Money management business paradoxes

[Concinnity]

Well usually when you are in a trade you think that the return is superior to not being in it. Finding times when this is true looking backwards becomes more difficult when the number of random events increases as time passes. The evidence is the signals are extremely weak and decay very fast and you have to go so far into the tail that they occur at extremely low frequency. So to make money you have to have a great number of signals and low holding times

Well yes, the lower the time frame you go the more money you can make, but at some point you get diminishing returns. however, that is not directly correlated to the pattern being different. It becomes more difficult due to catching shorter moves increases the pain of commissions, potential slippage, missing trades due to the speed of the movement and increased likely hood of mistakes.

Completely can appreciate and am aware of that. But just because that is the case, doesn't mean the patterns are any different or have changed, it's just more of a human capacity issue / common sense issues regarding commissions, slippage and mistakes.

For day trading I find more mid-range time frames to be the best, for me personally. Still allows you to capture a large portion of the move, but is also quick enough to trade both sides of the market, if you don't have any high probabilities of it being a super bullish or super bearish day.

Honestly, in the end am only concerned about if what I am doing works and making money. I don't want to be wrong on purpose, but even if my theories are incorrect and I am misleading myself about what I am actually doing, in the end it is working in backtesting and live trading. That is my focus is making money and improving.

 

[isabellavillareal]

You may well be right I'm certainly not an expert in this area

 

[piezoe]

If you believe the markets move 100% random

But of course they don't on a long time frame. The long term trend of the equities market, at least least, is certainly not random. It is up if for no other reason than inflation. But there are other reasons of course.

Sometimes what we believe is not so.

 

[isabellavillareal]

I'm assuming they are not random I'm saying how long does it remain non-random as at least some unpredictable events occur. I definitely agree there are high static carry positions but often you compensate in volatility which might require some of ze hedging. It also definitely depends on transaction costs heavily so in options its very significant. There is work you can read online about optimal control problems for exit and entry but it depends heavily on the drift you assume in your Q

 

[Concinnity]

I'm assuming they are not random I'm saying how long does it remain non-random as at least some unpredictable events occur. I definitely agree there are high static carry positions but often you compensate in volatility which might require some of ze hedging. It also definitely depends on transaction costs heavily so in options its very significant. There is work you can read online about optimal control problems for exit and entry but it depends heavily on the drift you assume in your Q

It's organized chaos for sure. I mean I think there are some random movements in the market, meaning you can't necessarily make a strategy to catch them. This most likely happens when larger players are just moving the market back and forth either accumulating or distributing in a range just forcing smaller players in and out. Maybe also known as "chop" to others. But if you know what to look for, there is probabilities to determine if they are distributing or accumulating in that range, and once the business is done is when you'll get an outsized move in one direction, those are the types of moves that are more predictable and can use more defined perimeters to build a strategy around.

 

[Concinnity]

But of course they don't on a long time frame. The long term trend of the equities market, at least least, is certainly not random. It is up if for no other reason than inflation. But there are other reasons of course.

Sometimes what we believe is not so.

Yes, the equities markets are naturally bullish bias. So focusing on long strategies or people who prefer long over short, generally do better. However, the bullish bias of the markets has become a little less these past years. I have no preference and just look for key benchmarks to see if there's more probability in buying or shorting each day (when the stats are clear, not everyday is super clear, sometimes it's neutral day or just unclear to me per my understanding).

 

[murray t turtle]

I could care less if someone is investing or trading my money, when it comes down to it, the bottom line are we making money or not?
EDIT: Also, to me I don't see a huge disconnect between investing and trading personally. The same things that work on smaller times, will work on larger time frames, particularly if you are taking a fractal approach to the markets. So, just for me personally saying you're "investing in it" based on fundamentals as an excuse for losing money, doesn't hold much water (just to me personally) particularly if we're talking about stocks / equity futures.

%%
Plenty of truth there.
I dont see much difference in trading + inVesting also. Except 2 big differences; most of the millionaires by far are in inVesting or market making. Smallest % of millionaires in daytrading/dont know about billionaires, dont have goals that big/

 

[richyfloor3]

I work as a financier, ask if you want!

 

[murray t turtle]

Why would the same thing that works on short timeframes work on long timeframes? Does that seem likely or has there ever been any evidence for it?

%%
NOT likely@ all\unless its superVolume + very liquid...............................................