Your apology is accepted, and I agree on the charlatan thingy. But you have to be very sure on who you declare is a charlatan. Tread with caution.
A message to some day traders.
- Thread starter Amahrix
- Start date
Your apology is accepted, and I agree on the charlatan thingy. But you have to be very sure on who you declare is a charlatan. Tread with caution.
A few strawmans regarding me wishing ill, and your implication that I don’t want my ET guys to make money.
Can we make this simple and get back to the point.
A day trader walks into his office. Sits on his computer. Loads up Apples chart prior to market opening. Looks at yesterday’s chart, draws some lines, looks at first 10-15 mins of trading, draws some lines, a TA alert goes off and he buys. He looked at past data, in this case, same day chart or MAYBE yesterday’s chart and used that to predict next movement.
Signal enters the market, such as China news, and market behaves accordingly.
Daytrader blames China news, federal reserve, trump etc for his losing money.
Daytrader doesn’t question the tools in his hands.
If he picked up other tools, he would build a strategy that is robust, if not, antifragile to events such as that or, more importantly, severe market making news.
Randomness is incomplete information.
Randomness pervades daily charts.
They look for patterns in this randomness but that would imply predicting the future and randomness is random, it doesn’t carry a message about the future but these “charlatans” and their tools, try to extract something out of nothing. Like looking at human figurines in inkblots or animals in the clouds.
Most days of the year, the majority of days, the activity is randomness. Few times a year you get some signal. The farther you look out, and the more INFREQUENTLY you look at it, the more clarity you get BUT EVEN THEN you run into the problem of induction and need to have insurance in place in case your wrong because of course, tail risks.
The daytrading individual that attributes his success to skill, our charlatan, is convinced he is a genius when he profits for a few years, but by just doing some math, it can be proven that that can be associated with pure luck. Because we know the strategy is a hoax.Eventually they can’t keep it up and losses start appearing. Or for unlucky individuals, they never have any luck to begin with(with this strategy).
End of the day, regardless of my little example that I drew up above, one cannot interpret daily charts or intraday charts and predict future over the long run. They’re convinced they can because the tools make it appear that way but it’s really not. It’s truth, in its absolute form, unless said individual encompasses all knowledge.
Lesson: Devise a more robust strategy or your out.
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Next time, I’ll take your advice and incorporate more chill.
Are you saying that the cognitive dissonance is so pervasive in their mind, that they resort to telling the OP that they can’t do it which allows them to hold the wishful thinking driven belief that it is possible?
@Amahrix has obviously created a thread that has produced a lively and interesting discussion. Additionally, this thread has stimulated some here to "rethink" the value of T/A and data. I for one believe that @Amahrix deserves respect for the effort, as well as some excellent informative points. I for one would appreciate more posts that stimulate thought and serious examination of widely held misconceptions. Now that the internet has made it so easy to gain insights and actual methods of many disciplines (including Profitable Trading) -- most traders could and should be profitable. By sharing their wiggles and squiggles on charts and all the Moving Averages and "secret" charting and Algorithms as well as socalled "EA's" -- most would have been wildly profitable -- through sharing with friends and chat rooms. If patterns were the answer, then again most would have obtained the "formula" for profitable trading from the massive Free exchange of e-books and courses.
The answer for me is similar to what @Amahrix has posted:
Amahrix said: (see above for full contextual quotes)
"6) I do believe in trading, I’m a trader, but I make zero predictions in my strategy. Absolutely ZERO. because I know I don’t really know. I use survival heuristics to protect myself against ruin and I take my chances in just about everything the market has to offer."
"Edit: You know very well those that look at even shorter time frames and try to find signals are only deceiving themselves because there is too much randomness in the data. That’s my argument in this thread.
Whether market is predictable or not is irrelevant. They aren’t predictable where it counts... the tails. What’s the point of being a good predictor of the market most of the time then getting hit with a tail event (which is unpredictable). This is another discussion."
My takeaway: I have traded for years using a Non-Directional System (some may call it "statistical arbitrage"). Risk and trade management are, of course, the most important -- particularly as I need not prediction Market Direction nor use stops to control Risk. I believe that No one can consistently predict direction and the answer is to trade using Probability Analysis which is expressed using a statistical approach.
Thanks @Amahrix
The answer for me is similar to what @Amahrix has posted:
Amahrix said: (see above for full contextual quotes)
"6) I do believe in trading, I’m a trader, but I make zero predictions in my strategy. Absolutely ZERO. because I know I don’t really know. I use survival heuristics to protect myself against ruin and I take my chances in just about everything the market has to offer."
"Edit: You know very well those that look at even shorter time frames and try to find signals are only deceiving themselves because there is too much randomness in the data. That’s my argument in this thread.
Whether market is predictable or not is irrelevant. They aren’t predictable where it counts... the tails. What’s the point of being a good predictor of the market most of the time then getting hit with a tail event (which is unpredictable). This is another discussion."
My takeaway: I have traded for years using a Non-Directional System (some may call it "statistical arbitrage"). Risk and trade management are, of course, the most important -- particularly as I need not prediction Market Direction nor use stops to control Risk. I believe that No one can consistently predict direction and the answer is to trade using Probability Analysis which is expressed using a statistical approach.
Thanks @Amahrix
@Amahrix has obviously created a thread that has produced a lively and interesting discussion. Additionally, this thread has stimulated some here to "rethink" the value of T/A and data. I for one believe that @Amahrix deserves respect for the effort, as well as some excellent informative points. I for one would appreciate more posts that stimulate thought and serious examination of widely held misconceptions. Now that the internet has made it so easy to gain insights and actual methods of many disciplines (including Profitable Trading) -- most traders could and should be profitable. By sharing their wiggles and squiggles on charts and all the Moving Averages and "secret" charting and Algorithms as well as socalled "EA's" -- most would have been wildly profitable -- through sharing with friends and chat rooms. If patterns were the answer, then again most would have obtained the "formula" for profitable trading from the massive Free exchange of e-books and courses.
The answer for me is similar to what @Amahrix has posted:
Amahrix said: (see above for full contextual quotes)
"6) I do believe in trading, I’m a trader, but I make zero predictions in my strategy. Absolutely ZERO. because I know I don’t really know. I use survival heuristics to protect myself against ruin and I take my chances in just about everything the market has to offer."
"Edit: You know very well those that look at even shorter time frames and try to find signals are only deceiving themselves because there is too much randomness in the data. That’s my argument in this thread.
Whether market is predictable or not is irrelevant. They aren’t predictable where it counts... the tails. What’s the point of being a good predictor of the market most of the time then getting hit with a tail event (which is unpredictable). This is another discussion."
My takeaway: I have traded for years using a Non-Directional System (some may call it "statistical arbitrage"). Risk and trade management are, of course, the most important -- particularly as I need not prediction Market Direction nor use stops to control Risk. I believe that No one can consistently predict direction and the answer is to trade using Probability Analysis which is expressed using a statistical approach.
Thanks @Amahrix
I had a thought I’d like to share.
at the same time, I can hold deterministic views as well as nondeterministic views and not contradict myself
The same way I can be a communist and Libertarian at the same time and not be a hypocrite. I can be At Fed level, libertarian; state, Republican; local, Democrat; family/friends, socialist; self, communist.
It depends on the level.
From the perspective of the human, the world is random, but for some reason, In our charlatan filled world, humans are trying to play the role of God.
From the perspective of God, given that his knowledge encompasses all things, its not random at all.
We need to Quit acting and trying to play the role of god, quit acting epistemically arrogant, and humble ourselves.
They can believe that the one day chart is deterministic but you as a human cannot behave as if it’s deterministic because you are not capable; quicker they realize this, the better.
Then there are some that don’t apply deterministic views at any level.
But just a thought.
Edit; I hope these daytraders that believe in determinism (because they believe past can tell future) are religious. Or is the universe random but your 1 day chart isn’t? If not, the hypocrisy is big with that one. For the record: I do believe in God. (And I behave in a way that is nondeterministic. That things are random to me, my perspective; if I behaved like God, I’d die out because it’s not realistic. A human cannot).