A message to some day traders.

[Amahrix]

Source: http://www.forex-ratings.com/forex-interviews/?id=12083

AT: I inferred from your book that using historical data may be a good idea to generate trade ideas, but it isn’t a good way to measure risk. Is any historical data worth testing?

NNT: It is worth analyzing. You cannot ignore past data, but you have to be careful about what you’re interpreting from it. You can’t [use it to determine the probability of rare events]. Large deviations can’t easily be seen from past data.

The bell-shape distribution is a fraud. For the bell curve, much of the deviations are delivered by regular volatility. But in the markets, much of the deviations are delivered by the tails (extremely large, infrequent moves). People use the bell curve because it simplifies things and gives the illusion of understanding what’s going on.

If you use past volatility to predict future volatility, it would hardly predict anything. The bell curve does not apply to something that has fat tails. Now, Mandelbrot’s theory of Power Laws distribution is used everywhere except in finance — in science, in sociology, and on the Internet. (For more details about the bell curve and Taleb’s argument, see “Taleb’s critique of the bell curve”).

 

[padutrader]

What do you mean it is a zero sum game. No it isn’t. But can be. But generally isn’t.

so if it is not a zero sum game, people lose more that all the money that goes in or they make more than all the money that goes in.....

you are a joke

either money is disappearing or it is being born out of thin air

 

[Wheezooo]

Ahmarix,
Taleb would laugh if he knew you said that to me. You have addressed everyone else in detail and rather aggressively, this is the second time you dodge the example, a real-world one, and one that happened frequently with me, so basically, I'll assume that you can't address it. That was all I need to know.

 

[Amahrix]

Ahmarix,
Taleb would laugh if he knew you said that to me. You have addressed everyone else in detail and rather aggressively, this is the second time you dodge the example, a real-world one, and one that happened frequently with me, so basically, I'll assume that you can't address it. That was all I need to know.

I disagree, good luck.

 

[Amahrix]

so if it is not a zero sum game

I thought I educated you on the meaning of straw man fallacy. https://yourlogicalfallacyis.com/strawman

"What do you mean it is a zero sum game. No it isn’t. But can be. But generally isn’t." was my answer.

My answer says that it can and can't be & this depends. For an investor, it is not a zero sum game. There is plenty of literature on this; use google.

If the only way to make gains in the stock market was for someone else to take a loss, then the stock market wouldn't be able to go up.

If you want to run down the economic theory that if Jenny bought her shares from Bob someone else is missing out on Jenny's money you're free to do that. But that would mean that literally every transaction in the entire economy is part of a zero sum game (and really misses the definition of zero sum game).

Poker is a zero sum game. All players bet in to the game in equal amounts, one player takes all the money. And hell, I've played poker and lost but still sometimes feel that received value in the form of entertainment.

Stop applying game theory to trading.

Even TickerTape at TD Ameritrade disagrees; https://tickertape.tdameritrade.com/trading/options-zero-sum-game-myth-15226

This is useless talk, change the subject.

 

[Wheezooo]

That was dodge number 3.

No, not good luck. That is what you are trying to alter my comment to. My comment has nothing to do about predictive value. I am stating that without question and to which no one could deny, that when a whale comes in to a market and says @X, and he knows he has Y days of daily volume to do, that market ain't goin thru X, not without some serious work. At that moment the next move is not random, the market can not go higher. This will also create a pattern people call resistance. It will be a horizontal line at X. No one looking at a chart will know who or why but they will see something/someone holding down the market, and that line definitely is not being formed randomly.

Now how much I have, for how long I'm going to do this, whether I decide to back off, maybe turn buyer for a moment to see if I can push some stops... who knows... but there is no question my outsized volume is creating a pattern. Shit, I could do this for an hour at lunchtime, on a slow day, in a giant product like CL, with no more than 1,000-3,000Fu.

 

[Amahrix]

That was dodge number 3.

No, not good luck. That is what you are trying to alter my comment to. My comment has nothing to do about predictive value. I am stating that without question and to which no one could deny, that when a whale comes in to a market and says @X, and he knows he has Y days of daily volume to do, that market ain't goin thru X, not without some serious work. At that moment the next move is not random, the market can not go higher. This will also create a pattern people call resistance. It will be a horizontal line at X. No one looking at a chart will know who or why but they will see something/someone holding down the market, and that line definitely is not being formed randomly.

Now how much I have, for how long I'm going to do this, whether I decide to back off, maybe turn buyer for a moment to see if I can push some stops... who knows... but there is no question my outsized volume is creating a pattern. Shit, I could do this for an hour at lunchtime, on a slow day, in a giant product like CL, with no more than 1,000-3,000Fu.

I can see, with your example, how easy it is for someone to get fooled into believing in these patterns. I can see, with your example, how millions have become victims of this nonsense. It’s really easy to fall for it. Now I see. Paint them this picture and you’ll seduce everybody into thinking and most importantly believing this bullsh*t.

Let me paint a picture for you: it requires some (common) sense.

Suppose I flip a fair coin, and odds are 50/50 heads/tails. Then after 99 flips, it’s all heads. What is the probability that the 100th flip is going to be heads? answer in your head before moving forward.

Now let’s go back to your stupid hypothetical, if it’s as easy as finding support, finding resistance and trading it, then everyone would be using this strategy, starting with the professional traders of the world, yet all we find are “daytraders” with $5,000 accounts trading in lots of $50 doing this bullsh*t. Yet almost everyone fails in long run doing “simple S/R”.

Back to the coin example: I don’t care what I am told about the coin and it’s fairness. 99 heads in a row, the 100th flip will be 100% heads, 100%. The fairness of the coin is bullsh*t.

And so is S/R as a long term trading strategy.

If it would’ve worked, I first, Nassim Taleb, George Soros, Ray dalio, Jim simons, Ken Griffin, Goldman, 2 Sigma, my mom and dad, US social security, everyone would’ve been doing this. This. Is. Bullshit.

Your hypothetical is setup for me to fail, the way my coin example is setup for you to fail. F*ck off.

 

[Wheezooo]

Nope kid,
I'm the first person to tell people that they'll probably get their ass kicked in trying to trade. Mostly because they are like you, and only see what they find acceptable to see.

...and that was your 4th dodge. So easy it's not worth your time to explain...

No need to respond further. I'm off this thread, you're just a kid whose read a couple of good books.

 

[Amahrix]

Nope kid,
I'm the first person to tell people that they'll probably get their ass kicked in trying to trade. Mostly because they are like you, and only see what they find acceptable to see.

...and that was your 4th dodge. So easy it's not worth your time to explain...

No need to respond further. I'm off this thread, you're just a kid whose read a couple of good books.

Good luck, charlatan.

 

[Amahrix]

Nope kid,
I'm the first person to tell people that they'll probably get their ass kicked in trying to trade. Mostly because they are like you, and only see what they find acceptable to see.

...and that was your 4th dodge. So easy it's not worth your time to explain...

No need to respond further. I'm off this thread, you're just a kid whose read a couple of good books.

@Wheezooo

Using your example:

Ok, you artificially create the level of "support" and "resistance".

Ok, you trade it yourself, artificially keeping the market there with your big guns and big money.

Eventually, you stop.

The market participants that participated doesn't know that you decided to stop. For instance, next time it goes to that "support" level, there won't be any "support", because you left, and the market participant begins experiencing losses or vice versa.

It is still random to the market participant because he has incomplete information. He predicted that there would be support there due to past data but once he reached, there was none anymore. So the data fooled him. Of course, to him it is noise now. He trusted it, but it ended up being noise.

It is not random to you because you artificially created it and then stopped once lunch was over. You never made an announcement that this is the last time you'll create support for the day.