Do Markets Change?
- Thread starter Palindrome
- Start date
example of why markets don't change if you don't allow them to -
imagine a pile of sand and shoveling that sand into bags the pile of sand may change "most traders view of market data" but the bags of sand do not "my view of market data".
is your pile changing? yes. my bags are not and if i can't fill a bag with sand i wait until there is enough sand to fill the next bag. when i look at all my bags they all look the same. no matter what grade of sand or where it come from all the bags look the same just as every market no matter what looks the same when placed in a bag.
imagine a pile of sand and shoveling that sand into bags the pile of sand may change "most traders view of market data" but the bags of sand do not "my view of market data".
is your pile changing? yes. my bags are not and if i can't fill a bag with sand i wait until there is enough sand to fill the next bag. when i look at all my bags they all look the same. no matter what grade of sand or where it come from all the bags look the same just as every market no matter what looks the same when placed in a bag.
%%
Markets trend;
again + again, but chop slop can be deadly to profits, even more so with larger leverage LOL Every month is a new month; not a prediction.
Are you sure that's sand you're shoveling?
tomorton,
This is soooo true.
For example, the MA Cross strategy that comes with ninja trader works sometimes and does not work. But overall and overtime, it loses money. Just click back test and you can see the results.
I short, we are responsible for knowing when out trading method makes money and when it doesn't make money.
Granted, as has been posted already,price and volatility vary over time. Trends and ranges form and die.
But a decent TA-based strategy acknowledges these variations and adjusts, commonly by reducing trade "signals", or reducing positions or stops or eliminating trading altogether.
Strategies that don't do this progressively and automatically without re-writing are half-baked. Maybe the Turtle strategy was always bound to fail but I can't see why.
It would be good to see the "change" on a chart as a before and after. If we understood what it looks like and when it happened, we might understand it.
But I think its a myth.
Palindrome,
"Do Markets Change?"
Here is the observation I have made based on mathematical and charting analysis of market movement for the last couple of decades:
Everything you said about correlations: change regarding trend changes (up, down & sideways) and volatility is correct, they are constantly changing, even chart patterns can look similar (or different) from one year to the next.
But, here in lies the problem:
"There are so many variables and combinations within the correlations, that this in itself creates constant change in the markets."
Example:
My mathematical program looks at daily and weekly price change, volatility, age of a trend (new or old) and exhaustion of a trend. That information is interfaced into 6 different math formula's that produce 6 trade outputs.
I believe the next part helps prove that you simply cannot count on the market doing the same thing, reacting the same way, producing the same results, from one year to the next:
"Based on a couple of decades, mathematical trading system outputs that worked well last year, rarely work the following year."
"Of the 6 trading system outputs in my program, only 1 or 2 work well each year, and they are often times competely different systems from the previous year."
Conclusion:
"The change from year to year in combinations of variables within the correlations creates unique Market Personalities."
The sad part is, as a New Year begins, by the time we recognize the market has a new personality, we often time have been trading last year's trading methodology and are wondering why it isn't working as well as it did last year.
"Do Markets Change?"
Here is the observation I have made based on mathematical and charting analysis of market movement for the last couple of decades:
Everything you said about correlations: change regarding trend changes (up, down & sideways) and volatility is correct, they are constantly changing, even chart patterns can look similar (or different) from one year to the next.
But, here in lies the problem:
"There are so many variables and combinations within the correlations, that this in itself creates constant change in the markets."
Example:
My mathematical program looks at daily and weekly price change, volatility, age of a trend (new or old) and exhaustion of a trend. That information is interfaced into 6 different math formula's that produce 6 trade outputs.
I believe the next part helps prove that you simply cannot count on the market doing the same thing, reacting the same way, producing the same results, from one year to the next:
"Based on a couple of decades, mathematical trading system outputs that worked well last year, rarely work the following year."
"Of the 6 trading system outputs in my program, only 1 or 2 work well each year, and they are often times competely different systems from the previous year."
Conclusion:
"The change from year to year in combinations of variables within the correlations creates unique Market Personalities."
The sad part is, as a New Year begins, by the time we recognize the market has a new personality, we often time have been trading last year's trading methodology and are wondering why it isn't working as well as it did last year.
