Physics Vs Prediction in Trading

[Frederick Foresight]

You are correct, it's hard to gauge beforehand, counterproductive even, what to expect from markets. Trading is very much reacting to everchanging present conditions.

However, you still need to correctly predict something in order to have the probabilities on your side (being on the right side of the market). Any random reaction is simply not going to cut it!

Driving a car is a good analogy to this. While driving, you not only have to react to minute changes of direction, velocity, road position, viewpoint from the car, driving conditions, etc. You also need to correctly predict what's happening around you: other cars, their intentions, signals, people walking in the road, bicycles, jaywalkers, animals, clutter in the road, accidents and catastrophic events. For many of these, the driver need to correctly gauge and anticipate the decisionmaking and capabilities of others, not just slavishly following traffic rules, but correctly predict and adjust according to unwritten physical and social laws, in order to avoid adverse effects and consequences.

It is not merely reacting to changing conditions, because it may be undefined what the correct reaction is, according to traffic laws and laws of the land, but drivers are still expected to make the correct decisions and are made accountable for unnecessary accidents and damages. Humans are still working on computer systems that can do this in realtime, but it requires alot of raw sensors and TPU power. There's no definite solvable answer to the equation in sight, as there are no definite requirements defining the final end goal.

I think we're getting a bit too much into the weeds here. So let's just agree that we define "prediction" differently. There are some people who think they can predict a move before it begins, and predict how far it will go (and when!). To me, that's full on prediction. I don't buy into it. I personally regard reacting to the market's activity as a distant cousin, at best, to any notions of "prediction." Beyond that we find ourselves in the realm of semantics.

 

[polaris]

The driving a car analogy is put forward incorrectly. When trading at the extreme right hand side of the chart...in a car, nothing can be seen forward of the front bumper. The only information you possess, is of the road behind you. Good look with those junctions.

 

[ET180]

FIRST

, there is actually no predictable pattern or stuff like that. Why?

Because price moves by simple trial and error method, nothing less and nothing more.

Pull up a chart of FISV and tell me that there has not been a predictable, buyable pattern there since 2011. The most simple pattern is a trend. I bet you also believe in efficient market theory and all that random walk crap.

 

[Handle123]

I trade based only on stats of the past, history repeats. Will it repeat when trade goes in? No clue. But works for me.

 

[Frederick Foresight]

The driving a car analogy is put forward incorrectly.

Only when I don't change the oil in my charts.

 

[polaris]

I trade based only on stats of the past, history repeats. Will it repeat when trade goes in? No clue. But works for me.

Precisely, nobody knows the future, but that doesn't mean to say we can't make a profit.

 

[ironchef]

Prediction is one of the biggest pitfalls in chart reading. If you want to know where prices will be on your dog's birthday, ask your dog not the chart.

Can you kindly explain and expand on your statement. I have been told over and over again here on ET that chart reading is not about prediction of the future moves?

Thanks.

 

[toc]

FIFTH... considering that stock trading is one of the most risky and nasty ruthless business... ROI anything less than 10% per month is not worth it. If someone tell you 2% is a decent one... just kick his ass.

10% a month? how many top guns out there on retail and institutional level gain 10% a month each single month.

Anyone giving 2% a month, year after year is in the top 1% of traders.

Also, price patterns "are" predictable and you have to be able to predict when a pattern will work and when it will fail.

This ability and inability is "one of the several tough factors" which make trading the most difficult business out there.

 

[lawrence-lugar]

Any business (including stock trading) demands two aspects : knowledge and creativity.

In conclusion: Trading is part art, part science, -- Which I've been saying since Day 1.

Most linear-minded, stubborn, dumb people...believe you either have 100% future prediction abilities, or nothing.
They fail to have a malleable, grey, dynamic mind.

Trading the market is like flirting, or dancing, with a woman...you have to see and sense her mood and signals,
You don't just simply flirt and flirt and dance and dance your Own way like a redundant jackhammer.

I know what I'm talking about, because I am what you would call...Elite,

I've been staring at the daily Dow and Spy charts daily for the past eight years. I would dare challenge anyone to trade/predict/manage it against me. -- even maybe mythical Japanese trader CIS, but he trades Japan's main index...so it wouldn't be an absolutely fair competition.

 

[MACD]

In conclusion: Trading is part art, part science, -- Which I've been saying since Day 1.

Most linear-minded, stubborn, dumb people...believe you either have 100% future prediction abilities, or nothing.
They fail to have a malleable, grey, dynamic mind.

Trading the market is like flirting, or dancing, with a woman...you have to see and sense her mood and signals,
You don't just simply flirt and flirt and dance and dance your Own way like a redundant jackhammer.

I know what I'm talking about, because I am what you would call...Elite,

I've been staring at the daily Dow and Spy charts daily for the past eight years. I would dare challenge anyone to trade/predict/manage it against me. -- even maybe mythical Japanese trader CIS, but he trades Japan's main index...so it wouldn't be an absolutely fair competition.

How please, Sir Luger, would I accept your challenge? (BTW, What's in it for me?")