Keeping it Simple
- Thread starter rs7
- Start date
Hi rs7, it's Eva. Mr Sub's busy writing his trading plan in the infirmary. Bubba's in solitary for 5 days during which time Subman has assured me the cardboard head will be ready - it's just lacking hair but Sub's in the shower block detail tomorrow. I guess you know by now why I'm really writing to you:
Eva
Tell that bimbo Tanya to stay away from Don - he's mine.
Oh for the times I could've used a third armpit.
Eva
Originally posted by alain
I think this is a wonderful example to show someone in real life how the "formulas" of trading have to be learned by experience. And models of trading have to be created in the brain to understand it partly.
By the way the article was written in 1994 i believe. Back then he mentioned that he will do the research on the stock market for about four years and then he will move to something else. This company still exists and works for the Swiss bank UBS Warburg Dillon Read. Well.. the markets have kept them busy little more than 4 years
alain
Thanks for some great posts alain.
Did you hear about a band of brilliantly talented students who pronounced the notion that it was possible to predict the outcome of the spin of a roulette wheel?
Crazy, yeah right, next they'll be saying they can beat the markets !
They succeeded to such an extent that the state of Nevada had to invoke new laws making their invention illegal inside Casinos! .....Hell !
An elite member of this group was one James Doyne Farmer who was born in Texas in 1950.
Personally I am very grateful to Farmer and The Eudaemonic Pie . After watching a tv documentary way back in the 80's on this story, I remember realising for the first time that there is probably always a far better way to look at solving an impossible problem.( I picked up a book on math and opened it at the page on probability. Now what are the chances of that happening !?
)I understand that his unique approach put simply, ( I couldn't do it any other way ) is to look at abstract problems by evaluating the constituent governing elements of the forces which drive them. ugh?
When he took on the roulette wheel, he had a set of forces (spin, speed, ball weight/material etc), which he found could then be documented electronically, analised and put to effect.
The analogy of the ball and balloon is I think a good one. Let's say, if the ball is the roulette wheel then the balloon is the markets. Farmer learned to catch the ball by inventing a method to automatically assimilate previously unused/unknown information and become able to predict the outcome of an event.
Although the information was always there ie; the speed and composition of the ball etc etc, no one had the means to know or analyze the information, let alone think that knowing would make a difference. Once this knowledge became available the Casinos were out of business. Farmer and his gang were brilliant in the first place to envisage the idea, apart from to then overcome the limitations of available computing power and put the results into practice.
In this same context, here's where I think they are off base with the Prediction Company.
He does not appear to identify the forces which propels the balloon like he did with the roulette wheel problem. ( I hope this all makes sense. If it does, please explain it to me )
He is quoted as saying these forces are random and complex and chaotic.
There is a simple fundamental beauty in a law which is a constituent part of the market movement. I do not believe it is understood well enough when attempting to harness it with banks of algorithmic computations, constructed - amongst other things - on the way it's moved previously. That's looking at
the balloon, not the elements which are the values of its driving forces. Farmer did not need to, nor did he, record all the back results of the roulette wheel spins to predict future outcomes.
If the text and quotes are accurate about Farmer & the Prediction Company and indeed other Phd approaches to the challenge , in my opinion they are taking a similar view in likeness to the Fischer Black / Myron Scholes / Robert Merton /LTCM hedge fund setup, when they believed they could break the markets. Black & Scholes & Merton proved to have enough of an unmatchable understanding and knowledge of everything in the cosmos to enable them to produce the answer. They in fact produced a new instrument, quite a different animal. Unfortunately their new instrument , I think I am correct in saying, lost investor banks and others around $3.5 billion which (with some hindsight) was due to a fairly simple / straightforward oversight.
Using rockets science to make something possible does work, but if the boffins don't build the rocket upwards they overestimate the eventual chances of a successful launch.
There is a subtle fundamental in the markets which must never be overlooked.
btw alain, the link refers to Farmer as a " Tall, bony, probably thirty-something...." well he's 52 now so...doing the math ....errr.......??
Great thread rs7.Keep posts coming.... Beats being superstitious. See I just knew you wouldn't become redundant due to computerization.
wwwwwatson is an idiot. ignore him. hey wwwwwatson how's that QQQ trading coming along? ...HA!
FasterPussycat
FasterPussycat
Thanks Stu.Originally posted by stu
Great thread rs7.Keep posts coming.... Beats being superstitious. See I just knew you wouldn't become redundant due to computerization.
As a worthless footnote, I actually did know of some folks that could predict (to a degree) the outcome of a roulette wheel. However, they could not be accurate enough to predict an exact number. Just a section of the wheel.
Know how they did this? They cheated. The dealer would spin the ball as closely as possible to when a specific part of the wheel would align with whatever mark was used. This in conjunction with a consistent rate of spin on both the wheel and the ball would in theory put the ball within a limited section of the wheel. But cheating is cheating. Besides, this is one of the most obvious scams to spot. Because the dealer is supposed to be watching the layout to spot late bets, etc...and not the wheel. So if the dealer has his eyes on the wheel and not the layout he is at best incompetent, and at worst, a cheat.
The people that run the casinos have seen it all. The cheats rarely get over on them more than once. If at all. Everything you can think of has been tried. And the only scam I ever heard of that worked for a while was the simplest of all. A blackjack dealer was dropping black ($100) chips into a players' coffee cup as he would move it out of the way. It took the house a while to figure out where the money was going. They knew the dealer was cheating. They just didn't know how. But as always, they figured it out.
How do I know this? Because I am a wealth of useless drivel...as has been stated here often.
By the way, my overnights were a disappointment. I had to get out while I still had a small profit. The market tanked, and now has bounced back nicely. But my discipline was not to let the winners turn into losers. Had I ignored that rule, I would have done much better. But I know I did the right thing. To have held through that big selloff would have been a gambling, not trading. I can always get back in. This is a key thing to always remember. There are always more opportunities. Somewhere Publias stated this beautifully either somewhere on this thread, or in MrSub's journal (I think).
RS7Well I have never traded at home. But the other stuff? Well, hell, did I not 'fess up to washing dishes, being a simpleton, etc., etc.?
BTW, my wife is one tough bit....uh, lady. She is an attorney, so that should give you a hint. So I am very careful to avoid temptation. Because I hate sleeping with one eye open. You know about the Bobbitt thing? Not for me, thanks!
Now if you want some real dirt, I suggest you get ahold of MrSubliminals Diary. I think it is in an evidence locker at the Pentagon. But the Freedom of Information Act should come in very handy for you if you are so inclined
RS7
WwwwwWatson! How's those QQQs trades going dude?? LOL!
(I thought wwwatson had gone AWWWWOL!
)Hey RS7. Nice, coherent, simple explanations dude. When you think about it, there's really not a whole lot to say is there? (About trading). It really is a very simple thing.
Kinda like a horse race. The winner(s) get all the prize money and the losers get nothing. But the winner isn't THAT much better then the loser. Just better enough to get the cash. With the simple kind of trading your talking about (simple but effective) there isn't THAT much difference between someone making money and losing.