if the probability is 100%? Does this mean that you will get it wrong on a 100% probability? Why do we discriminate from probability 1-99% against 100%. 100% never lie yet 1-99% is give or take?

Another guy came along and said that you have to flip the coin more than that. The more you flip it the closer you will get to the true 50% probability. How many more flips I asked. He said "50,000 would get you close... 1million flips even better chance to get closer to 50% head and 50% tails."

1. So what happens at flip 42,154? Or flip 35,611? Or flip 246,736?
2. Whats the difference between 10 flips and 50,000 flips?
3. Does this mean that I will screw your data if I flip the coin 50,010x?
4. Why are we looking at the history of the previous coin toss?
5. If a random generator is truly random, then the result would be random, right?

Wait a minute... Does a coin have a memory of the previous coin toss? Because If I flipped 7heads... in order for further toss to coincide with 50% I should be flipping more tails in the future... Because if I don't, then no matter the amount 50,000 or 1,000,000 it would be 70% heads and 30% tails if I don't flip more tails.

Does the coin know that you are at flip 50,001 and then the coin will simply linger and oscillate the 50% mark all the way up to flip 1,000,000?
If I flipped the coin 1000x and I stopped, another person continued to flip the coin... Should we start counting 1001 or should we restart the count from 1?

A kid came along and overheard the discussion about the coin toss. The kid politely interrupted and said, "Check out my coin tossing machine. If I set the machine with the same exact force to apply to every coin toss, I can get up to 99% heads... even with 1,000,000 toss."
"Beat it kid, get out of here." said one of the guy.

The kid packed up his machine and replied "You know, if the probability is 50% and the outcome is 50% head and 50% tail, then it is not random at all is it? A coin toss is never random but deterministic. And if a coin toss is random, then even at 1,000,000 flips we should get a random result. But whats interesting is that if I increase the height of the coin toss, after a certain height, I don't get the heads but chaos."


Peace,
CrucialPoint

The kid is wrong.
Google this issue on any physics / statistics sites...
(:

About the machine? Not necessarily. If the coin was placed at exactly the same position each time, and the same way up, and exactly the same force was applied, then why wouldn't you get many more heads than tails (or vice versa)?

And if you increased the height of the toss, i.e. increased the force applied, then you would increase the randomness due to slight variations in the room's atmosphere (air pressure, humdity, air movement, etc.) each time.

So about the machine, the kid's right...

What does this have to do with trading? My guess is that applying the same force is the same as following the same rules of your system each time (discipline), and not setting the force too great is the same as taking your profits at the right time, or exiting quickly when something's wrong, rather than staying in the trade too long and risking a reversal due to a change in conditions. Am I close, CP?

Hi,

I agree with the first part. If you could control every variables of the coin toss, then you could control the result.
IMO this fails in trading.
Indeed, the only aspect that can be controlled is the set of rules that one can devise.
However, even if you show perfect discipline you are applying the system to a quasi random time series, therefore your system result will be unpredictable over time, even if perfectly applied...

Talking about a truly random coin flip-like event, If you understand this you understand why
https://en.wikipedia.org/wiki/Law_of_large_numbers
Obviously if the toss apply same force the outcome is the same in our macroscopic world

Well, it ain't easy, that's for sure

But I'm sure most of us agree that psychology, especially discipline and having the right mindset about the nature of market, is very important to successful trading.

It's interesting, at least for me, to see how people's mind react to such affirmations, how they are stucked within some concepts. It is interesting because it helps me to overcome my mind's limitations, observing other people's mistakes can help my learning curve. If I am aware of how my mind elaborate informations then I am two, three, ten steps ahead.
Previous three posts are about discipline, rules of your system, control every variable, psychology aspect.
No one of these concepts are part of that quote, I am not sarcastic but sometimes what we should look for is in front of us, the question is why don't we see what we should look for?
Someone told me "I read things at least 100x until I truly understand the information" and this is very true because I realized that to understand CP's posts I read them a lot of times and everytime I found something I was missing.
Here is the trick, things doesn't change but our mind does.
At school they told us "read something 3 times, one to prepare your mind, one to underline important concepts and one to memorize" but it doesn't work this way, at least this is what I found for myself. Old school teaching what a drama.
When something goes too far then
Good one CP nice messing

I like coin tossing,

If tails are a decrease in price and heads are a rise in price .my little system works perfectly trading 10 to 20 pip returns and it adheres to the 50/50 rule.now as long as price remains in this perfect efficient state even allowing for slopes my gains are far greater than my losses.infact i would be doing far more interesting things than writing this if it remained true to this 50/50 rule.

but it bloody does not,it trends and throws a ten or twenty heads in a row at me ,and could throw any amount.my little system does not completly fail ,infact mylosses are my trading cost or the spread.this showed me the power in the efficiency of this market.

Scratching my head i decided that at times the market is not efficient or from my particular perspective i also know that the 20 head trend was correcting the efficiency on a very diferent level.

I tried to work out the cause of these trends of heads or tails and realised it was behond my capabilities ,so i needed to look for an alternative.

For me the kid also giving a truth .finding this truth in markets is probably as simple as the kids machine if we can look behond the given fact

The key is to ensure beginning conditions of a coin toss are random. Coins are classical objects and obey deterministic rules. With applied physics starting from initial conditions you can determine with precision the outcome if you exactly can determine initial conditions plus applied forces. In fact any classical experiment is fully deterministic in controlled environments with a knowledge of initial conditions.....hence why those lads with computers applying classical Newtonian principles of angular momentum to predict roulette outcomes were banned from casinos.

Where it gets funky is with quantum systems which when applied to determine initial classical conditions produce an initial 'undefined' initial condition. You can apply this to the coin toss experiment where initial conditions (eg. tails up or heads down is unknown) and then apply the same experiment to produce the required probabilistic result described in Mag357's post relating to the Law of Large Numbers.

That's why I specified "our macroscopic world", quantum physics is non-deterministic but probabilistic, but that's a whole different story and have nothing to do with the market, even if the decision of a human watching the market may be a quantistic-like event in our brain rather than deterministic.

The problem that CrucialPoint provocatively enunciated shows how counter-intuitive probability can be to our common logic and how important is to deeply understand the math behind the law of large numbers and its mathematical proofs to not fall into deceptive way of thinking.

Spot on Mag :-)

I remember reading how CP's assumptions regarding this market were fully deterministic which made me immediately jump on board his thought wave as when talking in terms of 'randomness', how I prefer to view this principle when applied to any classical system is simply in terms of extent of complexity or 'intractability', as opposed to randomness in the true sense of the word at the fundamental level.

While quantum systems are entirely non-deterministic, non-boolean in nature and the fundamental driver for any classical system, their classical expression is always deterministic given that you can apply a Schrodinger equation to precisely determine their 'classical outcome when mapped to spacetime.

I'm Dropping the Bomb

Pick a number:
1 year
5 years
10 years
15 years
20 years
25 years
50 years
100 years
500 years
1000 years

Some trader told me that 1 year back-testing data is not enough... the more the better, he says.
I asked him, "How about 5 years of data?"
He replied, "Well, 10 years is good."
I added, "How about 20 years instead?."
"Even better, it will be good if we have 100 years of data." he exclaimed.
I then replied, "Fuck it. Let's go for 1000 years of data instead."
He rolled his eyes, shook his head, turned and walked away. He probably thought I was simply trolling.
I didn't even get the chance to tell him that I don't back-test. That once you know the market structure, there is no need to back-test at all

The market moves up and down. It may move in different angles, nevertheless, it is up and down. What else is there to back-test?
You see as mundane as it is, this is how the market looked in the past (it has an open, a low, a high and a close):

Today's market looks like this (it has an open, a low, a high and a close)

In the distant future, the market will look like this (it has an open, a low, a high and a close)



Back to Basics
For an example, let us back-test 25 years of data.
It will have the current price (which is the close).
It will have a high and it will have a low.
At the end (or beginning) of this 25 years of data is the starting point (the open)
It will look like this (bullish or bearish/ vice versa).

It doesn't matter how many years of data (even if this was 10,000 years of data), you will get a candle: an open, a high, a low and the close.

Take a good look at this candle and I'm going to take your blindfolds away.

You have seen this candle a million times. You've worked with this candle a millions times. Can you see that this candle is giving you the middle finger. In fact, it is giving both of its middle finger at you telling you to get F*cked. This candle is making a statement "Don't mess with me or else I'll F*ck you up!" And guess what? Many have messed with this candle and they got F*cked up and without even realizing it.

You see, this candle is a biased candle. A bullish candle is biased to the upside. A bearish candle is biased to the downside.
There are more breakout to the upside than the downside on a bullish candle.
There are bigger movement on the upside than the downside on a bullish candle.
There are more tick points to the upside than the downside on a bullish candle.
There are more fakeout and reversal on the downside on a bullish.
You don't need to know the future candle and try to predict the next candle >>> These statistical facts will occur as long as price remains above the open in a bullish candle.

Now, it doesn't matter what kind of system you have developed. You simply have tested your system in a biased data. It will either show good positive profitable results or a negative losing results. If the results is negative and losing, you will go back to the drawing board to get the result profitable in this biased data.
Nothing can go wrong, because you're smart/intelligent and you have 25 years of objective data
Plus, you have tested this with other securities and other trading vehicles and the result was positive (yet you didn't know that 90% of ANY securities or ANY investment vehicles moves in the same direction of each other. Only about 10% are moving in the opposite direction. So you're test result is also again biased without you realizing it.)
Now that all the back testing is showing to be profitable (from a biased data), its time to trade this baby LIVE & MAKE TONES OF MONEY!!!

And then this happens...


Well you know the story.... from here.

If this was a green candle (after the first initial green candle), you will celebrate in awe, how brilliant you are and that you have cracked it. Give it another bar or two when it becomes bearish/red and you will be telling the trading community the old saying: "My system stopped working." or "The market has changed." Of course, you wouldn't be telling them that you've lost everything. And 10, 15, 20, 30 years down the drain and you are probably homeless.

A lot of traders here on the forum won't be able to see this post. And those that do, most will be too brainwashed to comprehend what I just said.
A lot of people (even the highly educated) are deluded due to a simple misunderstanding and clouded by their own cognitive biased.

As I continue to advocate, if you don't have a working system that works in all market condition, you don't understand what's truly going on. You don't need to backtest years of data if you truly know the market. As I also said in the past.... 95% of successful traders' system have never been put to the REAL test. Yet they retired with with loads of money thinking they cracked it, but unfortunately it was luck... I wish them the good life.


===========================
As for me, I'm happy with my results and I can truly and objectively say that I have a proven system and it was not due to luck. What's the point of this post? I've been profitable for many years now and the least I can offer is a big wake up call.
If you know me, I don't like the concept trading. It doesn't do any good for mankind. That's why I refuse to teach anyone or share my discoveries.

I've just dropped the atomic bomb of trading (The biggest secret in trading)
Some will get it and some won't. To each his own, take it or leave... hopefully I have saved some poor souls.

And lastly, this is my last post here if FF.
Please Remember: Anyone who proclaims to be CrucialPoint is not me. DO NOT GET SCAMMED.

Have a Merry Christmas and a Happy New Year.
May you achieve your goals in trading and life endeavors.

Signing Out.


Peace,
CrucialPoint