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One caution to what acracy says. Be careful that you don't trade on margin or any form of borrowed money using an IRA. The IRS regs on IRA accounts explicitly prohibit using an IRA as a collateral. If the IRS catches someone doing that, they will declare the pledged money to a be distribution...

Re slapshot said "IMO, you are trying to quantify a incredibly complex, random situation into mathematical terms - it is impossible with the market." I definitely agree that the market is NOT a coin flip process for the very reasons that you state. Nonetheless, I see two good reasons for...

First, I really like how you set the problem up -- nice bit'o algebra there.:) Second, your results just verify the conclusion that the expectation at the outset of the trade is 0 (as you put it, m = 0). That p = 1 just shows that IF one reaches the stage of having 1 point of open profit...

The problem is not too hard if we take it one step at a time and realize how the problem changes with each step. In the first step the market will either move down 1 point or up 1 point. If it moves down 1 point, we hit the stop loss and exit with a 1 point loss. This situation of being...

Although I do not know if portfolio insurance is still prevalent, I do believe that the trading curbs that are declared after a large down movement are intended to prevent a repeat of Oct 87 by prohibiting program trading. Whether institutions adhere to those curbs or whether the existence of...

Vladiator, Thanks for pointing out the Grossman and Stiglitz definition of EMH -- time for me to dive into the literature. I can see the plausibility of a definition of efficiency that subtracts the costs of finding inefficiencies from the profits made from those inefficiencies. The...

You raise some very good points, vladiator, perhaps I (and others) are expecting too much from economics. Is Economics a Hard Science or Just a Science that is Hard? Hard Science = Accurate Causal Models I suppose I evaluate the scientific merits/basis of economics, or any field, in...

Economics is the only science that when the theory and the world disagree, it is the world that is mistaken.:D Explaining the Failure of LTCM: To me the magnitude of the error seen at LTCM comes down to one of three explanations: The theory was wrong: The theories used by LTCM were...

try hitting the "kill" option in the lower right corner of the posting. You can send a message to the mods and they will kill it for you. Good luck and goodbye, Traden4Alpha

RE: vladiator asked, "are you saying that some self-trained college dropout or a 50 year old sit at home mom who saw an E-trade commercial and decided to trade is capable of finding really profitable niches that Goldman and others aren't able to find???" No, that is why the joke is on everyone...

Two economists are walking down the sidewalk when they spot a $100 bill on the ground. One economist starts to pick-up the money when the other economist says, "Don't bother, because its not real. If it was real, someone else would have picked it up already." That's EMH for you -- don't...

Hmmmm... I wonder what would happen if they had a Running of the Bears? Now that could get ugly.:eek:

Regarding negative autocorrelation of the returns of trading systems, I believe it. My current trading system (which is based on reversion, not trending) also displays tendencies to have winners after losers and losers after winners. But how you capitalize on this observation, especially...

Interesting! It suggests that IB's customers are approaching net-short in QQQ and other issues. This might be regarded as bullish or bearish, depending on whether IB customers are "smart" money. Sanjuro is right, maybe one needs to find a broker that caters to the buy'n'hold crowd in order to...

I think that you will find that 401K distributions during retirement just flow into your adjusted gross income. So, its not that the 401K money is "tax free" as much as it is that you may be in a very low tax bracket after retirement. Before retirement, I think you run into some nasty...

Aphie, You're doing some interesting work here. Please don't let the mostly well-intentioned criticism get you down. Everyone has their own path to trading success. If these analyses help give you the confidence to stick to a trading system, then do these analyses. <b> DANGER...

EMA_Time_Periods = (2/EMA_Percentage)-1 And the backwards calc is: EMA_Percentage = 2/(EMA_Time_Periods + 1)

Any chance that you have a more general network problem? When the flaky PC is having web problems, can it still do file transfers over the network at normal speed? It could be the NIC (if rebooting helps) or a flaky cable (if rebooting does not help). Good luck!

<b>Micropicture: Keep an eye on small potatoes?</b> <b><i>tntneo said:</i> I don't think the micropicture will tell you what you want to know."</b> Maybe not, although that is an important result in itself. In crafting a good trading system, knowing what to ignore is as important as knowing...

<b>Offsetting Trades Leads to Chaotic Bifurations</B> <b><i>tntneo said:</i> "if you enter long, but I sell you short, we are both entering a trade. think about this one (!)."</b> Very interesting. This sounds like what profitseer said about futures: <b><i>profitseer said: </i> "I'm just...