Reality based coin-tosser method that beats 95% of traders in the world.

[Whisky]

Quote from MandelbrotSet:

That's OK.

It means you were one of the smart ones.

In Jack's defense, he has contributed at least one self-evident truth: If one has a repeatable positive edge, one must strive to increase the frequency of trading as much as possible, as the exponential effect of compounding is the main contributor to ultimate gains. (The effect of compounding becomes overwhelmed by liquidity issues at some point, and one must devise longer timeframe/ slower positive edge methods if one wishes to persist in compounding, or simply extort money from weak governments).

Let's see if we can enroll ehorn as the official translator and objective practitioner of at least some of the rest of what Jack attempted to contribute.

If I can squeeze $ out of a coin-tossing bum, maybe I can squeeze something usable out of ehorn/Jack et al. I mean how worse than a 50-50 coin can it get?.

 

[Whisky]

Quote from whoisjohngalt:

Good thread... (TSGannGalt here... I have my other alias stopped by Baron... not banned... ... and I wouldn't like to bother Baron and Joe to get my alias back just to comment in this thread...)...

The most important premises, is whether there is an exposable binomial distribution. Of course, most financial cash products have a upside bias (inflation... 200 year bull market) but they're too small for "most" of us to expose. Considering that the OP wants to flip coins... let us consider that the binomial distribution to be random, and we're not going to take some obscure selection bias to skew the distribution.

That said... we need to take other characters of the market to expose without being affected by the market direction. (In the long run... as this is a systematic approach...)

1. Options. One way to look at this is to look at Options and how they're used to make money. Whether something goes/up or down doesn't matter, but you're looking at how they do so... Simply, you're transferring directional market risk to Greeks. (Of course, you would have to "flip a coin" to go Long/Short for them but that's a different story...)

2. Risk Management aka Position Sizing. A well known example would be Martingale Betting. Of course, you're dealing with a different type of capital (credit) risk along with volatility.

3. Statistical Approach. Simply, Crabel-type Breakout Trades like ORB or other using Stops. Risks are the change in the markets regarding frequency and returns.

...

OK... there's plenty of them...

As we all know... risk-free trade does not exist. From my understanding eliminating the binomial distribution of a direction from the equity curve is to risk (bet on) something else.

I wouldn't like to change the topic but... considering that ET is not a mathematical crowd (myself included) let's say you flip the coin at a support/resistance. Heads = bet on breakout. Tails = bet on fadeout. How would one setup a "system" to be profitable?

I think this example would be more of interest for ET newbs. than the examples given.

You will have to prove to yourself and others that your suggestions bring in at least 1 tic per day on average extra profit over the original method rules.

p.s.: Welcome to the thread. Let's try to keep the emphasis on the practical over the theoretical (except when the theoretical brings about an inmediate practical application). After all, you go to war with the gun you have (or steal it from the enemy), not with the ideal gun you'd like to eventually manufacture with a-still-undiscovered-secret new hyper-conductive metal alloy...). Are you by any chance one of the original turtles?

 

[wee man]

The markets have been in a strong uptrend these past several months so being long is the sensible play (at the moment).

Coin tossing exercise brings too much risk giving present market conditions and therefore is moot?

 

[Whisky]

Quote from jack hershey:


I will do this as soon as the OP eliminates coin flipping or random data sets from his initial scheme.

If you can beat my coin-tossing bum, I'd like to see it. After all that's one of the objectives of the thread.

Something that can be objectively forward-tested would be nice. Thanks.

I'm sure ehorn or another translator will appear.

By the way: Right now would be a good time to answer my Forbes 400 question/discrepancy between what you claim you are and what you truly are in reality.

 

[Whisky]

Quote from wee man:

The markets have been in a strong uptrend these past several months so being long is the sensible play (at the moment).

Coin tossing exercise brings too much risk giving present market conditions and therefore is moot?

If it helps, market reality consists of only 2 things:

1-Past trades that can be observed and analyzed.

2-Unfilled limit, stop and market orders to be executed or modified, that can also be analyzed.

It is what it is.

 

[Trader666]

Forward testing is a total waste of time UNLESS the concept backtests favorably first. A lot of people (especially noobs and gurus with unprofitable systems) claim backtesting doesn't work... when in fact backtesting only fails if you do it wrong and is orders of magnitude more efficient than forward testing. Take stocks for example... one can backtest a strategy on thousands of stocks over years of varying market conditions, to include OOS data, in minutes... while forward testing would take years to do a comparable evaluation. And why would the period you forward test on be any more representative of future market conditions than the data used for backtesting?

Quote from Whisky:

Something that can be objectively forward-tested would be nice. Thanks.

 

[Whisky]

Quote from Trader666:

Forward testing is a total waste of time UNLESS the concept backtests favorably first. A lot of people (especially noobs and gurus with unprofitable systems) claim backtesting doesn't work... when in fact backtesting only fails if you do it wrong and is orders of magnitude more efficient than forward testing. Take stocks for example... one can backtest a strategy on thousands of stocks over years of varying market conditions, to include OOS data, in minutes... while forward testing would take years to do a comparable evaluation. And why would the period you forward test on be any more representative of future market conditions than the data used for backtesting?

Fine. Do you have anything to backtest that will improve profitability of the original method and rules?. Knock yourself out.

 

[MandelbrotSet]

Quote from Whisky:

(i) In Jack's defense, he has contributed at least one self-evident truth: If one has a repeatable positive edge, one must strive to increase the frequency of trading as much as possible, as the exponential effect of compounding is the main contributor to ultimate gains.

(ii) (The effect of compounding becomes overwhelmed by liquidity issues at some point, and one must devise longer timeframe/ slower positive edge methods if one wishes to persist in compounding, or

(iii) simply extort money from weak governments).

I'll answer your points, and then leave you to your rather excellent thread, Whisky.

(i) Yes, while YOU DO need a repeatable positive edge to increase the probability of a successful trade beyond a 50/50 coin toss, jack hershey most definitely hasn't proven that he actually has one!

The thing is, you actually are on the right track with your concept of one trade per day, utiilizing a coin toss to place a trade (which automatically gives you a 50/50 chance of success) and then modifiying that basic 50/50 probability trade with more data input to increase the probability of a successful trade.

The fact that you are allowing that basic idea to be replaced with that in-and-out thing that jack proscribes to, is a real shame, but hey, it aint' my thread.

whoispaul aka TSGANNGALT (one of my favorite posters, btw), wee man and Trader666 have presented some interesting ideas about how to get there, since I consider these threads to be a jumping-off point, it is up to the indvidudal to acutally pursue them.

(ii) For all intents and purposes, given the size and volume of the U.S. financials (S&P500, NASDAQ and DOW) liquidity just isn't going to be a problem ... not for any of us, anyway.

(iii) LOL (we do it well, don't we?).

 

[jack hershey]

Quote from Whisky:

If you can beat my coin-tossing bum, I'd like to see it. After all that's one of the objectives of the thread.

I think the objectives of the thread are terrific. In ET, it is rare that any subnstantive discussion gets underway.

Something that can be objectively forward-tested would be nice. Thanks.

Again, I agree. Three elements are contained in your comment: posting things that can be tested. The 8 year old is a terrific example of an approach that can be tested. In this case, backtesting AND forward testing is easy and simple. The tester could be especially helpful if she were to post the back or forward stesting information so others could repeat the test under identical circumstances and then post how their results came out. This has never been done on ET and in the past it has been requested.

I'm sure ehorn or another translator will appear.

There are a lot of PM's going on behind the scenes. We are determining the level of the dialogue at this point. Putting up a three rule set that loops, exceeded the level. We see that. We understand that a filtering approach is not understandable either. Our first shot at filtering was to use a volume pattern.

When a group is being addressed that is induction oriented and induction is not being used, then there is a challenge in the space that the presenter has to deal with.

So far we have been successful in engendering that the frequency of compouinding is a cardinal concern of trading. Naturally, once this gt on the table successfully, it squirted right out the other side, rationally speaking, to dealing with liquidity issues in one market. I'll relieve that issue by saying what the 8 year old does is being done on at least 25 exchanges of the world presently.

By the way: Right now would be a good time to answer my Forbes 400 question/discrepancy between what you claim you are and what you truly are in reality.

My bio is well known and the fields I have contributed to are well known. some people are prone to keep capital and build it into a recognizable pile. See Forbes 400. Other people trade OPM and those they trade for make the Forbes 400. My assumption is that you and your mentor are in the Forbes 400 because he is skilled and he trades your capital so you qualify as well. I followed a third route. I teach people to fish and a proviso is that they help others in three ways: passforward; contributions of time; contributions of money. There is a public record on these things; cummulatively, it is significant. You can tab the benefits of PL 92-500, alchol as a substitute for lead in gasolene, and the EIS filing cummulative benefits. You can also tab the value of gifting copyrights and royalites of books (31) to 501's. I and those I continue to support have done pretty well. For example, use 400,000 copies in 4 months to one 501. I have been cited by the SEC for insider trding many many times. These repeated SEC mistakes have been corrected. There is NO ONE in the Forbes 400 who has been mistakenly cited for insider trading as many times as I have. Some may or will be correctly cited however. what distinguishes me from Forbes 400 people is that they are greedy and selfish and I am not. Right now I am teaching you have to make money and you have some first recourses that leave something to be desired.

So far in this thread, we see an 8 year old getting 50 cents a point (using her allowance in an arrangement with her daddy)on ES by flipping and compounding more than 20x a day. She flips on volumetroughs going into dominant price traverses and holds through the following non dominant price traverse and then exits as she flips going into the next dominant price move. She is handicapped by having to compete with an idea that is represented by a bum. The guy giving the bum the coin, so far doesn't get why she wins 2 out of 3 times. No back or forward testers have stepped up with results. you can bet there is some backtesting going on and it is not posted because it makes my case very simply and inductively.

Going forward, I am dropping the artificial coin flipping and replacing it with deductive reasoning all the way down the the OTR granularity.

Right now I am a little bit ahead of the crowd because no one have deduced how I got to a 2 out of 3 winning result. This is like giving Covel six key words of trendfollowing that he left out of his book's revisions.

My next post will be a free standing deductive proof of how the 2 out of 3 results and then I will segway into eliminating the 1 out of 3 losses. Two small rule changes will accomplish this:

1. No coin flipping

2. Reversing on peaks from the correct past measured sentiment to the new correct measured sentiment.

Since this is on an 8 year old level we will tab proifits in points which are 50 cents to the 8 year old per contract per point. Her daddy is going to go broke quite soon and she will have to trade for real in a real account on a limited POA since she is so young. She will trade OPM (hers) in her daddy's name.

 

[jack hershey]

Quote from Whisky:

Fine. Do you have anything to backtest that will improve profitability of the original method and rules?. Knock yourself out.

Right now he has two things to back test: PVT and SCT. I posted the Sunday batting order for for PVT streams of capital. The entries and exits are posted up to a week in advance. He also has been testing the SCT 8 year old trading on three rules (2, 3, and 4. and their loop). He probably has some results. the stuff he previously posted here and hundereds of times elsewhere has not been backed up with his methodology (it been requested) so that others can verify his workmanship. So far his results are not statisitcally significant by any accepted measure of significance. I know these comments are way above 8 year old.

Thank you for putting the ball in his court.

The Sharpe ratio on the PVT is over 60 as determined by Worden Bros. The rules are on a one pager. and the universe used (a standard universe was not available since WB cannot do EPS and RS of IBD) was the NAZ 100. Thus worden refuts Trader666 in a primafacia manner. I regard Trader666 as a great source of humor on ET. If a person reposts anything over 100 times, then he is being funny.