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Exact Science
- Thread starter outsource
- Start date
Quote from outsource:
Jack,could you please clarify?Where stocks and etfs have limotations?What are those 3D?
tnx
A lot of things are discovered when you examine the limitations of application of capital.
I would suggest that there are two themes:
1. Having good control meaning "knowing that you know". You orientate to "good enough" as you have explained. Probably most people do. I don't. To have prsiion and good control a person adds degrees of freedom. Then he addresses how to know when which subsets are in play and what these dimensions signal in terms of their order of events.
2. Effective and efficient application of capital.
Here, a person finds out he can only trade so much capital in given kinds of markets. Larger and larger applications have to be found. SSR came into being as the means of dealing with unlimited capital. Excess SCT capital spills into PVT and excess capital of PVT spills into SSR.
The money velocity is highest in SCT ajnd about 80 markets ae available in a dsaily rotation. The market's efficacy re SCT is easy to determine as shown in the Korean example a while back. SCT, however, is applied to limited capacity markets. Ordinarily, I suggest harveting overages on Fridays since you have until monday to apply capital to the streams of PVT or if PVT is running at capacity, applying overages to SSR.
Recently there was a collection of misstatements about using PEP in SCT, PVT and SSR. And Tucson is not in Australia this week inless you have a rally deep basement.
Trading involves more and more drilling down into detail and precision as a person deals with effectiveness and efficiency.
Raw data comes ina bout 6 to 8 streams per instrument. Think of a stream as a dimension. Functions allow new degrees of freedom to appear. This creates about 70 dimensions.
Effectiveness and efficiency demands attention to detail. So my systemmic view is derived from PEP going to all three, SCT, PVT and SSR.
Money management is the tradition of "trading size". As NIKE says: "Just Do It".
Here I put on the table the 10 cycles and how a person builds his mind stage by stage to handle the dimensions (degrees of freedom) of the market.
The fifference between your "good enough" and the potential precision of the mind of a person who has gone through the 10 cycles is precisely one of dimensionality.
You are finding out what the three initial dimensions are to increase you mind's ability to give you more inference (long term memory "truths" or "beliefs").
Sentiment, Price and Volume are three good starting dimensions.
Cycle 1 dealt with Dominance.
Cycle 2 dealt with Non Dominance.
The dimension for DOMINANCE is VOLUME.
Here we took care of b8ulding the mind to differentiate between whipsaw and anti whip saw and to differnetiate between retrace and reversal.
What is if like to spend 12 days and triple your capital and "know you know thediference btween whipsaw and antiwhipsaw And the difference between a retrace and a reversal AT THE BEGINNING OF EACH?
I thought is was so cool for you to reject (make a choice) this beginner knowledge and skill to just be "good enough".
Look at all the threds and journals that reject this knowledge and skill out of hand and from the very beginning of the repsective learning processes. You do not see me camped in any of those journals. Look at the P&L thread. Look at the people getting axed by not knowing the difference between whipsaw and antiwhipsaw. Look Agian. Pay attention to the folks who do not know the difference between a retrace and a reversal AT THE VERY BEGINNG OF EACH.
I am doing an imaginitive story of a fifth grader who goes through doing a simpler equivalent of learning arithmetic. I chose a poor neighborhood with no school and only a catholic nun who used materials found on the ground to teach the poorist children.
Concidentally I choose, at a leading Acrchitecture school, the first design problem for teams of graduate students, to design a Montissori school. I was not on campus all the time since I commuted from hundreds of miles away by jet. So they complained all the way up to the Dean of students and the Dean of faculty. They got the first lesson right on the nose and made the lesson results a campus issue. It was a ball. If you go to MUD Island ever, you see the results of thier final team project and you can read the brief book that encapsulated their wonderful trip, intellectually. The centerfold is how iterative refinement works in design.
Here is a comment on the thread topic: Exact Science.
To do anything, you have to build your mind. When you build it, first you put in pieces, lagely unconsciously.
At some point your mind takes charge.
It begins to put the pieces together.
The mind raises questions at this point. It has street's smart.
If you are smart enough to listen to your mind's questions, you get answers and give them to your mind to deal with.
So you do not have a personal ability to listen to your mind's questions. Instead you do what you have been trained to do in your formal education (it is not serving you very well it turns out).
Look over ET and its journals. People are spending the mythical 10,000 hours to do what they do. Do you really think you mind is going to sit on its ass for 10,000 hours to figure out what is what?
Hell no. it can do it all in a few days.
The mind never gets a chance to move ahead for most people; they are too busy screwing up the mind's normal mind building processes.
Image this.
In Tucson, we spent three sessions building a Board (4" wide and 8' tall) of the first three cycles. We painted it first with a fast drying cool toxic paint. then we took all the pieces in 72 point times roman type and cut and pasted them on the blue cool color background.
then we put hot colored chart tape on the board to show the nodal linkages. then we added cool colored feedback chart tape loops. Three widths were used to emphasize relative importance.
We had an 81/2" by 11" red doji node were reversals were noted. this was repeated on all three cycles.
the board is up; the 52 inch screen is running; and we are trading last Friday from open to 10am. Two lassers were used one after another as they pooped out. MADA was done lap by lap by lap.
Every person in that room learned in 2 1/2 hours precisely how to do antiwhipsaw and differentiated between retrace and reversal AT THE BEGINNING OF EACH. FLAWLESSLY.
They know they know all 10 cases of adjacent bars. They know they know B2B 2R 2B or R2R 2B 2R point by point and coordinated with P's and T's on volume.
The market offers and they keep taking the offer segment by segment.
They know what this sequence means:
15>>10>>8>>6>>5>>4>>4>>3>>3>>3>>3>>2>>2>>2 >>2 ....2>>1>>1>>1.....
One 2 1/2 hour session after laboring to "build a board".....
What is it like to trade the market's offer segment by segment and always have antiwhipsaw running and being able to differentiate retraces from reversals AT THEIR VERY BEGINNING.
It is much less than 60 days from a 5K beginning with 2 ES contracts to becoming a millioinaire.
How does a person get past fear, anxiety and anger that all CW type traders live with?
It is done by building the mind from a foundation using the building blocks of trading.
Geez, this thread just keeps going and going...Quote from outsource:
An exact science is any field of science capable of accurate quantitative expression or precise predictions and rigorous methods of testing hypotheses, especially reproducible experiments involving quantifiable predictions and measurements. Mathematics, physics, chemistry, as well as parts of biology, psychology, and the social sciences and TRADING can be considered as exact sciences in this sense.
If you think trading is anywhere near an "exact science" capable of "exact predictions," I suggest you read Schwager's interview of William Eckhardt in The New Market Wizards.
Quote from Gabfly1:
Geez, this thread just keeps going and going...
If you think trading is anywhere near an "exact science" capable of "exact predictions," I suggest you read Schwager's interview of William Eckhardt in The New Market Wizards.
Do I have this straight: you're talking about a book published in 1992?
In the first place, no one does "predictions" in trading.
All trading is done in the Present based on Present status of the market(s).
There is absolutely no requirement to do "exact predictions".
You need to get past whatever and begin to consider performance in the context of taking all of the market's offer segment by segment.
There is zero probaility (meaning no probability is used) involved in trading to take the market's offer.
Catch up to the times.
If you are going to respond to my post, I think you should take a moment to read the post to which I had responded. Context.Quote from jack hershey:
Do I have this straight: you're talking about a book published in 1992?
In the first place, no one does "predictions" in trading.
All trading is done in the Present based on Present status of the market(s).
There is absolutely no requirement to do "exact predictions".
You need to get past whatever and begin to consider performance in the context of taking all of the market's offer segment by segment.
There is zero probaility (meaning no probability is used) involved in trading to take the market's offer.
Catch up to the times.
Yes, 1992. Why do you ask? Has the "science" of trading advanced so much since then for you? And if so, which elements of that "science?" Mathematics, perhaps? More specifically, statistics? Since I am not a scientist who keeps abreast of these things, perhaps you could bring me up to date regarding the latest advances in math/stats since '92, as it relates specifically to trading. What with my being behind the times, and all that.
Quote from Gabfly1:
Geez, this thread just keeps going and going...
If you think trading is anywhere near an "exact science" capable of "exact predictions," I suggest you read Schwager's interview of William Eckhardt in The New Market Wizards.
Yeah,it keeps going and going,thanks to Jack.
I read it long time ago and nothing was derived from there.As far as i remember he says something like 'what looks good on charts 98% doesn`t work' . ok,why not 95%, or 87%? why 98%? it`s just a verbal diarrhea.He also had a bet with Dennis, that no one could be taught to trade..
I suggest you to read article about Jim Simons instead where he says that his partner, Baum dumped to use models and did it well just by 'guessing' the market direction.But before he started 'guessing' he was the scientist at first place.Also look at Simons` staff.They are all scientists one field or another.Only a couple of traders...
I think the "98%" reference was a figure of speech. However, on the matter of chart reading, he did make one comment that I personally agree with. Specifically, he wrote, "When I have an idea based on a chart pattern, I try to reduce it to an algorithm that I can test on a computer. If a method is truly valid, you should be able to explain it to a computer." Also, whatever you may think of the guy, I think he's spot on regarding his comment on the misapplied use of statistics in trading, as compared to its more careful application. The precision that a lot of people take for granted simply isn't there. I think you're making a mistake by underestimating what Eckhardt has to say.Quote from outsource:
Yeah,it keeps going and going,thanks to Jack.
I read it long time ago and nothing was derived from there.As far as i remember he says something like 'what looks good on charts 98% doesn`t work' . ok,why not 95%, or 87%? why 98%? it`s just a verbal diarrhea.He also had a bet with Dennis, that no one could be taught to trade..
I suggest you to read article about Jim Simons instead where he says that his partner, Baum dumped to use models and did it well just by 'guessing' the market direction.But before he started 'guessing' he was the scientist at first place.Also look at Simons` staff.They are all scientists one field or another.Only a couple of traders...
As for your reference to Jim Simons, no one can argue the success of Renaissance Technologies. I am not a scientist, mathematician, statistician or computer programmer. However, I think the dumping you refer to has more to do with novel algorithms and computer programming than it does specifically with the exactitude of math or stats as they relate to trading. And you will recall that my comments to you in my earlier post today were in response to your reference to precise predictions. As I understand it, the use of Renaissance's computer brute force to arrive at trading models has been compared to an expectations maximization algorithm in the use of statistical machine translation. The results may be very effective, but I'm not sure what they have to do with either "exact" or "precise."
Quote from Gabfly1:
I think the "98%" reference was a figure of speech. However, on the matter of chart reading, he did make one comment that I personally agree with. Specifically, he wrote, "When I have an idea based on a chart pattern, I try to reduce it to an algorithm that I can test on a computer. If a method is truly valid, you should be able to explain it to a computer." Also, whatever you may think of the guy, I think he's spot on regarding his comment on the misapplied use of statistics in trading, as compared to its more careful application. The precision that a lot of people take for granted simply isn't there. I think you're making a mistake by underestimating what Eckhardt has to say.
As for your reference to Jim Simons, no one can argue the success of Renaissance Technologies. I am not a scientist, mathematician, statistician or computer programmer. However, I think the dumping you refer to has more to do with novel algorithms and computer programming than it does specifically with the exactitude of math or stats as they relate to trading. And you will recall that my comments to you in my earlier post today were in response to your reference to precise predictions. As I understand it, the use of Renaissance's computer brute force to arrive at trading models has been compared to an expectations maximization algorithm in the use of statistical machine translation. The results may be very effective, but I'm not sure what they have to do with either "exact" or "precise."
You are confused with the notions.
Statistics is the science of the collection, organization, and interpretation of data.It deals with all aspects of this, including the planning of data collection in terms of the design of surveys and experiments.Statistics is closely related to probability theory, with which it is often grouped.
When it comes to the territory of trading the statistical methods or expectations maximization algorithms, is already behind.The precisness of TRADING comes into play now.Therefore, statistic is a integral part of trading, and the two problems cannot be separated from one another.
And you wouldn`t want to trade with a figure of speech, would you?
''The proper execution of your trades is one of the most fundamental components of becoming a successful trader and probably the most difficult to learn. Most traders find it is much easier to identify something in the market that represents an opportunity, than it is to act upon it." --- Mark Douglas
http://www.tradingmarkets.com/.site/stocks/how_to/articles/3-Keys-to-Flawless-Execution-81967.cfm
http://en.wikipedia.org/wiki/Flawless_Execution
http://www.tradingmarkets.com/.site/stocks/how_to/articles/3-Keys-to-Flawless-Execution-81967.cfm
http://en.wikipedia.org/wiki/Flawless_Execution