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Also, the probability of a win has a large variance unless you have a significant numbers of trades in a year, on the order of a 1000 trades (using all the same trade method of course.) See the latest episode: https://www.tastytrade.com/tt/shows/the-skinny-on-options-math/episodes

I am actually coming more and more to the view that a random walk model of the market is the best description of how prices move through time. This would mean that pricing models that give future value are the most "true" model, and that models which tell you when to buy and when to sell are BS...

Funny you should mention that because in some of Ehlers' latest work, he uses an autocorrelation periodogram to calculate the dominant cycle.

His work is generally predicated on well established engineering methods. That of course doesn't mean you will make money by trading his indicators, but they aren't some BS contrivance like Elliot Wave. If you stick to your oscillators, consider the Fisher Transform or Inverse Fisher...

While price itself does not mean revert, derivatives of price called oscillators do mean revert. I like the work of John Ehlers. Check out his roofing filter (a combination of a low pass and a high pass filter), and his bandpass filter.

I like Ehlers work using DSP methods. His latest work on trends is in his new book "Cycle Analytics...." called the decycler. Of course an argument against using DSP in the markets is that there is no noise, it is all signal. Also, that while Ehlers concepts and math are sound, using DSP on...

And how do you propose to interpret the regression line and trade off of that? Do you define an uptrend as when the slope is > 0? Do you go long when the slope turns positive? Do you extrapolate the line and go long when price closes above the line? How you determine the lookback period to run...

Here is a simple method to get in and out. Use a low lag (preferably zero-lag) MA and get long when it is above a 100 SMA and the 1st derivative of the zero-lag curve turns positive, and exit the long when the 1st derivative turns negative. Vice versa for shorts. Nothing special about the number...

The bell curve will always exist, that is the way nature works. Government policy can alter the skew and kurtosis of the distribution, but can not change the fundamental normal distribution of wealth. Communist theory tries for a uniform distribution, but that never really happens does it.

Here is the Easy Language code from Ehlers latest book Cycle Analytics for Traders { Hilbert Transformer Indicator © 2013 John F. Ehlers } Inputs: LPPeriod(20); Vars: alpha1(0), HP(0), a1(0), b1(0), c1(0), c2(0), c3(0), Filt(0), QFilt(0), Real(0), Quadrature(0), IPeak(0)...

I was thinking the same thing, I just didn't post it. I suppose an answer could be that the private sector are penny pinching tight wads (or just fiscally responsible) and would never spend the kind of money or take the risks needed to juice up an economy. Fractional reserve banking...

A little bit of inflation I would say is a good thing for economy. Here is the question I have for folks: How does the government stimulate real growth in the economy without deficit spending? Economic growth with a balanced budget seems the only way to break the cycle and avoid a bust...

For a good read about the FED and fractional reserve banking, read: The Creature from Jeckyl Island

Aren't market tops and bottoms usually associated with volatility? The way chaotic systems behave is that calm begets calm and volatility begets volatility, that is until it changes. When that change will happen, nobody knows, at least not with anything greater than 50% precision.

I haven't read through every thread here, but: 1) how do you define a breakout? 2) when and how do you admit your wrong on a beakout trade gone bad?

Just remember, even random walks can produce patterns that look like trends.

Here is why indicators don't work consistently. Because they are all based off of data from the past, and can not predict the future with anything better than 50% precision. Why? Because price is pretty darn near a random walk process. Price distributions are not perfectly Gaussian. The skew...

That's the problem, for me TA hasn't really worked, at least not consistently. I've studied various trend following and cyclic indicators for the better part of six years, and none have really worked. I've managed to be essentially flat in P/L over that time frame, but probably just random luck...

I'm glad Georgy boy made money, but N=132 is still a rather small population set. Yes it is possible to make money from a random walk process, but if he backtested his method, I bet you would see results closer to breakeven. Scataphagos, why not post your TA method(s) you have used for the...

A coin toss is exactly a random process. Its outcomes create a binomial distribution given a sufficiently large number of trails, and has no skew or kurtosis. Stock prices (or returns rather) also have a normal distribution, but that distribution includes some amount of skew and kurtosis. In...