Predicting randomness
- Thread starter oddiduro
- Start date
nicely said, bdixon.
one can lead a trader to the facts, but one can't make him think.
best wishes,
surfer
You're so right about "becoming a billionaire is a pointless endeavor". I realized this in 2000, and it left me empty for awhile.
indeed, the more it becomes consuming the more pointless it gets... unless of course you really enjoy being consumed by it. Some things are just self validating, not my cup of tea, but I can understand if someone has nothing else.
indeed, the more it becomes consuming the more pointless it gets... unless of course you really enjoy being consumed by it. Some things are just self validating, not my cup of tea, but I can understand if someone has nothing else.
Allow me to disagree. A position trader has no need to be as accurate to the tick as a daytrader. Therefore a position trader has just as high of a chance to make a profitable prediction as a daytrader.
edit: actually i am referring to something you didn't say, but still i'd like to make the clarification.
Ok, these are some honest questions and comments, please don't take them otherwise. I'm participating in the discussion mostly to clarify and focus my own strategies or change them if necessary.
You say you have to be "damn fast" to take advantage of it. Why?
I don't see it that way. I've been successful in life with what some people might see as "going with the flow", and specifically some people here might call my trading style sloppy. I disagree.
I'm a forest type of person, not to say I don't look at a few trees here and there, but I start with the big picture and work down.
How this fits into the discussion is I look for opportunities based on how I think other people are going to act.
Here are some specific examples:
I love someone like Jim Cramer because he gets people to act. I just don't go willy nilly into a stock he mentions, but I often will play a stock he recommends. I don't have to be quick to the trigger. If he pumps what I feel is a non-quality stock with little institutional support I'll let it peak and try to ride it back down until it settles again. But I'll play him other ways too.
Take a look at Microsoft. I've made an absolute killing on it this month with both leaps and regular old day trading 5 - 20 cent gains on the stock. I played the stock because I feel it has little downside and with XBox coming out people have historically driven the price up before a product release and toward the end of the year.
How about something as stupid as a Nike corporate jet that's having landing gear trouble? That was on tv for a couple hours before the landing, giving someone plently of time to prepare a short term trading strategy.
How about a long term example? More people are getting old. Old people need more medical care. Old people or the government on their behalf are going to pay for medical care rather than die. United Health Group as had a very nice run based on that premise.
Perhaps you are talking about something completely different, but my contention is the market is 100% affected by long term and short term human behavior. Some human behavior is very predictable, and some of it catches us as individuals off guard at times. Every single day there are way more tradable predictable human behaviors than anyone could ever have the time or capital to act on.
I've had success so far with using that premise as a base for my trading, although I'm not saying I don't incorporate other methodologies into my trading style. However, I would have a very hard time putting money into the market with the assumption that the next X ticks could go up or down and as long as I manage my money properly I'll be ok.
I'd appreciate your thoughts.
murdog
Quote from oddiduro:
So, what you are saying is that trading is about psychology.
So why don't Niederhoffer and Taleb subscribe to this view in your opinion?
Or do they?
Hey oddi
Trading about psychology? Well...I'm not too sure about that, I was basically just riffing about why it is that we don't learn from past mistakes (at least I think that was my point, but I smoked waaayyyy to much pot as a younger man to be absolutely sure).
I think you mean social psychology or sociology. This isn't the case for me personally, although some people might be able to devise trading approaches based on it. For me it's more about my own internal psychological processes, but as a technical trader I probably fall more into the Taleb/VN camp.
Hi Perseus
Yes, your point is well taken. It is clear even to me, with my superficial understanding of nonlinear dynamics, that the butterfly effect can operate even in systems in which the inputs might have 'patches of order' (yes, that's a techical term). I understand your argument that the markets don't have ordered inputs - rather, you think they can be irrational or random.
One thing this discussion is forcing me to consider is that my conception of the markets as more ordered than the weather might be influenced by my own programming and my world view in general. It is hard for me to describe my intuitive feelings about this. Perhaps the random walkers have equally heartfelt intuitive feelings when looking at a chart. I guess I can only say - I can look at a system like the weather and believe 100% that in the end, nonlinear dynamics shows us that we can't predict the effects of apparently miniscule changes in current condition. However, when it comes to the markets, I just see them as being rooted in human behaviour, which to me is a more predictable system.
Nor am I. I guess you'll get some arguments about the suggestion that shorter term predictions are more accurate than longer term ones.
I just keep thinking about BRK.A
Anyway, thanks for a considered response.
See, this is the thing. Is that what the random walkers do??
If so, I guess I have made my position clear.
But...just in case anyone doesn't feel like wading through the thread to find it... that is just bizarre. In that case, to actually pick a direction would be pointless. You would have to throw a dart at a dartboard to remain consistent, and that dartboard would have to be segmented with small enough 'squares' that you couldn't aim at 'long' or short', otherwise you might be in danger of subconsciously favouring one direction or the other. If someone tries to tell me that the human mind isn't a categorizing machine and that this couldn't happen....
Maybe some options traders who trade exclusively delta neutral strategies can chime in here.
That wacky stuff didn't do me any favors either
I thought your post was good for revealing that major tops and bottoms are at the height of irrationality, and greed and fear are almost the lone drivers of the market at these points. They always will be.
The average trader can't beat these, Gann wrote about in 1920 something, and it still applies today, almost 100 years later.