Proving that the market does NOT sum up to randomness is NOT difficult if you use the null hypothesis.
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Does trend following have an edge?
- Thread starter Visaria
- Start date
Proving that the market does NOT sum up to randomness is NOT difficult if you use the null hypothesis.
Quote from intradaybill:
Rodney King should be grateful some people are willing to enlighten him free of charge.
I'm very grateful... I'm all about http://i51.tinypic.com/muhh08.jpg
Quote from nLepwa:
I should have been more precise, "randomness" is a term too broad and I wasn't clear enough.
So here it is:
Markets sum up to swarm behaviour.
Ninna
Interesting, I know someone who put forth that theory back in 2007 http://www.dailyspeculations.com/wordpress/?p=1847
there are some ultra smart people on this site, you should read it.
Swarm Theory: Financial Speculative Applications? by Dave Goodboy
July 1, 2007 |
The July 2007 issue of National Geographic contains an extremely interesting article by Peter Miller on "Swarm Theory". Swarm Theory attempts to quantify how individual actions of unintelligent individuals develop into the complex behavior of a group. The way ants or bee colonies work together for the good of the group is discussed in detail then how this can be applied to complex human/business systems. For instance.........
Quote from nLepwa:
I should have been more precise, "randomness" is a term too broad and I wasn't clear enough.
So here it is:
Markets sum up to swarm behaviour.
Ninna
Sorry, I must have sounded pedantic or something like that.
In the development of monitoring and analysis many degrees of freedom can become involved.
Fortunately mathematics provides guidelines on how to not cross the forbidden lines in modelling and development.
Many people, although unintentionally, avoid abiding by such limitations and they go astray. Those who just observe are even more remote from reason and just play tangentially to the real markets.
At any rate, at some point,under good mathematical behavior, noise and anomalies go away.
Obviously, I avoided getting into probability by these means. As an outcast to those who let mathematics overpower their reasoning, I am similar to a person speaking a foreign language.
It is probably true that any cultural group is able to communicate in their language among themselves. Any other laguage speaking group can either deem them as outcasts or they can learn both languages and do translation and live in an interchangeable language world.
This rarely happens in the various mathematical languages of the trading worlds. If there were philosophies of trading, it would be interesting to examine how various tribes became ostricized by others.
I chose to go the route where no noise and no anomalies exist. To most this is even hard to imagine and it certainly must be unbelievable.
For me, it filters people away from me intentionally and occasionally unintentionally. I like it this way.
Why is it important to not have noise nor anomalies contaminating the degrees of freedom used in trading models and their end development? Mostly because risk is eliminated and concerns just focus on market capacity and trading at a multiple of the capacity.
To do monitoring and analysis is markets that are noise and anomaly free means that only trend monitoring and ananlysis is what is done. The market determines the data in the nonstionarity region. If a person does not abide by this, then what he (she) does is very imperfect and not noise nor anomaly free.
One of those who understood how fractals integrate pragmatically was William Dunnigan. He used two sdjectives to describe things. They were not kindred to O'Neill's monikers for whale trading but they were followons to the discertations of Dodd-Granville. He used "trap" and "continuous" mostly to describe duration of the same things.
I gave David Goodboy a message since he has never seen "trends" or their tests. He probably does not know the difference between retraces and reversals either.
Because I was suppoted by IBM to learn theoretical physics, I got used to the mathematical vocabulary of those who deal in probability. In trading, it is best to use nonprobalistic mathematics simply because the market dictates this. The bridge between the two is apparently too narrow to traverse for most.
Frontrunning the swarm is something we can agree is a most worthy endeavor. I do it with certainty, however. Providing that mathematical proof is deductive instead of inductive, however.
LOL.... So you pooped out at the regular place all beginners poop out. LOL
Dow came up with that recitation about 1900.
I suggested that you deal with trend failure for a moment to get acquainted with how trend monitoring and analysis works for successful systematic traders.
See if you can "get it".
Most people trade long or short. they do it for one reason: to make money.
To learn to make money, people concentrate on either of two things: making money or learning how and why markets work.
You say that you have read in books the following:
"The basic premise of trend following is that stock strength begets strength and stock weakness leads to more weakness. A series of higher highs and higher lows identifies an up trend. A series of lower highs and lower lows is a sure sign of a downtrend. The strategy, as defined in the books by the same name, teaches that once the investor identifies the trend, trades are placed in the direction of the trend."
This explains entering on strengths of price movement up or price movement down. It is an expression of "trading with the trend by measuring the trend strength.
As you say this is easy to do. Anyone can enter on strength of a market. The indicator is volume. Volume is the stated "begetter" as you read in books.
So you pooped out on when to take profits of the entry long or short on strength.
You mentioned you read about weakness being begetted. what happens when weakness is begetted? Obviously it is not an entry since entries are taken when the market is begetting strength.
Dunnigan was terrific at differentiating traps from continuations. Both occurred on market strengthening. BUT they were different. How did he trade both traps and continuation which began with the begetting of strength you mention you read in books?
If you learn about how trends fail and find it in books, you can finsh the silly statements you make.
Why do you poop out with a statement that just puts a person in a trade?
Did you read all the way to the end of these books you read?
Dow came up with that recitation about 1900.
I suggested that you deal with trend failure for a moment to get acquainted with how trend monitoring and analysis works for successful systematic traders.
See if you can "get it".
Most people trade long or short. they do it for one reason: to make money.
To learn to make money, people concentrate on either of two things: making money or learning how and why markets work.
You say that you have read in books the following:
"The basic premise of trend following is that stock strength begets strength and stock weakness leads to more weakness. A series of higher highs and higher lows identifies an up trend. A series of lower highs and lower lows is a sure sign of a downtrend. The strategy, as defined in the books by the same name, teaches that once the investor identifies the trend, trades are placed in the direction of the trend."
This explains entering on strengths of price movement up or price movement down. It is an expression of "trading with the trend by measuring the trend strength.
As you say this is easy to do. Anyone can enter on strength of a market. The indicator is volume. Volume is the stated "begetter" as you read in books.
So you pooped out on when to take profits of the entry long or short on strength.
You mentioned you read about weakness being begetted. what happens when weakness is begetted? Obviously it is not an entry since entries are taken when the market is begetting strength.
Dunnigan was terrific at differentiating traps from continuations. Both occurred on market strengthening. BUT they were different. How did he trade both traps and continuation which began with the begetting of strength you mention you read in books?
If you learn about how trends fail and find it in books, you can finsh the silly statements you make.
Why do you poop out with a statement that just puts a person in a trade?
Did you read all the way to the end of these books you read?
Marketsurfer didn't get straight what he read. he did not get trend failure straight nor taking profits straight. Neither do most beginners.
Think of marketsurfer as a beginner and making beginner mistakes in trading.
A lot of traders in ET have suggested that if you enter a trade also know where your exits is as well. In trends it is at the time when the trend fails.
Here the OP deals with using treding as an edge. Marketsufer deals with not using trends as edges. It is a bad idea for marketsurfer to use trends as edges. He knows this and does not use them.
I do use trends and only trends. For me they are not just edges, however.
Trends have meat; they are where the beef is in trading.
Dunnigan saw both traps and continuations. He saw rhem, in modern terms, as two different kinds of dominant trend segments. He would trade traps and then hold and keep in the trade and wait until the continuation began and hold all the way through to the end of the continuation.
These are both segments that narketsurfer refers to as strengthening movements. What is in between is foreign to marketsurfer and he mentions it as a period of weakening.
So Dunnigan was the first to follow Dodd and Graham in introducing several parts of whole trends and Dunnigan named the parts as well.
Obviously the 29 people mentioned in Ostgaard's piece knew trends and knew how to enter and how ro exit.
Dunnigan figured out how to hold through the several segments of a trend. He told the world how to deal with both strengthening and weakening in one trending trade.
Will marketsufer show insight from this point onward? No, not at all or in any way. this is also typical of beginners. Beginners do not want to waste time learning how markets work; they want to make money instead. As we see in marketsufer, they learn failure instead.
As a reader, think about how fortunate it is for you to be able to sit and just read about how a closed mind doe NOT work to be able to add personal strength to stengths and not deal with weaknesses at all. Marketsurfer neglected to eal with market weakness as an indicator. Will he in the future? No, there is zero chance that he will.
Think of marketsurfer as a beginner and making beginner mistakes in trading.
A lot of traders in ET have suggested that if you enter a trade also know where your exits is as well. In trends it is at the time when the trend fails.
Here the OP deals with using treding as an edge. Marketsufer deals with not using trends as edges. It is a bad idea for marketsurfer to use trends as edges. He knows this and does not use them.
I do use trends and only trends. For me they are not just edges, however.
Trends have meat; they are where the beef is in trading.
Dunnigan saw both traps and continuations. He saw rhem, in modern terms, as two different kinds of dominant trend segments. He would trade traps and then hold and keep in the trade and wait until the continuation began and hold all the way through to the end of the continuation.
These are both segments that narketsurfer refers to as strengthening movements. What is in between is foreign to marketsurfer and he mentions it as a period of weakening.
So Dunnigan was the first to follow Dodd and Graham in introducing several parts of whole trends and Dunnigan named the parts as well.
Obviously the 29 people mentioned in Ostgaard's piece knew trends and knew how to enter and how ro exit.
Dunnigan figured out how to hold through the several segments of a trend. He told the world how to deal with both strengthening and weakening in one trending trade.
Will marketsufer show insight from this point onward? No, not at all or in any way. this is also typical of beginners. Beginners do not want to waste time learning how markets work; they want to make money instead. As we see in marketsufer, they learn failure instead.
As a reader, think about how fortunate it is for you to be able to sit and just read about how a closed mind doe NOT work to be able to add personal strength to stengths and not deal with weaknesses at all. Marketsurfer neglected to eal with market weakness as an indicator. Will he in the future? No, there is zero chance that he will.
Quote from jack hershey:
Marketsurfer didn't get straight what he read
Speaking of Surf -- reading through his blog this morning, I came across this from ProfLogic:
<i>Dr. Logic said... I don't do seminars as I've retired from teaching. Of course you already know that so your statement, as usual, is made for sensationalist reasons. My calls are made in real time as I trade for a living. I'm about 30 days away from locking up the strategies. When completed I will send you a disclaimer to sign. Once I get that back I will provide you the program and locks necessary to test it. 11:41 AM</i>
Does anyone know if ProfLogic followed through on that? Thanks.
Quote from Rodney King:
Speaking of Surf -- reading through his blog this morning, I came across this from ProfLogic:
<i>Dr. Logic said... I don't do seminars as I've retired from teaching. Of course you already know that so your statement, as usual, is made for sensationalist reasons. My calls are made in real time as I trade for a living. I'm about 30 days away from locking up the strategies. When completed I will send you a disclaimer to sign. Once I get that back I will provide you the program and locks necessary to test it. 11:41 AM </i>
Does anyone know if ProfLogic followed through on that? Thanks.
I think I would know that . . . Smurf never followed through as usual to get back to me to get and test a copy of my program.