SEYKOTA's method?

On of Seykota edges was he was able to computer test trend following systems at a time when nobody had access to this power except maybe a few firms. To us, moving averages and trend following systems seem remedial, but at the time he tested this stuff it was unique.

Now my pda can do the work of that old IBM punch card computer that Ed used to develop his systems many years ago. To think that these systems would work today, when there are billions of copycats out there, would be kind of like trading on hope. I am sure you can use it to make money, but the kind that Ed made using those MAs and simple trend following systems, those days I believe are gone.

You have to adapt and constantly think ahead. The more people are aware of and using a certain type of system, the less effective it is. To be the real money maker in most trades, you need to be making that trade at a place where there are very few other traders. The is where the most opportunity is. Tell me...if you think that you and 1 million other traders are trading the system...where is your edge?

What you can learn from Ed that can apply to any type of trading is what he quote in Market Wizards as aligning your beliefs and behaviors with your goals. He is big on psychology because its the universal learnable trait that determines trading success. I bet he would say that trading is 90% psychology and all thats related to it, and 10% his trend following system. Each time can use a different system, but the successful trading mindset may transcend different periods of trading time.

I am of the belief that a good trader can profit even with a bad system, while a bad trader will kill profit with any system.
 
Quote from billpritjr:

well, that is great but I am yet to read reasons, articulated facts, as to WHY, HOW, etc.

"MA's have intrinsic problems that would drive any EE away from them. The market is periodic and EE's have one heck of a lot of knowledge about that stuff especially as it relates to communications and analysis and bandwidth"

1. what are the problems?

2. One heck of a lot of knowledge? Uh, please articulate your reasons, facts. I am not sure what a heck of a lot of knowledge is, but with extensive creds, I am quite confident you can further articulate this beyond "heck of a lot"

3. Communications, analysis, bandwith? "Especially how it relates to....." (!!???!!)

are we talking about high speed internet or trend following

I am interested in your "how it relates to" explanation
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Moving averages suffer from lag. That's what makes them a good trend indicator, as the lag tends to get you away from price when the market is trending. An oscillator will get overbought in a strong trend and start reversing, giving false signals. A well-chosen MA will not.

But that comes at a price. The lag makes MA systems vulnerable to getting whipsawed in choppy markets. Also, you will not get in at the exact point of trend change. You will always be late.

Jack's comments about the market being periodic probably refer to the cylical nature of prices. Communications engineers learn how to extract cyclical components from noisy data. One way to do it using a fourier transform, which I believe is the basis of the Ehler's MESA system. A FT takes a time series, like stock market prices, and extracts the dominant cycles from it. It might take daily S&P data and determine the dominant cycle is 3 days and minor cycles exist at 5, 9 and 20 days. Obviously, such information can be very useful for traders.

The fly in that ointment however is that engineers are used to working with physical systems that display static cycles. An airplane wing is not going to have a different resonant frequency in December than in June. Markets do however. So you have to be constantly reoptimizing your parameters or use some sort of adaptive system that relies on past data to change parameters. And guess what that introduces? Our old nemesis Mr. Lag.

Now if you are a communications engineer, you determine the frequency of interference or noise on your signal path. Then you can hopefully design a network filter to block that noise nad pass your data. In effect you adjust the bandwidth of the carrier for your data. It's kind of like putting screening on your porch. Its bandwidth is wide enough to let summer breezes through but not wide enough for mosquitoes.
 
Unfortunately Jack Hershey = Bubba7 = Roger Hershey have turned a thread about Seykota's method into a discussion about thier own theoritical physics gobblikook opinions. All that theoritical physics gobblikook represents the antithesis of what Seykota's all about. Go to the source; on his website he clearly indicates that he uses a mechanical trend following system using MAs as the only indicators. And Seykota is a theorithical physist (read his theory on Radial Momentum) and he still rejects the theoritical physics gobblikook that Jack Hershey = Bubba7 = Roger Hershey talk about. If you use it and can profit off of it, then congratulations. But don't falsely associate it with someone who doesn't.
 
Quote from -EntropyTrader:

Unfortunately Jack Hershey = Bubba7 = Roger Hershey have turned a thread about Seykota's method into a discussion about thier own theoritical physics gobblikook opinions. All that theoritical physics gobblikook represents the antithesis of what Seykota's all about. Go to the source; on his website he clearly indicates that he uses a mechanical trend following system using MAs as the only indicators. And Seykota is a theorithical physist (read his theory on Radial Momentum) and he still rejects the theoritical physics gobblikook that Jack Hershey = Bubba7 = Roger Hershey talk about. If you use it and can profit off of it, then congratulations. But don't falsely associate it with someone who doesn't.
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Roger Hershey is a name associated with someone unknown to me.

Thanks for your input to help the thread originator.
 
Quote from bubba7:



Sorry I mislead you. I'm an EE (1955) also and so are Soros and Ed. After EE I studied Theoretical Physics and I halve a MS in Technical Writing, minor EE. I did not attend MIT; I went to RPI.

I am just an amateur investor since 1957.

It is true that I have lectured at MIT, in several departments; a while back my wife was the Ida Green Scholar one year.

It is common for EE's to look at stuff from a viewpoint like Ed has.

You will find that Ed does stuff with people at the level they are at. The MA stuff is probably understandable to BA's etc.

MA's have intrinsic problems that would drive any EE away from them. The market is periodic and EE's have one heck of a lot of knowledge about that stuff especially as it relates to communications and analysis and bandwidth.

Where you are is neat for you. 18 pages of ET count a lot for you; I will watch your posts to learn what I can from you.
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Looked at 18 pages, plenty of which are filled with Jack Hershey's posts. My post was not meant to dis anybody, or go into crusade. Just hope it will save some time for people reading Jack's posts. I believe I will add some value to this thread by adding this observation:

The poster, bubba7, wrote: "I'm an EE (1955).... I am just an amateur investor since 1957"....... Funny enough, same was mentioned by Jack Hershey in earlier post on this thread. What a coincidence:)

I am really puzzled how people take his comments seriously, I mean, man posts under various aliases and responds to himself....
 
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