Do markets change? Trend Following.

[GreenPlay]

Quote from jack hershey:

Thanks for your response.

Throughout my trading I have used just one approach. As new markets were invented, it was fun to apply the approach to the new market.

The advent of the PC was particularly interesting. When data switched to real time, electronically, after the ticker tape period (which was more like a telegraph) it was possible to spend more than 15 minutes a day doing trading.

At some point, printers switched to color and graphs were possible. Before that (since 1957) I just made charts in pencil on brownlines to do trend analysis. "Trend following" would have been a very humorous terminology at that time; it still is actually. We shared doing charts and blueprinted them as "B" size drawings. The brokers were totally mystified by us pulling a year's profits in a week or so.

I have always just been an amateur.

Amateur = "one who loves"
Dilettante = "one who delights"

My teacher's teacher was Shunryu Suzuki-Roshi, who wrote a classic called Zen Mind, Beginner's Mind. He praised the beginner mind. In his broken English (I listened to the tapes) he would say: "Beginner mind wide open. Humble. Expert mind, closed. Expert mind already full. Beginner mind empty. Cannot give anything to expert mind full of own self. Beginner is better mind."

I too am honored to call myself a dilettante, and amateur and a beginner. Too many experts already. They are not rare in these market forums. Honestly open minds. beginner minds? Not so common. Especially if one has been trading with such a mind for 10-25+ years! Or maybe it takes that long to return to original mind?

Hat's off to you, my rare friend.

GP

 

[GreenPlay]

Quote from AFJ Garner:

Intelligent readers of this thread (incredibly, there seem to be few) will have taken your points on board. On occasional recent visits to his multiple sales venues, I note that Trend Following has taken to naming any view that does not coincide with his own “100% bollocks”.

Mike is an okay guy and has a good heart, if I read him right. He's just young and full of vinegar - and a little insecure. He has doubts about himself and uses his bluster to cover it. His tendency to debate and argue will not help him, but it could be be years before he mellows enough to let his own gifts speak, and not waste his time slamming others and taking on all comers. That's stuff for rabbit ears! (more on this later).

If a person with such a tendency can resist the urge to react to this - "who's taunting who? You are blah blah blah" etc - if he can just let it pass without comment, even acknowledge that he is human and sometimes makes mistakes just like the rest of us. If he can accept hard words like these with the humility of a Warren Buffett that could be a great start toward the road to respect and longevity, in my opinion And this opinion, incidentally, was not formed until after I had read his two books, links to articles at his website, watching his video BROKE - all useful and valuable for many traders (not to mention entertaining and funll of humor). But after observing the ways he responds to others in this thread and others, I was saddened to see the humor and sense in much that he writes or produces seems to be lacking when he faces any perceived threat or criticism. Maybe he has a way to go as a human being. But don't we all? Mike, just take this pitch, even if it is high and inside and seems like a brush-back, stand your ground in the box, respect the strike zone, keep your focus., and let the next one meet the sweet spot Okay?

My old baseball coach used to talk about players with "rabbit ears." They'd be the ones who suddenly could go charging into the stands if a fan provoked them, get into fights with other players, be involved in one pissing contest after another. Some rabbit-ears become consumed with this, and simply cannot change. The very reverse of what is needed as a trader. Best to never explain, never react, never get into wars. Keep your heart warm and your head cool - not the other way!

I tactfully suggest that there is no point trying to argue with such a person. There is no common ground.

I have encountered such sad examples. After a certain point, they're all in and can't see a way out - they may never be able to change Psychologically these people feel alive only when they get attention, and feel bereft and forlorn when no one is giving them praise or blame. Doesn't really matter which it is, as long as they are not ignored!. Of course some of them, but very few, know exactly what they are doing and why. (See my post with the Gorgeous George link) More power to them, but it's good to know what's behind the taunts and rants and callings-out. Motives can be unconscious, but if they are conscious, and thus manipulative, keep your hand on your wallet!

If the atmosphere gets stirred by such a person into a hurricane with an eye at the center called "This here is All About Me ME ME! Well, I just let that hurricane go its way. After all, life is short, and I have nothing to sell and nothing I need that I don't already have.

Peace out.

GP

 

[Trend Following]

Quote from GreenPlay:

Mike is an okay guy and has a good heart, if I read him right.

Why is it that when Anthony Garner participates in any chat online there always seems to quickly follow a poster who is a carbon copy of Ellsworth Toohey? Bottom line, if Garner wants to be taken serious, and he clearly does, he needs to disassociate from some of his buddies. A classic Garner utterance:

Anthony Garner:

Take a look around at the many ludicrous clowns and charlatans who populate this industry and fleece the unwary. Mr Faith is certainly not amongst them.

You have to wonder if IFIT Advisory AG is aware of Garner's incessant promotion of some less than savory characters.

 

[Muskoka Joe]

I posted this in another thread but it is this thread that really prompted it.

The "markets change" is an excuse for the poor performance of something that was not a true edge to start with. For example a "trend following" strategy that uses a "N" bar breakout or a moving average crossover is NOT an edge. It WILL therefore cease to work when the market stops trending in one direction. Two lines crossing has no relation whatever to character of markets.

There are edges that uncover true character of markets. There are edges that will only cease to work if the market ceases up completely. Of course there will be times when the equity curve is flatter then others.

The true edge strategy has dealt with the conditions in such a manner that equity curve flattens but does not dive. These strategies are based on character of markets, including complete entry and exit edges, and the market cannot outsmart them except by really just stopping.

As far as strategies with no parameters I'd love to see how that is possible. As someone said unless you are using only the last print of price referencing nothing else, you have parameters. Threshold amounts of time or volume or price are all parameters.

Changes to trend following (or other) strategies can be ongoing but the changes are at the margins. The strategies if they are good would work without the incremental changes, just likely better with them, and if the trader is experienced enough to know why the addition is made, its not curve fitting.

 

[factorama]

Quote from Trend Following:

Why is it that when Anthony Garner participates in any chat online there always seems to quickly follow a poster who is a carbon copy of Ellsworth Toohey? Bottom line, if Garner wants to be taken serious, and he clearly does, he needs to disassociate from some of his buddies. A classic Garner utterance:



You have to wonder if IFIT Advisory AG is aware of Garner's incessant promotion of some less than savory characters.

HARSH !!!!

 

[jack hershey]

Quote from Muskoka Joe:

I posted this in another thread but it is this thread that really prompted it.

The "markets change" is an excuse for the poor performance of something that was not a true edge to start with. For example a "trend following" strategy that uses a "N" bar breakout or a moving average crossover is NOT an edge. It WILL therefore cease to work when the market stops trending in one direction. Two lines crossing has no relation whatever to character of markets.

There are edges that uncover true character of markets. There are edges that will only cease to work if the market ceases up completely. Of course there will be times when the equity curve is flatter then others.

The true edge strategy has dealt with the conditions in such a manner that equity curve flattens but does not dive. These strategies are based on character of markets, including complete entry and exit edges, and the market cannot outsmart them except by really just stopping.

As far as strategies with no parameters I'd love to see how that is possible. As someone said unless you are using only the last print of price referencing nothing else, you have parameters. Threshold amounts of time or volume or price are all parameters.

Changes to trend following (or other) strategies can be ongoing but the changes are at the margins. The strategies if they are good would work without the incremental changes, just likely better with them, and if the trader is experienced enough to know why the addition is made, its not curve fitting.

Two super contributions, congrats:

1. differentiating trend following from trend analysis, and

2, defining the test for curve fitting and not curve fitting.

I feel so strongly about how going the full route in analysis by drilling all the way down to the granularity built into a market, completes the analysis.

The exception would be inductively based analysis.

Logic is in fact, the antidote for curve fitting.

I hope your post does open the door a crack for those with closed minds posting here.

 

[factorama]

Quote from jack hershey:

Two super contributions, congrats:



I hope your post does open the door a crack for those with closed minds posting here.

Those who demand evidence are not the closed minded.

Those who believe blindly in complexity and those who use complexity as a shield are the closed minded in the guise of wisemen.

Where is the empirical evidence? Please save the he said, she said, he does, i do, she does, i know for the sheep and the religious.


just the facts, please
FACtoRama

 

[GreenPlay]

"Personally, I like what Van Tharp has to say about developing not just one system to fit all market conditions, which is difficult, but to have at least three well-developed systems for various markets.

Here's a quick take from his book Super Trader, 2009: I like this idea of having different strategies for six market conditions 1. sideways stable, 2. sideways volatile, 3-4. bullish stable and volatile, 5-6. bearish stable and volatile. Tharp uses a 13-week window back-tested to 1950 - if the average change is less than 5.53% either way, he considers this a sideways market, great either way, bullish or bearish market condition. To measure volatility, he uses a 13-week ATR for the same period. Less that 2.87% ATR = quiet market, greater = volatile. Over the past 58 years, 41.35% of the time the Market is volatile, 11.91% it is bearish, 58.29% sideways, and 29.8% bullish. Curtis Faith (if you will pardon me!) makes similar points in his books."

================

^^^^ And how is this correlated to what strategy will work best over the NEXT 13 weeks? The answer is that this information provides zero edge in what system will work best over the right hand edge of the chart.

================

I don't know. I am taking time off from BIG trading until I have a system or three in place. I am have been trading less than a year, and so take anything I say for only what it is. Until I stop quoting other people, I am seeking feedback. And for this I am grateful. I just don't like the atmosphere here all that much, Not helpful, these pissing contests. There are plenty of blogs and forums, and only so much time.

Personally, I tend to go with simple and elegant. KISS makes sense to me. Multiple systems can be something as simple as adjusting time periods for trades. Trend following allows for both long-term (months) and short term (intraday) trading. For example, I am shorting Gold futures when they hit my short entry, Happened Friday at 1143. The sell came only four hours later, and I covered (or should have, see below) at 1112.

"Right side of chart" Okay. Hee;s what I do. Now (6:06 CST Sunday 13 Dec GC is climbing at 1114 and my bottom is at 1105, and top is 1139. That it will test 1100 I am pretty sure, but I do not have the stake to risk a Richard Dennis-type LTTF trade - could get whipsawed into a margin call. Besides I am not Dennis, (Few are!) I am just me, and have to work with what I got. I know when the portfolio heat causes me to worry. To be honest I covered that trade above too soon because (a) I am still learning and (b) I am not all that talented. But the fact is, I had a nice peacful weekend! Like I quoted, and now know, it comes down to individual trader psychology, risk tolerance, etc. Know thyself, Trader!

My P&L does not qualify me to speak with any authority. And if I were on a winning streak, I would probably be even more cautious. I intend to stick around, Like the old saw goes, "There are old traders, and there are bold traders, But there are no old, bold traders."

All this foucs on systems, without discussing one's particular situation, personal objectives, and psychology? And this is coming form experts, so-called? I don't understand. My gut says something's not right here. Maybe I am wrong.

So you tell me - what "system" am I using? I do have exits and stops when I enter a trade, but I don't have some highly tweaked algorithm or automatic system - not yet. I will, soon. But I suspect it won't be basically different than whan I am now doing - just much more disciplined, Like John Carter says (quoting again l) the only unsuccessful trade is one executed before it hits your limt or your stop. Easy to quote, hard to do. Everybody has a fight plan until they get hit, said the great Market Wizard Mike Tyson. Ouch!

 

[Muskoka Joe]

Quote from GreenPlay:

"Personally, I like what Van Tharp has to say about developing not just one system to fit all market conditions, which is difficult, but to have at least three well-developed systems for various markets.

Here's a quick take from his book Super Trader, 2009: I like this idea of having different strategies for six market conditions 1. sideways stable, 2. sideways volatile, 3-4. bullish stable and volatile, 5-6. bearish stable and volatile. Tharp uses a 13-week window back-tested to 1950 - if the average change is less than 5.53% either way, he considers this a sideways market, great either way, bullish or bearish market condition. To measure volatility, he uses a 13-week ATR for the same period. Less that 2.87% ATR = quiet market, greater = volatile. Over the past 58 years, 41.35% of the time the Market is volatile, 11.91% it is bearish, 58.29% sideways, and 29.8% bullish. Curtis Faith (if you will pardon me!) makes similar points in his books."

================

^^^^ And how is this correlated to what strategy will work best over the NEXT 13 weeks? The answer is that this information provides zero edge in what system will work best over the right hand edge of the chart.

================

I don't know. I am taking time off from BIG trading until I have a system or three in place. I am have been trading less than a year, and so take anything I say for only what it is. Until I stop quoting other people, I am seeking feedback. And for this I am grateful. I just don't like the atmosphere here all that much, Not helpful, these pissing contests. There are plenty of blogs and forums, and only so much time.

Personally, I tend to go with simple and elegant. KISS makes sense to me. Multiple systems can be something as simple as adjusting time periods for trades. Trend following allows for both long-term (months) and short term (intraday) trading. For example, I am shorting Gold futures when they hit my short entry Friday at 1143 and covered at 1112. Now (6:06 CST Sunday 13 Dec GC is climbing at 1114 and my bottom is at 1105, and top is 1139. That it iwll test 1100 I am pretty sure, but I do not have the stake to risk at Dennis-type LTTF trade - could get whipsawed into a margin call. Like I quoted, and now know, it comes down to individual trader psychology and position-sizing, risk tolerance, etc. My P&L does not qualify me to speak with any authority. And if I were on a winning streak, I would probably be even more cautious. I intend to stick around, Like they say, "Thee are old traders, and there are bold treaders, But there are no old, bold traders."

All this foucs on systems, without discussing one's particular situation, personal objectives, and psychcology? And this is coming form experts, so-called? I don't understand. My gut says something's not right here. Maybe I am wrong.

===================

No disrespect to you intended, my apologies if you took offence. My point was that a lot writing done by the source you quoted is intended to take your eye off the ball, and not for your benefit. Nothing there will help you until you are 95% done all the hard work, and then it may be of some aid at the margin.

Edges are difficult to attain. Until you have done that all the post strategy analysis is useless. The thread by TalonTrading should be read and used as a basis for further work in this regard. There is more useful information in that thread then infinite pages of VT.

 

[GreenPlay]

Quote from Muskoka Joe:

===================

No disrespect to you intended, my apologies if you took offence. My point was that a lot writing done by the source you quoted is intended to take your eye off the ball, and not for your benefit. Nothing there will help you until you are 95% done all the hard work, and then it may be of some aid at the margin.

Edges are difficult to attain. Until you have done that all the post strategy analysis is useless. The thread by TalonTrading should be read and used as a basis for further work in this regard. There is more useful information in that thread then infinite pages of VT.

Muskoka Joe, I did not intend this reply to you . It is the bellicose tone of others, not you, I was referring to. Actually your comments and a few others are exceptions to this tone, in my opinion. Nor did I take offense - even with the antagonism I do not find helpful. So no worries,

I am obviously a noob in this forum and do not know the personalities or threads here. What I have said so far is intended as an introduction of myself. I participate as a way of learning, and also pass along what I can.

Ah, so much to learn! Are we having fun yet? Keep it real, and a good sense of humor helps! Seems pointless if were are enjoying and having fun at what we do!

Wishing you and all the traders a good week and great holiday season.

cheers,
GP

Where is the thread by TalonTrading? URL? Thanks for the perspective on VT. OIn my eperince (not just in trading) I have found that no single person or path can lay claim to holding all the truth, You're right on - we gotta work this out for ourselves - it's hard work and it takes time.
Thanks again for caring enough to share this with a stranger,