Logics: Random?

Quote from Lucias:

Tom,

I find your ideas very interesting and would like to learn more. However, I also find that you are "couching" these terms in quite a bit of complexity.

When you talk about hedging and multiple instruments then it is reasonable that there are several assumptions (or statements) such a strategy makes about the market, i.e model characteristics.
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It sounds like you may be taking something from portfolio theory which states if you combine low or non correlated assets you get a better risk adjusted returns. This theory applies to assets with a positive bias-- not to random price distributions.
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Well i did not mean to take the position of one who wishes to "teach" anything. I am actually the one always ready to learn.
Just, as you were stressing the "predictive" component in the original post, i wished to make you aware that there are also people who may have a different view.

Clearly, i have evolved my views. Ages ago, I have also been designing convincely "predictive" systems.
So my current beliefs just reflect my current state of "evolution". And perhaps if we talk again in 5 years i will have still different ideas :-))

I merely provide my current point of view and the least thing i wish is to change other people's ways to trade.
If they want to use sistematically stops at trade level, i don't even argue. I am actually pretty happy they do. I just moved on.

My continuous effort is to grow in the direction that my actual experiences point out, and using as main objective criterion the actual improvement of performances (mostly intended as reward/risk ratio, within obvious constraints of relative tradability).

Tom
 
Being able to predict with 55% or more accuracy the next half hour of price direction is all I ever care about.

Interesting thread , I like it.
 
What really made this clear to me was reading Evidence Based Technical Analysis. I found the first chapter very useful. But, I reach different conclusions to the author, who comes off as a bit of a sour pot.

Yet, I found his insight into the importance of testable statements very useful for focusing in on what was important.

He really pointed out how most people making statements about the market didn't contain any information. They'd say things like

"If the market rallies at the 1300 level then I'll be a buyer. But, if it fails then I'll go short"

This statement while nice sounding doesn't contain any useful information. These are the type of untestable statements that vendor slicksters make. Whether price rallied or fell, they can come back later and claim they were right. In fact, a certain famous female vendor made a statement just like this. I spotted it immediately.

One vendor I won't name shares free videos. He was giving a broad overview of the markets and he would say something like, always, "but i don't predict. I just trade what I see. I'm scalper" Okay, if that's true then why waste the time to make a f-king video or do the analysis in the first place if it isn't valuable?

I do feel there is some value in making untestable statements, i.e when it is on tip of awareness to bring it forth. But these must eventually get boiled down into a testable statement, i.e a trade or a prediction. But, in general I'm convinced the big promoters are not doing this: they know very well what they are doing and they are quite careful not to make statements that they could get wrong.

The importance of this recognition is not merely to spot vendor snakeoil. But, more importantly I feel it helps to know what one is trying to do -- in order to do it.

Yes, I'm sure some legitimate traders claim they don't predict. But, they really are predicting. They just don't realize it.
 
Quote from Lucias:

You need to ask the right question to get the right answer. The wrong question that I see most of the foolish out there asking:

Is the market random?

And, they're thinking primarily about using price to predict the future price. Their thinking about the market in a very limited way. Better questions to ask:

What's influencing the market right now?
Where is the market going tomorrow?


You see something can be predictable but not be dependent on the historical price data.

Look at the big dude, what was his name Pauslon? who shorted the housing market. There was nothing in the price that told him to short. All the scientist would say well nothing here: just pure random. But, there was something. There was something that allowed him to predict something that had never occurred which was the ability to anticipate correctly how the market was going to react in the future. He had the ability the model possible future scenarios.

I do believe price data can be predictive. But, it can so much more predictive when you can anticipate using hypothesis based reasoning to go with it. In other words, if you can anticipate something happening then you can also monitor to see if it is happening.

Most losers are looking backwards while the leaders are looking forward. They are anticipating. Sometimes they anticipate too far ahead which is why every trader has to manage risk.

One trader here asked about tape reading as a means too know when the big trader is making a move. Well, if you know what the big trader is looking at and you know how he's going to make his decisions then you can move before he even makes his trade. You can be the big trader. Or you can combine such a hypothesis with the ability the ability to read the market and that's powerful stuff.
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Paulson was sitting on the lap of Goldman Sachs insiders , and U S government was sitting in the pockets of Goldman Sachs.What did he predict ?

Raj Rathnaram wa also a good predictor .

http://www.washingtonpost.com/busin...icted-of-fraud/2011/05/11/AFN6fRuG_story.html

All the great traders hang around on E T predicting how to brainwashing noobs into parting with their money.
 
Sorry that is just not credible. It would contradict all known laws of the physics. There is no evidence of such ability. Some of the things successful traders are going to present will be misinformation, to mislead and to obfuscate.

Quote from jimbojim:

You know what happens when you trade against those who can predict the future.
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Quote from Lucias:

Sorry that is just not credible. It would contradict all known laws of the physics. There is no evidence of such ability. Some of the things successful traders are going to present will be misinformation, to mislead and to obfuscate.
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According to the laws of physics, the state of the universe is completely deterministic from its initial conditions. In addition, according to the current theories like Relativity, the past, present and future coexist. Specifically, when I studied special relativity at the graduate level , we learned that the future fo some observer can be the past for another observer depending on relative state of motion.
 
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