How long before you were fully automated?
- Thread starter travis
- Start date
Deduction requires rules too. Markets are not deductive unless we don't mean the same thing. Can you give an example of what you mean by "use deduction and logic"?
Yes.
I tried to mention just a couple of people who are published in this sort of thinking. What I mean is the same as what they reason to be possible and appropriate.
If you choose, you may look at markets in the context of how markets work. Say, for example, you do.
This is true of any system as well. I consider the market as a system. I look at any system as a structure, a process going on the the structure, and the results produced by the process going on in the structure.
If you grant me this as a possibility for looking at the market, then it would be possible for us to consider how markets work and taking advantage of this knowledge to achieve some worthwhile goals. Some people do look at markets as systems.
Perhaps it may be possible to consider that I am not talking about rules. You are and I am not. When I put myself in your place, I cannot reason efectively to take advantage of the opportunity of participating in a market as a consequence of using the structure, process and results.
Easily, I can come up with a code for trading and most will consider that I used a set of rules to create the code. This is the usual focus of programmers trying to carry out the instructions of their clients.
Here we see travis and others looking at the market and making codes of sets of rules that will make money.
I wanted to make it possible for a person to look at a system and characterize it in a language that would be in the form of something that meets the requirements of Logic Theory, and several other theories which afford a person the possibility of stating the market's system of operation based on structure, processes and results.
Usually I create a picture of this. I will do that as the general case and you will see the example does not have rules.
If this example is good enough for you, then I will construct the bridge from the example to making an account collect the offer of the market.
The words I use to language the system are as follows.
The pink paradigm contains three parts. a paradigm is usually, in rigorous theory, a two part thing that has a lot of requirements. The parts are: the Hypothesis Set and the parametric used to measure the Hpothesis set.
These two things are descrived as follows:
Hypothesis Set:
h sub 1 If volume is increasing, then the price trend will continue.
h sub 2 If vlome is decreasing, then the price trend will change.
These hypotheses pass many tests that must be passed. Fro example Kuhn outlines five tests that have to be met: accuracy, consistency, scope, simplicity, and fruitfulness.
Keynes insists on, in classical theory, "indivisible alternatives of the same form".
Invariance Theory applies as well and this is what, for all paradigm developers leads to the Rev. Thomas Bayes and his objectors the "frequentists.
Read the hypothesis set and intuitively digest that you are looking at something that covers the bases.
Notice there is no rule. there are a lotof intellectual practise requirements, though.
The parametric measure is simple and singular.
Velocity is the measure. velocity is, in language, the time rate of change of a variable. we use the two variables of the market as you see: V and P.
The pink paradigm contains three parts. a paradigm is usually, in rigorous theory, a two part thing that has a lot of requirements. The parts are: the Hypothesis Set and the parametric used to measure the Hpothesis set.
These two things are descrived as follows:
Hypothesis Set:
h sub 1 If volume is increasing, then the price trend will continue.
h sub 2 If vlome is decreasing, then the price trend will change.
These hypotheses pass many tests that must be passed. Fro example Kuhn outlines five tests that have to be met: accuracy, consistency, scope, simplicity, and fruitfulness.
Keynes insists on, in classical theory, "indivisible alternatives of the same form".
Invariance Theory applies as well and this is what, for all paradigm developers leads to the Rev. Thomas Bayes and his objectors the "frequentists.
Read the hypothesis set and intuitively digest that you are looking at something that covers the bases.
Notice there is no rule. there are a lotof intellectual practise requirements, though.
The parametric measure is simple and singular.
Velocity is the measure. velocity is, in language, the time rate of change of a variable. we use the two variables of the market as you see: V and P.
The priors originate from the practical considration that they come before the hypothsis set and its parametric measure.
In markets a person has a participating orientation.
We all have the same ones. They are goals.
If a person understands them intellectually in the language of the market, then he becomes very successful.
g sub 1 Money is made through price change.
g sub 2 Traders have to be in the market to make money.
g sub 3 To make money you have to be on the right side of the Market.
These three things form a set of priors to the hypothesis set and its parametric measure.
g sub 1 is about how the market works.
g sub 2 is what a trader has to do to participate.
g sub 3 is the goal that relates to making money.
So the three parts (boxes) of the pink paradigm are complete and in the form of language.
I have traded for 53 years and found this out at the beginning as a way of life. It was what I did that was exactly parallel to what is known as reading.
Everyone learns to read as a child. Fifth grade hildren who have Wall Street Journal subscriptions are all capable of good profitable trading by reading the WSJ and charting stocks of their choice on price volume charts. they use rulers. they use colored ball points to put in the parametric measure. In fifth grade language, it is called doing "geometry".
They use one additional thing ,mostly because it is fun. They Score the market cycle for whatever they are charting. knowing the score tells them the answer to three questions:
1. where in the cycle the instrument is,
2. what is next, and
3. how fast the cycle is changing.
Score adds one more variable which is already built into the pink paradigm. It is A/D. where A is accumulation and D is distribution.
In markets a person has a participating orientation.
We all have the same ones. They are goals.
If a person understands them intellectually in the language of the market, then he becomes very successful.
g sub 1 Money is made through price change.
g sub 2 Traders have to be in the market to make money.
g sub 3 To make money you have to be on the right side of the Market.
These three things form a set of priors to the hypothesis set and its parametric measure.
g sub 1 is about how the market works.
g sub 2 is what a trader has to do to participate.
g sub 3 is the goal that relates to making money.
So the three parts (boxes) of the pink paradigm are complete and in the form of language.
I have traded for 53 years and found this out at the beginning as a way of life. It was what I did that was exactly parallel to what is known as reading.
Everyone learns to read as a child. Fifth grade hildren who have Wall Street Journal subscriptions are all capable of good profitable trading by reading the WSJ and charting stocks of their choice on price volume charts. they use rulers. they use colored ball points to put in the parametric measure. In fifth grade language, it is called doing "geometry".
They use one additional thing ,mostly because it is fun. They Score the market cycle for whatever they are charting. knowing the score tells them the answer to three questions:
1. where in the cycle the instrument is,
2. what is next, and
3. how fast the cycle is changing.
Score adds one more variable which is already built into the pink paradigm. It is A/D. where A is accumulation and D is distribution.
So I hope you see how a lot of deduction was used and no rules appeared.
In the picture there is the matter of bells and whistles and how they yield a trading system.
Very significantly, you see the math of choice that is required.
This choice kills the need for the use of bayesian or "frequentist" theory. Everthing is always certain.
The OODA of John Boyd, all based on induction is gone.
As a person looks at the pink paradigm, he sees that all that is needed on the part of the trader is to read the market. after electricity was invented, the market was easily read right from the beginning. It was called tape reading.
Livermore and Darvas were standouts because they were written up. I am in the same age group as Darvas and we began at the same time. He was a person who danced professionally. I was an electrical engineer at IBM.
It could not turn out differently for ech of us. He saw the trythm of the markets; I saw the Boolean algebra and certainty of data sets. We both read the market.
A person just posted the word target. In the language of markets, the reasoned alternative is to take the market's continuing offer in segments. you do it at the capacity of the market's offer. For ES it is about 10,000 contracts ordinarily.
In the picture there is the matter of bells and whistles and how they yield a trading system.
Very significantly, you see the math of choice that is required.
This choice kills the need for the use of bayesian or "frequentist" theory. Everthing is always certain.
The OODA of John Boyd, all based on induction is gone.
As a person looks at the pink paradigm, he sees that all that is needed on the part of the trader is to read the market. after electricity was invented, the market was easily read right from the beginning. It was called tape reading.
Livermore and Darvas were standouts because they were written up. I am in the same age group as Darvas and we began at the same time. He was a person who danced professionally. I was an electrical engineer at IBM.
It could not turn out differently for ech of us. He saw the trythm of the markets; I saw the Boolean algebra and certainty of data sets. We both read the market.
A person just posted the word target. In the language of markets, the reasoned alternative is to take the market's continuing offer in segments. you do it at the capacity of the market's offer. For ES it is about 10,000 contracts ordinarily.
try this connection to the market.
Upon open you enter on the right side of the market and hold.
The end of each hold and the beginning of the next is done with an order called a "reversal". So you do reversal during RTH's and cover at the end of the day.
The frequency of your activities is a function of the money velocity you wish to have. the graphic for this is a fouth degree polynomial in the first quadrant. The limiting case is the human response time or the ATS resonse time. 100 milliseconds is the pragmatic human upper time level.
In the partnership of the trader and the market, the market gives the timingof the profit segments, etc. The market always uses one profit objective: the offering for the segment.
Here is the bad news. All commercial platforms are error ridden with one exception tested and proven out as known to me. Most operations use their own platforms as a consequence. None of this matters for most trader skill levles.
Jack thanks for your insights. Interesting stuff but isn't the case that hypotheses are just rules?
Is it always true that when volume goes up price continuous in the same direction? I think it is not true always. Those rules are also probabilistic in nature. They are inductive in a sense. I don't see how you can get away from induction, or maybe I am missing something. At any rate, this is interesting and refreshing thread. Thanks again.
Is it always true that when volume goes up price continuous in the same direction? I think it is not true always. Those rules are also probabilistic in nature. They are inductive in a sense. I don't see how you can get away from induction, or maybe I am missing something. At any rate, this is interesting and refreshing thread. Thanks again.
Rules are fairly specific in their nature and are defined as well.
Let me amplify a bit. Data comes in about 6 degrees of freedom. In logic that is processed up to about 70 degrees. Finally, when the results are sent from the ATS, about 6 degrees of freedom are involved for execution.
For me it looks like about 250 D size drawings with the usual symbols.
As usual when people look at direct market real time continuous flow data, they process some of it for visual display. I like two screens full of panels, for example.
I am observing a set of leading indicators of the price I trade. I have seen people looking at displays of many many kinds over the years and I have seen professioal dispalys that depicted accounts where one account was about 40 million down. One that screen it was also showing a daily situation that was very upsidedown. Because I had that person's technician adjust it to show the blank future, I suggested that he would be back to even by a time and value that I placed specifically as a future intersection of price and time. It happened and he was thankful.
A person is empowered to use anything he wishes from the data available. As a consequence, the next price turn is always displayed. and it is also true that what you see on your screen panels is not something I would want to have displayed nor a part of the data set I had collected.
i do not use the OODA since it is a prediction based experiment where an inductively determined hypothesis is decided and the action is to test it subsequently and begin again by observing, then orienteing to make the next guest that is labellled D for decision to deploy a hypothesis.
Instead I do a MADA routine where Monitoring gives me a certainty based data set. It is a subset of afinite set. I next turn to analysis which is simply looking up (deducing its counterpart in the Analysis finite data set. both sets are all predetermined and part of any lookup in any ATS that uses pariring of finite data sets. This is certainty.
The pink paradigm is where the M finite set and the A finite set come from and the pairing is also a permanent part of the ATS.
D the decision finite set has five elements. The analysis finite set is paired to the D finite set. the five elements are wait, reverse, hold, enter and exit. Enter begins a day and exit ends a day so they do not come up often.
Enter is preceded by Wait and Wait is a function of premium. when markets open the premium offset is not correct because of the massive irrationality of bots and algos. they stop functioning shortly after the open when premium offest is reached. Premium is not a price calculation primarily. It has a lot to do with a thing called value. waren Buffett uses a form of vlaue and as seen it has a degree of functionality for him. But his value is the "durable" value and not a premium oriented value.
Wait ends as premium is reached and the sentiment of the market gives you the right side for entry.
From here on out oly reversal and hold are used to take timely profit segments all day long on the market fractal being used. there are seven and the sentiment varies at any given time from fractal to fractal.
The basis of making money is to optimize the money velocity (a parametric measure of of hypothesis set).
To do this the ATS takes you to the appropraite set of data elements. As I said there are about 70 degrees of freedom and about six elements are used to make up a set at any time.
In the languaging of markets, this for me is described as a steer and focus function.
Braithwaite was good at this kind of thinking. when iwas in college I had several milestones. I invented at each stop. at westerm electric I was known as E-6178 and I had, early on a lifetime offer of employment. as you would guess that lead me to Bell Telephone Labs and as a summerstudentI was given the same clasification as Derman of book writing fame and screweing up columbia University fame after he left goldman sachs after leaving BTL before that. MTS (Memeber of Technical Staff) at BTL is tenure. my university would not return my manditory BTL journal upon graduation since while taking college labs I originated some antenna theory (UHF stuff).
Bandwidth is vaste in market data. At any given time most of the bandwidth is not information strictly speaking so a person has to migrate to the location of where pertinent information lies. This is matrix theory as applied to information in bandwidths.
Here you find out a theorem that turned out to be utterly mind blowing. In a matrix of the operating point of the market, there are eight cells surrounding the operating point. one or two dimensional changes are required to get to any of the eight cells.
This is important once you have proved by deduction that the market does not jump around but, instead, migrates.
Again the null hypothesis and its testing proves that the market only moves its operating point when only one alternative remains as all other were elimiated without a move.
Now we deal with focusing o the vanishing pointof theoperating point if and only id all other alternatives but one are eliminated. thisis a time of intrinsic certainty and at this time a consideration of volatility compression preceding volatility expansion is in the limelight (Connors Hayward and make all of it neutral biased instead of stochastic).
All indicators have the power and characterisitcs to give you the "tells" on this time period when alternatives are exhausted and a vanishingpoint is being approached.
Here you know where you are, what is next and how fast it is happening. someone siad, if I remember corectly: "I have 57 programs and 17 are active." he has just thee problems he does not know whre he is, what is next of how fast things are changing. the reason is he uses induction of raw data the same unprocessed data and all the time. The same old six degrees of freedom with the same types of detectors that do not change any degrees of freedom. No steer and no focus.
He also has a deep and abiding probability density problem. If he asks a programmer to analyze it; it will not be a possibility.
So at this point, I put some details on the table.
Basically, you learn everthing about markets after hours so to speak.
You find that finite set theory works well and it comes from the pink paradigm's binary vector data orientation.
The test (Kuhn) comes from using what you have on any fractal.
By the time you steer and focus for a vanishing point you can see (on displays as well) the future turning point and it appears on price at the magnified (focussed) level of the OTR charts, especially those that are leading indicators of the price you trade.
I have to do partial fills since it is a capital issue. Trading at five times ES market capacity is normal and it could be at a limit of 10,000 contracts. think of a train of partial fills as each turn occurs as the market comes to and off the WALLS showing on the panel displays.