Nearly Random Entry vs a High Probability Entry

[bigbeech]

you are a [mistaken] if you think you can just put on positions randomly
we all do this for a living, so we know what we are talking about
ENTRIES DO MATTER- i know you have some theory you are testing on paper, but you sound just like another economics professor with his efficient market hypothesis crap
if you go around just putting on positions arbitrarily, then thinking you can manage them, you will get your ass handed to you by those of us who know what we are doing

 

[bigbeech]

Quote from bigbeech:

you are a [mistaken] if you think you can just put on positions randomly
we all do this for a living, so we know what we are talking about
ENTRIES DO MATTER- i know you have some theory you are testing on paper, but you sound just like another economics professor with his efficient market hypothesis crap
if you go around just putting on positions arbitrarily, then thinking you can manage them, you will get your ass handed to you by those of us who know what we are doing

i didn't mean to be too harsh on you, but you are wrong with your approach

 

[size]

What is someone really claiming when he or she says that they can make purely random entries into markets and have a positive expectancy on those trades, based on the timing used to exit those trades? It would stand to reason that this person is saying that he has found a holy grail, so to speak. This person making this claim would have to be (if not already) on his way to becoming the richest man in the world.

Why wouldn't he? Since he has a positive expectancy on randomly entered trades at any time whatsoever then he of course will be entering more and more trades as his p&l grows bigger and bigger. I know I would be entering trades as fast as I can handle them and just raking in the cash. A positive expectancy on any randomly entered trade at any time means you can do this every day, hour, minute, 15 seconds, or whatever and make money doing so. This means infinite money - on the tiniest of time-frames, around the clock.

I'd love to meet this person and shake his filthy rich hands.

 

[abishiai]

Quote from size:

...you can do this every day, hour, minute, 15 seconds, or whatever and make money doing so. This means infinite money - on the tiniest of time-frames, around the clock...

Yum... Sounds good.

Where do I send my $2,500 to attend a seminar that will teach me how to do this?

Cheer,

kp

 

[OddTrader]

Quote from abishiai:



Yum... Sounds good.

Where do I send my $2,500 to attend a seminar that will teach me how to do this?

Cheer,

kp

Sorry, too late. Already fully booked.

 

[alfonso]

Quote from size:

What is someone really claiming when he or she says that they can make purely random entries into markets and have a positive expectancy on those trades, based on the timing used to exit those trades? It would stand to reason that this person is saying that he has found a holy grail, so to speak. This person making this claim would have to be (if not already) on his way to becoming the richest man in the world.

Why wouldn't he? Since he has a positive expectancy on randomly entered trades at any time whatsoever then he of course will be entering more and more trades as his p&l grows bigger and bigger. I know I would be entering trades as fast as I can handle them and just raking in the cash. A positive expectancy on any randomly entered trade at any time means you can do this every day, hour, minute, 15 seconds, or whatever and make money doing so. This means infinite money - on the tiniest of time-frames, around the clock.

It doesn't necessarily have to be that way. Damir didn't say he could make money doing anything, just that he could enter the market randomly. So, depending on what sort of money management methodology he's using, it might not be the case that he can just enter as many trades as he can cram into the trading day.

Bigbeech, I'm just as suspicious as the next man, but if he's willing to publicly post what he's doing, then let's just let him do it, rather than reprimanding him. If there's any validity to his claims it will be there for all to see. And contrary to what nitro says, there is (a lot of) value in demonstrating the potential of an approach to the markets without using "REAL money" to show it.

 

[nononsense]

Quote from alfonso:



It doesn't necessarily have to be that way. Damir didn't say he could make money doing anything, just that he could enter the market randomly. So, depending on what sort of money management methodology he's using, it might not be the case that he can just enter as many trades as he can cram into the trading day.

This is probably a very wise attitude. Wether you can have a positive expectation or not using random entry depends on your strategy. Damir is not telling us about his strategy. This is very understandable, not many people post much on the nitty gritty of their strategy.

The term "high probability entry" is "fuzzy" or meaningless for several reasons: (1) what is the result event or criterion? not going broke, return, drawdown or a combination of these? (2) what is the strategy used, i.e. the adaptive control (e.g. stop replacement, immediate exit, etc.) exerted over the interval that the position is active? Nobody sais much about this when he trumpets "high probability entry", so we don't know what is meant by this.

As several posters have pointed out, a "working" random entry strategy can be considered as a jumping off point for further development. Quality of entry can now be evaluated under application of this "already known random entry strategy" and talk about "high probability entry" would have some basis. This leads to what one may call the "decoupling" of the design of the "entry decision system" and the design of the "active control strategy". In general such decoupling may be more practical but may yield a "suboptimal" solution only. In some cases people actually have proven that such decoupling leads nevertheless to an optimal solution. You need to satisfy a lot of rigorous conditions before you are proving a thing like this though - hard to see how you would ever do this in a market environment.

So Damir, keep working on your system, it may have merit.

nononsense

 

[Gordon Gekko]

Quote from J~Commisso:

Damir,

Instead of swinging your dick around in this thread -- why don't you simply try to explain to others how you managed to close (55 out of 57) profitable trades in August using a random entry generator???

PEACE and good-trading,
Commisso

i don't agree with commisso much, but i certainly agree with him on this.

 

[dbphoenix]

Quote from nononsense:



This is probably a very wise attitude. Wether you can have a positive expectation or not using random entry depends on your strategy. Damir is not telling us about his strategy. This is very understandable, not many people post much on the nitty gritty of their strategy.

The term "high probability entry" is "fuzzy" or meaningless for several reasons: (1) what is the result event or criterion? not going broke, return, drawdown or a combination of these? (2) what is the strategy used, i.e. the adaptive control (e.g. stop replacement, immediate exit, etc.) exerted over the interval that the position is active? Nobody sais much about this when he trumpets "high probability entry", so we don't know what is meant by this.

If the definitions of "high probability entry" are fuzzy to you, they are certainly no fuzzier than damir's definitions of "random entry", particularly since his entries aren't random.

As I've said repeatedly, "high probability entry" simply means that, over n trades, whatever system one is employing, or testing, will yield a profit, regardless of the drawdowns, etc. If, for example, the drawdowns of a system are beyond the tolerance of the trader, then he looks for another system which will also yield a profit over n trades which also has more acceptable drawdowns. Given the hundreds, if not thousands, of systems out there, this is not difficult. There is no "one" system.

In any case, any argument about random entry is pointless if the advocate(s) of random entry aren't making random entries. If you guys need to fill up the day with something, I suppose this is as good as anything. But you won't be reaching any conclusions this way.

 

[Speculator888]

I personally have never been a big proponent of "high probability entries", as almost all of my most profitable strategies have yielded a lower than 50% hit-rate. For me, it has always been what I did after a play was initiated that was most responsible for my monetary success. Having said that, I am still very skeptical of anyone who claims great success with a totally random entry. As such, I am hardly annoyed by Damir as it seems most others are by his claims, but extremely interested to see if this guy can prove my skepticism 'misguided'...

Good luck with your 'lotto-girl' experiment, perhaps you can teach me a thing or two Damir...

PEACE and good-speculating...

This thread, and more so the responses, remind me of a line from one of my favorite Vonnegut novels -- Cat's Cradle;
"Beware of the man who works hard to learn something, learns it, and finds himself no wiser than before," Bokonon tells us. "He is full of murderous resentment of people who are ignorant without having come by their ignorance the hard way." ~Kurt Vonnegut~