Yes. Look at the rules. The system is 50-50 minus commissions by definition. Any particular daily outcome could have gone the other way if the coin came out differently. It's a self-evident truth. You will have runs of "good luck" and "bad luck" with an average negative equity slope equal to commissions and slippage.
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Reality based coin-tosser method that beats 95% of traders in the world.
- Thread starter Whisky
- Start date
Yes. Look at the rules. The system is 50-50 minus commissions by definition. Any particular daily outcome could have gone the other way if the coin came out differently. It's a self-evident truth. You will have runs of "good luck" and "bad luck" with an average negative equity slope equal to commissions and slippage.
Quote from Whisky:
Would you care to ellaborate or suggest some simple objective rules or process?
Sure. Do a normal coin toss for the entry. Maybe weight it 52/48 or whatever, as the earlier poster suggested.
Then make a multisided coin to cover the combinations of:
- stop distance
- profit target
- trade duration in time
You can do this to any level of granularity you like, eg.
stop distance: tight, moderate, wide
profit target: tight, moderate, wide
trade duration: 1h, 2h, 4h, 8h (or days or whatever)
Can have another coin that chooses between absolute and volatility-based values for everything (ie, 5 point stop versus 20% of average of last 5 days daily volatility).
Pick the winner. Repeat the process, randomizing around the promising candidate as a baseline. If that looks robust - ie, not one outlier that looks great, results all more or less bundled together - then maybe we've got something.
Quote from Random.Capital:
Sure. Do a normal coin toss for the entry. Maybe weight it 52/48 or whatever, as the earlier poster suggested.
Then make a multisided coin to cover the combinations of:
- stop distance
- profit target
- trade duration in time
You can do this to any level of granularity you like, eg.
stop distance: tight, moderate, wide
profit target: tight, moderate, wide
trade duration: 1h, 2h, 4h, 8h (or days or whatever)
Can have another coin that chooses between absolute and volatility-based values for everything (ie, 5 point stop versus 20% of average of last 5 days daily volatility).
Pick the winner. Repeat the process, randomizing around the promising candidate as a baseline. If that looks robust - ie, not one outlier that looks great, results all more or less bundled together - then maybe we've got something.
Any volunteers to perform the above promising test of the exits and post the results?.
I believe that the coin toss entry can be improved beyond the 52-48 suggested, by looking at what OTHERS do in the market to themselves. I also believe that the exits can be improved based on what OTHERS do in the market to themselves.
Please discuss. I'm taking off till Monday. I think we are on to a good start from which many "potential winners" will be spawn.
Quote from Whisky:
Could you rewrite the above, so that an 8 year old would understand it?. If you can't, then you will have to prove to yourself and others that your suggestions will bring an extra tic or more average per day over the original rules.
I would suggest that it is a good idea to manage a thread on greater than an 8 year old level. I'll do several proofs instead.
Proofs:
1. Having an increase in value each day (or on the other fractal, Night) fractal is not going to happen over the original or any other rules. This suggested new criteria is on a myth level. Rescinding this required tick increase per day would be a good rational thought. The equity curve will have ups and downs as units of time greater than the rate of trading actions ensues. Your intial commentary on "holding" through consecutive identical coin flips was a trivial logic addition. I suppresed this triviality as a de facto obligation in reasoning. It is very important in all trading models to eliminate induction; it is even more important to introduce scientific methods. Scientific methods do not allow the use of induction and, further, they require the use of deduction AND the null hypothisis type hypotheses which are totally inclusive as a set.
2. crash and burn has pointed out the kurtosis of the distribution for 24 hour periods. I took advantage of this by increasing the emphasis of the greater kurtosis of the sub parts of a 24 hour day and which are well documented. Thus more of the market's offer can be captured in profits.
3. Consider the principles used by owners of operations for gambling. One of the things they do is increase the frequency of the gambling turns. I doubled the performance of your original approach and I divided the 24 hours into two biased subsets. RTH is biased short and non RTH is biased long. Applying a 50/50 to each and using the capital available affects the compound interest formula, especially the exponent, the most powerful variable contributor.
4. Others have introduced changing the exit/entry times to gain advantages. My improvement fits in that genre as well (prima facia). thus I have introduced the gap aspect of trading where you had eliminated it. The gap accumulates with bias during my night fractal. then during the day I recapture by the advantage of RTM inherent strategies of RTH trading. Check the statistical kurtosis of gap refilling as a function of daily ATR.
In summary, there is a way of using coin flipping to gain advantage with respect to every market principle. The key is to link the coin flipping to market timing. What makes it all work out is not obvious. But it is probably true that an eight year old has a better chance of fathoming how trggering coin flipping by market's non price signals increases the strategy's advantages.
Morphing an arbitray system into a winning approach is done by iterative refinement. The focus of iterative refinement is on deducing how the market works rather than inductively piling up data and building a Black Swan machine. My use of kurtosis was just done as a way to talk in terms of the dominant use of induction here. Getting biases and gaps into the mix, I felt was a nifty first cut to start pulling down the chips and do it at double the compounding rate intially envisioned.
Your suggestion of what intellectual level to deal at in ET has been in vogue for quite a while. Pressuring people to keep this level is kind of pithy zen as jem would say. The Traderzone level to be sure.
Quote from jack hershey:
I would suggest that it is a good idea to manage a thread on greater than an 8 year old level. I'll do several proofs instead.
Proofs:
1. Having an increase in value each day (or on the other fractal, Night) fractal is not going to happen over the original or any other rules. This suggested new criteria is on a myth level. Rescinding this required tick increase per day would be a good rational thought. The equity curve will have ups and downs as units of time greater than the rate of trading actions ensues. Your intial commentary on "holding" through consecutive identical coin flips was a trivial logic addition. I suppresed this triviality as a de facto obligation in reasoning. It is very important in all trading models to eliminate induction; it is even more important to introduce scientific methods. Scientific methods do not allow the use of induction and, further, they require the use of deduction AND the null hypothisis type hypotheses which are totally inclusive as a set.
I said 1 tic per day better than the original rules ON AVERAGE.
Quote from jack hershey:
2. crash and burn has pointed out the kurtosis of the distribution for 24 hour periods. I took advantage of this by increasing the emphasis of the greater kurtosis of the sub parts of a 24 hour day and which are well documented. Thus more of the market's offer can be captured in profits.
Skewness, not kurtosis.
Quote from jack hershey:
3. Consider the principles used by owners of operations for gambling. One of the things they do is increase the frequency of the gambling turns. I doubled the performance of your original approach and I divided the 24 hours into two biased subsets. RTH is biased short and non RTH is biased long. Applying a 50/50 to each and using the capital available affects the compound interest formula, especially the exponent, the most powerful variable contributor.
Compounding only applies if you can gain an edge. You have merely doubled the rate of coin tossing for a losing method. In other words increased the losing rate.
Quote from jack hershey:
4. Others have introduced changing the exit/entry times to gain advantages. My improvement fits in that genre as well (prima facia). thus I have introduced the gap aspect of trading where you had eliminated it. The gap accumulates with bias during my night fractal. then during the day I recapture by the advantage of RTM inherent strategies of RTH trading. Check the statistical kurtosis of gap refilling as a function of daily ATR.
So you have an edge here?. Care to ellaborate?.
Quote from jack hershey:
In summary, there is a way of using coin flipping to gain advantage with respect to every market principle. The key is to link the coin flipping to market timing. What makes it all work out is not obvious. But it is probably true that an eight year old has a better chance of fathoming how trggering coin flipping by market's non price signals increases the strategy's advantages.
Morphing an arbitray system into a winning approach is done by iterative refinement. The focus of iterative refinement is on deducing how the market works rather than inductively piling up data and building a Black Swan machine. My use of kurtosis was just done as a way to talk in terms of the dominant use of induction here. Getting biases and gaps into the mix, I felt was a nifty first cut to start pulling down the chips and do it at double the compounding rate intially envisioned.
Your suggestion of what intellectual level to deal at in ET has been in vogue for quite a while. Pressuring people to keep this level is kind of pithy zen as jem would say. The Traderzone level to be sure.
If you have something objective to contribute, fire away. Talking in big words and convoluted thinking only adds to the confusion.
5 for a hundred, a hundred at 6. What do you want to do?. Nothing?. Fuck off then. [From an old floor trader].
You also keep mixing up skewness with kurtosis, which leads me to believe that you are, in reality, full of shit.
No offense, but I have no interest in deciphering your language. Simplify your statements or take a hike.
Here's the ultimate coin tossing scenario.
When the coin is tossed is told by a market phenomena.
This is the 8 year old level of trading, too.
It is based on Einstein's relativity. Since its the weekend, this is a good time to create the smell of wood burning as older than 8 year olds smolder away.
Coins are very advantageous for an eight year old mentality because by leeting the 8 year old do the flipping and trading as a consequence they get to see their allowance really pile up fast. We can let a point on the ES be 50 cents and use a corresponding margin requirement for compounding.
For attention span purposes use a 5 minute bar on ES. Use PRV and flip 12 seconds into a bar when a flip is called for.
The result is 2 wins every 3 flips. Between 20 and 40 flips a RTH day will occur; most likely > 20. We get to thank the OP for introducing such a creative thread for making money using 8 year olds with coins.
Here are the 8 year old rules.
1. Look at a five minute chart 24 hours a day. Look for only one thing: volume troughs. A trough is a volume minimum. Use PRV 12 seconds into a new bar to determine a volume trough. PRV means pro rata volume based on actual volume and a 5 minute volume bar. By knowing at the beginning of a bar, the child has a trough makes it more fun since increasing volume is fun to trade as price makes more money during these times. The child holds through all peaks.
2. Flip a coin for long or short on each volume trough that occurs on the 5 minute chart. (50/50 prob).
3. Enter according to the flip.
4. Exit just before the next flip.
5. Repeat 2, 3, 4 as required.
6. Add a contract every 30 points of cummulative profit (this is the maintenance margin required at most IB's). Keep a log for getting paid in allowance terms. If you are an 8 year old do NOT let your parents trade your profits using their methods.
Footnote: for those who do channels (pt1, pt2, pt3, FTT stuff) this is simply BO and pt 2 coin flipping. What is neat is that the BO then pt 2 is a biased hold. So is the Pt2 to BO hold. There are two flips per pattern and there are three patterns before the flipping scenario repeats in a slower fractal construct; the slower fractal construct is what creates the overall bias of the flipping. In a sequence of any six flips (50/50), four will be winners (net) and two will be losers (because of market price action). All flipping happens when price is going into a dominant traverse. No flipping happens when a non dominant traverse is being held through. The rules assure this. Most trades will be within BBT's and a tape of 3 BBT's is the term of the flipping overall cycle. BBT bias is what makes this a winner. Two of one kind of BBT and only one of the other kind.
8 year olds will love this; they can pay for college using 50 cent points.
For those older than 8 years old. Do a coin flip BUT use a crayola test (ZigZag indicator) to give you some of the timing of the troughs. Finding out that volume is more frequent than a price zigzag is important in learning.
When the coin is tossed is told by a market phenomena.
This is the 8 year old level of trading, too.
It is based on Einstein's relativity. Since its the weekend, this is a good time to create the smell of wood burning as older than 8 year olds smolder away.
Coins are very advantageous for an eight year old mentality because by leeting the 8 year old do the flipping and trading as a consequence they get to see their allowance really pile up fast. We can let a point on the ES be 50 cents and use a corresponding margin requirement for compounding.
For attention span purposes use a 5 minute bar on ES. Use PRV and flip 12 seconds into a bar when a flip is called for.
The result is 2 wins every 3 flips. Between 20 and 40 flips a RTH day will occur; most likely > 20. We get to thank the OP for introducing such a creative thread for making money using 8 year olds with coins.
Here are the 8 year old rules.
1. Look at a five minute chart 24 hours a day. Look for only one thing: volume troughs. A trough is a volume minimum. Use PRV 12 seconds into a new bar to determine a volume trough. PRV means pro rata volume based on actual volume and a 5 minute volume bar. By knowing at the beginning of a bar, the child has a trough makes it more fun since increasing volume is fun to trade as price makes more money during these times. The child holds through all peaks.
2. Flip a coin for long or short on each volume trough that occurs on the 5 minute chart. (50/50 prob).
3. Enter according to the flip.
4. Exit just before the next flip.
5. Repeat 2, 3, 4 as required.
6. Add a contract every 30 points of cummulative profit (this is the maintenance margin required at most IB's). Keep a log for getting paid in allowance terms. If you are an 8 year old do NOT let your parents trade your profits using their methods.
Footnote: for those who do channels (pt1, pt2, pt3, FTT stuff) this is simply BO and pt 2 coin flipping. What is neat is that the BO then pt 2 is a biased hold. So is the Pt2 to BO hold. There are two flips per pattern and there are three patterns before the flipping scenario repeats in a slower fractal construct; the slower fractal construct is what creates the overall bias of the flipping. In a sequence of any six flips (50/50), four will be winners (net) and two will be losers (because of market price action). All flipping happens when price is going into a dominant traverse. No flipping happens when a non dominant traverse is being held through. The rules assure this. Most trades will be within BBT's and a tape of 3 BBT's is the term of the flipping overall cycle. BBT bias is what makes this a winner. Two of one kind of BBT and only one of the other kind.
8 year olds will love this; they can pay for college using 50 cent points.
For those older than 8 years old. Do a coin flip BUT use a crayola test (ZigZag indicator) to give you some of the timing of the troughs. Finding out that volume is more frequent than a price zigzag is important in learning.
Quote from Random.Capital:
What you just did there is induction, violating your own first rule.
I also admitted it and I gave my reasoning. The next game for an 8 year old (see above, actually) begins the process of differentiating skewedness and kurtosis all from a deductive viewpoint.
Quote from Whisky:
I said 1 tic per day better than the original rules ON AVERAGE.
Skewness, not kurtosis.
Compounding only applies if you can gain an edge. You have merely doubled the rate of coin tossing for a losing method. In other words increased the losing rate.
So you have an edge here?. Care to ellaborate?.
If you have something objective to contribute, fire away. Talking in big words and convoluted thinking only adds to the confusion.
5 for a hundred, a hundred at 6. What do you want to do?. Nothing?. Fuck off then. [From an old floor trader].
You also keep mixing up skewness with kurtosis, which leads me to believe that you are, in reality, full of shit.
No offense, but I have no interest in deciphering your language. Simplify your statements or take a hike.
Thank you for your comments. I appreciate them.
The two sides of things always created an intense interest for me. The coin part is not too significant but the binary logic is where it is really at. So stats do not appeal to me but logic does. Now that programming and PC have come into the picture, the playing field has gotten to be terrific.
I guess I was introducing too many things in a short time. Sorry. Suffice to say the RTH's and non RTH's have no common characterisitcs overlap in their evaluation. Non RTH's is what creates gaps relative to just RTH price segments which are adjacent.
It is surprizing how this phenomena is handled with respect to logic based trading systems.
In the 8 year old flipper game, I introduced another phenomena. The three price move pattern (I also broke it into two parts to achieve a further bias). This pattern applies to news as well, so there is a news trading advantage too.
I will bow out of this thread as you suggest, since I am full of shit.
Did anybody else have Jack Hershey spontaneously come off of their ignore lists, or am I just having a senior moment?