Intuition Amplifiers 2
- Thread starter MAESTRO
- Start date
Quote from NoDoji:
Cornix posted this a while back on his blog and it helped me stop trying to predict what the majority of market participants were going to do next:
http://www.cornixtrading.com/2012/07/rats-vs-yale-students-randomness-psychology/
Over my 5 years of trading, I learned that my "feelings" were a thing best faded. Maybe after another 5 years, I'll be at the highest level of performance, trading at the intuitive level, as Mark Douglas calls it.
In the meantime, the most profitable psychological leap for me was to stop caring about what will happen next on any individual trade.
I look for two things to tell me whether to consider a trade: the setup and the R:R (based on stats I've compiled over thousands of appearances of the setups).
I then either place an order at the price that would signal to me a) something is more likely than not to happen, and when it happens the market offers a gain at least equal to the technically logical risk, or b) something has a 50/50 chance of happening, but when it happens the market offers 2 or more times the technically logical risk.
This is my personal trading plan, pure probabilities. Some of the setups that "feel" like slam dunks fail quickly and some of the setups "feel" impossible produce gains beyond my best expectations.
I was wearing myself out trying to predict what would happen next. I was the Yale student, certain that there was a way to perfect a system that was darn good enough if I could learn to embrace losses as a natural part of trading.
Kudos to those whose intuition helps them profit from the markets.
My intuition simply cannot be trusted at this point and so I have no desire to amplify it.
I cant help but feel like your article and your trading style as in contradiction with one another. But the flaw in human intuition is seen in the article. I have seen this often, the weather man is always wrong or what not..
Maybe intuition is not to blame, maybe something else is getting in the way, maybe if we amplify the intuition or lower that which gets in the way we can be the rat ? I dont know lets see where this goes.
Then a paper and pen is a good amplifier. but that is not intuition.
Not at all. Just as the rats learned that if they always went the same way they'd get rewarded more often than not, I learned that if I always trade a certain way, I get rewarded more often than not.
When I tried to trade based on a belief I could predict the outcome of individual trades, when in fact the distribution of winning and losing trades in a positive expectancy system is random*, my overall result was worse than when I simply did the same things over and over again and let the favorable probabilities reward me consistently over time with far less effort involved.
*Only the distribution is random, not the overall result over time. This is the barrier to profitability for most educated traders. They are the Yale students, and the lower probability they achieve by trying to outsmart the market or to curve-fit based on survivor bias is the difference between profit and loss when commission and slippage are involved.
I'm not at the same place you are, lets first see how intuition comes in to play and they see if we can find a way to deal with that, The thread is interesting even your points.
after reading the first 2 pages of this thread . i knew what u where asking/talking about
so without reading any further**.. here is what i can give ya ..
**i flew over this thread ,,, briefly..
intuition dosent fly by ,it evolves .. like ya said.. what u lived thru , expirience thus
far.. etc.. and what u filter it thru (experience).. like sherlock holmes did/does .. etc
.
imagine..
2 persons
the first one acts on intuition he gained thus far.. the second one is one step further
and knows how person A acts on situiation X based on his expirience,
now this person B is in an advantage and can manipulate or at least
act based on this knowledge.. thru experience..
a Market situation:
so person B places a Huge Order @resistance on the Offer side ..
Person A leans on this Order ,as its on resistance and it looks like a huge
selling order is telling him the same..ie.
that you should rather sell then buy at this point
as .. resistance + sellers.. means u should sell, right ?
mhmh... so Person A sells at market...
person B knew* that this would happen.. and bought the shorts from person A
* what a predictable move ?!?! but this has nothing to do with intuition..
he is the game master.. and person A plays upon his rules !..
as person A is now in a trap.. ie.. person B knows that he will puke.. and that puke means
buy... in the near future..
Person B removes the huge sell order.. and may buy anything left to buy the market
wich sends the price higher .. person A gets scared and all that shit.. and eventually
starts to puke... right into the hands.. of person B.. ughh!! but that puke is pure gold !
::
this was just to illustrate that one person might be one step ahead.. and palys tricks on
ya.. even on your intuition! .. and what not..
there was once .. an artcile , wich.iactually never read.. but get the point anyhow..
all/most traders are psychopaths!! ..
what doe this actually mean ?
well first off. we dont think like anyone else.. this allready makes us psychs
but that aint a bad thing per se.. we just got a level higher.. as long as u dont do bad
things !!! of course...
but as u know.. average joe.. doesent like to think for themself.. they are happy if
someone esle thinks for them... and as more there are of them the supider they get!
herd behaviour!
hence getting more predictable!
predictable ?!!
so here we are . predicting which way price may take..
is it dioable ??.. sort of!
just think about it!".. and here comes another topic wich gets argued about manny times
technical analysis.. TA
hmmm.. do you think/agree that most stops from bears are placed @ A swing high /
resistance etc.. ?? (ie. technical)
how do ya know ?
experince?
what would u think happen if price triggers those stops?
and what would happen after that? ..
dont forget why markets are here.. they are here to fascilitate a trade
therefore.. the market is on constant search of liquidity...
and u may find liquidtiy where a bunch of SLs sit.. dont ya think?
its a different story what one makes with that knowledege.. Ie. where SLs may reside!
they may fill there own orders.. or exit a position.. etc..
.. same goes for fundamental analysis.. FA
good news doesent mean price will rise.. (that would be too good to be true)
remember there is always someon who is much more exprienced then u
he may sell into the rising demand. or on bad news buy into the panic!
all actions creaate liquididty and options to act based upon..
and dont forget,., people tend to trade ones opinions.. and act.. upon there fullfiled or
unfullfilled opinions!!!
what one makes out of that. is based on his skill... and expirience..
it doesnet work ou all the time... if ya get run over by a stampede.. so it be..
good experience anyhow...
but who does know that he is in such a super position..and will manipulate people to gain
something out of it?
right a psychopath!
but dont u dare.. to say that he is a looner .. sitting in his cellar.. and planing crazy
things ,he is may be one.. who wants to be the best! .. who wants to beat everyone in
this game...
just like professionals do! u wouldnt say that Sebastian Vettel is a psychopath dont ya ?
but he may act like the same way a Psyhco would do...
.. so if ya act based on intuition.. u may be one step behind.. if ya act based on someone
esles intuition.. u may be the game changer! ..
if ya act for urself and your personal gain .. u may have a problem..
if u act in the name of the people.. and give back alot of your expirience or anything u
gained.,, u do good .!
but who am i to judge one... ?
u might be one.. who leans upon one of the game changers! and know.. how they act..
but u wont evolve doing just that.... .. In general! not in your profession!
sorry for tha bad english!
all in all Intuition = Knowledge > and acting based upon that!
that allone will beat any Algo! ,, as an algo will always act the same.. hence get predictable.. we can adapt thou! .. ALgos will always ReAct! ...
Cause and Effect .. baby! .. are u the cause of the effect ????
half drunk and half listening tho this http://www.shoutcast.com/Internet-Radio/trap
whle writing the response..
cheers
so without reading any further**.. here is what i can give ya ..
**i flew over this thread ,,, briefly..
intuition dosent fly by ,it evolves .. like ya said.. what u lived thru , expirience thus
far.. etc.. and what u filter it thru (experience).. like sherlock holmes did/does .. etc
.
imagine..
2 persons
the first one acts on intuition he gained thus far.. the second one is one step further
and knows how person A acts on situiation X based on his expirience,
now this person B is in an advantage and can manipulate or at least
act based on this knowledge.. thru experience..
a Market situation:
so person B places a Huge Order @resistance on the Offer side ..
Person A leans on this Order ,as its on resistance and it looks like a huge
selling order is telling him the same..ie.
that you should rather sell then buy at this point
as .. resistance + sellers.. means u should sell, right ?
mhmh... so Person A sells at market...
person B knew* that this would happen.. and bought the shorts from person A
* what a predictable move ?!?! but this has nothing to do with intuition..
he is the game master.. and person A plays upon his rules !..
as person A is now in a trap.. ie.. person B knows that he will puke.. and that puke means
buy... in the near future..
Person B removes the huge sell order.. and may buy anything left to buy the market
wich sends the price higher .. person A gets scared and all that shit.. and eventually
starts to puke... right into the hands.. of person B.. ughh!! but that puke is pure gold !
::
this was just to illustrate that one person might be one step ahead.. and palys tricks on
ya.. even on your intuition! .. and what not..
there was once .. an artcile , wich.iactually never read..
but get the point anyhow..all/most traders are psychopaths!! ..
what doe this actually mean ?
well first off. we dont think like anyone else.. this allready makes us psychs
but that aint a bad thing per se.. we just got a level higher.. as long as u dont do bad
things !!! of course...
but as u know.. average joe.. doesent like to think for themself.. they are happy if
someone esle thinks for them... and as more there are of them the supider they get!
herd behaviour!
hence getting more predictable!
predictable ?!!
so here we are . predicting which way price may take..
is it dioable ??.. sort of!
just think about it!".. and here comes another topic wich gets argued about manny times
technical analysis.. TA
hmmm.. do you think/agree that most stops from bears are placed @ A swing high /
resistance etc.. ?? (ie. technical)
how do ya know ?
experince?
what would u think happen if price triggers those stops?
and what would happen after that? ..
dont forget why markets are here.. they are here to fascilitate a trade
therefore.. the market is on constant search of liquidity...
and u may find liquidtiy where a bunch of SLs sit.. dont ya think?
its a different story what one makes with that knowledege.. Ie. where SLs may reside!
they may fill there own orders.. or exit a position.. etc..
.. same goes for fundamental analysis.. FA
good news doesent mean price will rise.. (that would be too good to be true)
remember there is always someon who is much more exprienced then u
he may sell into the rising demand. or on bad news buy into the panic!
all actions creaate liquididty and options to act based upon..
and dont forget,., people tend to trade ones opinions.. and act.. upon there fullfiled or
unfullfilled opinions!!!
what one makes out of that. is based on his skill... and expirience..
it doesnet work ou all the time... if ya get run over by a stampede.. so it be..
good experience anyhow...
but who does know that he is in such a super position..and will manipulate people to gain
something out of it?
right a psychopath!
but dont u dare.. to say that he is a looner .. sitting in his cellar.. and planing crazy
things ,he is may be one.. who wants to be the best! .. who wants to beat everyone in
this game...
just like professionals do! u wouldnt say that Sebastian Vettel is a psychopath dont ya ?
but he may act like the same way a Psyhco would do...
.. so if ya act based on intuition.. u may be one step behind.. if ya act based on someone
esles intuition.. u may be the game changer! ..
if ya act for urself and your personal gain .. u may have a problem..
if u act in the name of the people.. and give back alot of your expirience or anything u
gained.,, u do good .!
but who am i to judge one... ?
u might be one.. who leans upon one of the game changers! and know.. how they act..
but u wont evolve doing just that.... .. In general! not in your profession!
sorry for tha bad english!
all in all Intuition = Knowledge > and acting based upon that!
that allone will beat any Algo! ,, as an algo will always act the same.. hence get predictable.. we can adapt thou! .. ALgos will always ReAct! ...
Cause and Effect .. baby! .. are u the cause of the effect ????
half drunk and half listening tho this http://www.shoutcast.com/Internet-Radio/trap
whle writing the response..
cheers
Quote from NoDoji:
Cornix posted this a while back on his blog and it helped me stop trying to predict what the majority of market participants were going to do next:
http://www.cornixtrading.com/2012/07/rats-vs-yale-students-randomness-psychology/
Over my 5 years of trading, I learned that my "feelings" were a thing best faded. Maybe after another 5 years, I'll be at the highest level of performance, trading at the intuitive level, as Mark Douglas calls it.
In the meantime, the most profitable psychological leap for me was to stop caring about what will happen next on any individual trade.
I look for two things to tell me whether to consider a trade: the setup and the R:R (based on stats I've compiled over thousands of appearances of the setups).
I then either place an order at the price that would signal to me a) something is more likely than not to happen, and when it happens the market offers a gain at least equal to the technically logical risk, or b) something has a 50/50 chance of happening, but when it happens the market offers 2 or more times the technically logical risk.
This is my personal trading plan, pure probabilities. Some of the setups that "feel" like slam dunks fail quickly and some of the setups "feel" impossible produce gains beyond my best expectations.
I was wearing myself out trying to predict what would happen next. I was the Yale student, certain that there was a way to perfect a system that was darn good enough if I could learn to embrace losses as a natural part of trading.
Kudos to those whose intuition helps them profit from the markets.
My intuition simply cannot be trusted at this point and so I have no desire to amplify it.
So far I am at the same stage. Intuitive, subjective behavior hurts more than helps, despite sometimes I have a very strong feel of the market, but if you rely on it, there's a risk to end up violating your rules, so I prefer to make trading as mechanical routine as possible.
Be the rat!
Great post Mademan and too big to quote so I leave out lots important details to focus on some highlights.
Let's take a practical example - the Dow. We have a big rising wedge on the 2-week chart and statistics tell us the odds favor a break down from a rising pattern. Trader A looks at this and says Price Drivers are at -10 this is a big move down.
Trader B observes there has been 2 rising wedges and a rising channel inside the wedge that all paid out like broken ATM's - it this another? Trader B also notices Trader A represents herd activity and is euphoric about the opportunity for another simple pay day. A quick look at the COT tells A that the dogs in the street are all on the shorts to get the easy pay day and immediately smells a rat. Another look at the Fed sees them pumping like crazy.
Sure enough the market drops, but only a little to recharge and then begins a solid grind up. Not enough to panic the shorts. Not even enough for them to use their stops. Just grinding enough to make them feel a little more up and their decision to ignore their hard stop will show how cunning they were. The Dow continues its grind without a flicker and when Trader A can take no more and they buys to cover pushing the market on, it is often into its final spasm.
I had a thread on the new (now old) ET on gambling and trading as I used to be a pro gambler and the 1st post was that we need to be cunning. But how do we develop the awareness of the opponents weaknesses? The poker player lets you win a few hands so he can get you at your over confident weakest. How do we catch on? Often to begin with its that intuitive gut feel that often precedes conscious logic and allows us to get smart. Then we learn to see that when it looks too easy, it usually is, because something was unconsciously observed many times that we can later turn into rules of logic to join the dots. We test it - it works. We research it - we understand it.
But how fast does this gamesmanship play out? It starts with HFT algos and then goes on to the sub 1 min TF and it is observed in every time frame every day. It's the nature of the market. I don't think the algo's are psychopathic in design, they just play on the rules of human nature. In fact imho, a psychopath has too many weaknesses to survive in this game - they are in an instant too reactionary when the wrong button is pushed and the market reserves that pressing for the best of times.
And you're right that an algo has a weakness - its code is based on human perceptions and as can be proven by the number of successful HFT Hedgies that later crashed, human perception is not cast in stone. Eventually AI will develop the rules of intuition that develop the rules of logic that are reshaped by new intuition. Until then, when I'm playing against a bot I'm playing against a human and machine combo with inherent human weaknesses and I can sniff out the changes when it can't - long may it continue!
Bot wars have a chart footprint. Human traders have a chart footprint. Random bars have a chart footprint. All of them have weaknesses and strengths to exploit. Extreme curiosity is all that's needed to drive anyone towards the answer and intuition is often the seed of knowledge. However a lot of cats die in the process
