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SEYKOTA's method?
- Thread starter billpritjr
- Start date
Quote from PoundTheRock:
HOV, ISIL, KMX: all nice calls. Keep 'em coming Jack. Could you elaborate a bit more on your application of fluid dynamics to the market? Keep in mind it's been 24 years since sweating out the Venturi Meter equations on the physics final.
PTR
I think the volume is the major clue. I like to think of volatility as a measure of how the type of flow goes from stage to stage.
As terrible as it may seem in phyics classes my fisrt assignment was to have teams design flow meters for the local stream (river) through thecampus. This is a calculus thing for sure and always gives several orders of magnitude hen you travrse the total x sections.
If you see stages flow as the rough out of possibilities, then you focus on the ones that make money most and look at the ones that just precede and follow making money.
Here is an awesome thing. Whatever fluid system you have running and are studying, you have to make changes in it over time. There is no step function available.
The market rolls along. I do look at it's operating point all the time.
As I slip through the range of fractals (all seven) I see the situation. Damned if I do not look at the formations and trends in each as the way to measure them. What is neat about it is that the variety is something else.
Soooo. I have made a shortcut way to document the operating point. A matrix of times (fractal durations) fast on the top rows and slow on the bottom. The columns are classes of market activities. I have filled in the cells with formations and other visual chart indications.
There are pathways of cells. The fact is that I know the pathways by heart from recording stops and sequences for years and years. Because I have a visual memory and do not miss Q's on tests, I am in a neat place in terms of my intellect and psychologicall bearing.
In th stockmarket and futures there is an equivalent expression to "All roads lead to Rome". It is: "all paths lead to BO's".
I guess you can see that from the list of stocks I made above.
So th punch line is that as you watch the P and V formations, you know that they migrate from cell to cell and a BO happens. After non failure the money velocity picks up and you enter late and leave early to conserve the time for rotating capital.
Fluid dynamics tells you all of this.
It says no random jumping around. It says things go from one state to another and you can see it happening by how the formations (water surface, flow from reynold's # to another to turbulent flow) change over time. One formation sets up another like clock work.
Some people can do this mentally. I remember at IBM, I was one of five people on 24/7 demand to fix systems failures. I had no working hours. I just was given problems to do.
Since 1957 or the 700 series computers I have not noticed the market working any diffrently.
I know my answer is sort of ad lib. I didn't want to get too sciency. we need to get the price volume relationship down in a bout five different ways so that no one still has a mental log jam.
Quote from funky:
don't take this the wrong way, but you aren't making logical sense. more trades don't equal less risk/reward. it is more risk, but more reward. of course its more work, putting on more trades will always be more work, and with that comes either, as you so graciously put it, more gains or more losses.
its just a faster game. if you're good, its a faster way to grow $$$, if you're bad, well......
just as seykota says on his site, the market tends to work in fractals, each timeframe giving the same setups, just in different magnitudes.
Attached is a yellow brick road for the ES mini.
You can change it to anything and do the efficiency other ways by tweeking the equations.
How fast people grow their money depends upon them.
Your criticisms are off the mark in many ways as you will learn when you make some money somehow.
I trade on two fractals the 30 min for equities and the 5 min for commodities futures indexes. My money velocity ratio is 1 to 50, respctively.
Attachments
Jack, from your writing I get that "next faster fractal" is another name for the "next timeframe down", but then again, my hunch is that if they were the same, they may share the same term for a name, which they don't. What defines a faster fractal apart from a trader's next timeframe down? And if you're looking at just *one* fractal, you're keying in on the price velocity/movement in that one fractal and willing to bank a whole trade on it. What is it about any one fractal's price movement over another's that inspires that confidence, or is there something more to that?
Speaking of sharing the same names, it sounds as if what you've termed, "swapping", is the same as what's been termed elsewhere as "switching" (getting out of less profitable/losing positions into newer trades as they come along). Is there a appreciable difference? Thanks.
Speaking of sharing the same names, it sounds as if what you've termed, "swapping", is the same as what's been termed elsewhere as "switching" (getting out of less profitable/losing positions into newer trades as they come along). Is there a appreciable difference? Thanks.
Quote from vanilla2:
wow, thanks Jack! you shared tons of great info. your elaboration really clarifies a lot for me. i'm going to take some time and think about this and get back to you.
thanks
awesome post
Wow, I am really happy for you.
I guess, I finally understood what Jack means by fractals, loosely, as he says. So let me explain this to the rest of the masses.
The basic feature of the fractal is its self-similarity, that is the same structure appears in different scales. There is nothing really astounding about it as we traders know very well that similar chart patterns occur in different timeframes. There is also something more to it, namely that you can use your indicators in a fractal, that is self-similar manner, by applying it first in, say, 1 min timeframe, then in, again an example, 3 min timeframe, and so on, that is you keep repeating this process. Each time you do this you want to get a confirmation in a larger time scale. Say, you see that the stochastics cross in 1 min timeframe and that suggests that a move up is likely. You then go long, but you also make sure that the same stochastics cross in 3 min timeframe, and this is the way to confirm your 1 min signal. You keep repeating this process until you see that at some point in some timeframe the stochastics are to weak to favor mainting your long position.
Well, I do this very often, not necessarily using stochastics although I use this indicator too, except that it would never occur to me to mess this up with fractals even if there seems to be some good analogy here. Anyway, my point is you can tell the same story without using funny sounding scientific terms that more likely obscure than clarify the picture.
It's almost like the fractal characteristic isn't the simultaneous existence of a single pattern in multiple timeframes, like you picture when you think of the standard image of a fractal, but the sequence of transition between patterns in timeframes that happens in the same order no matter what the timeframe.
Put another way, the fractal isn't pattern A in timeframe 1, 2 and 3. The fractal is the transition from pattern A to B to D to Q back to A that always happens in that order in any timeframe.
I agree with you, I think everyone observes this whenever they look at multiple timeframes. The thing about Jack's explanation that's novel to me is that he's keeping written record of the transitions to identify more complex relationships. I bet in my multiple timeframe analysis, I'm vastly oversimplifying things.
Put another way, the fractal isn't pattern A in timeframe 1, 2 and 3. The fractal is the transition from pattern A to B to D to Q back to A that always happens in that order in any timeframe.
I agree with you, I think everyone observes this whenever they look at multiple timeframes. The thing about Jack's explanation that's novel to me is that he's keeping written record of the transitions to identify more complex relationships. I bet in my multiple timeframe analysis, I'm vastly oversimplifying things.
Quote from gms:
Jack, from your writing I get that "next faster fractal" is another name for the "next timeframe down", but then again, my hunch is that if they were the same, they may share the same term for a name, which they don't. What defines a faster fractal apart from a trader's next timeframe down? And if you're looking at just *one* fractal, you're keying in on the price velocity/movement in that one fractal and willing to bank a whole trade on it. What is it about any one fractal's price movement over another's that inspires that confidence, or is there something more to that?
*** My preferences are based on making money 30 min for equities and 5 min for futures indexes. I feel the with regard to equities that making money by compounding works for me by trading every 6 to 8 days and shooting for half the potential move. 10% is a nominal value of profit for me. I look at smaller time frame bar durations which I call "faster fractals" to anticipate the movement coming up for my trade.
for futures trading on ES for example, I recommend moving to a bar time duration that is a slow as possible to see the trend. what you will see on that fractal is a series of bars that tend to fill the channel they are in. I do name that a "tape" because it resembles a wide straight line that illustratesthe price movement. This I recommend because it lets people relax a little when they are in a trend. There is no hyper action to be "in reaction" to.
Speaking of sharing the same names, it sounds as if what you've termed, "swapping", is the same as what's been termed elsewhere as "switching" (getting out of less profitable/losing positions into newer trades as they come along). Is there a appreciable difference?
*** usually i use a third term. Then I m chatting about all the capital. I divide my capital into streams of money. the number is related to the duration of a holding period. If I am holding for six days I use 6 streams. If things are perfect, then I attend to one stream as day in a staggered way so I can keep focussed. Usually it is not perfect but bunched somewhat.
the termI use is "rotation" and it applies to my capital. I like to do the money velocity xover thing for many strong reasons. I regard the hold time as the most significant value. This is a trade off between profit per cycle and duration of hold. The duration is more powerful than the profit per cycle. I keep it short by entering late and exiting early when I am rotaing capital.
my choice of words is related to being clear as I can.
Wally just explained going from "fractal to fractal to make a decision for him self. what he does is backwards from my point of view and it is like having an attitude of staying in trades until it is almost to late to make any money.
I feel that all indicators used should be "leading" indicators. They all are leading indicators because of what signal you use from them and on what fractal the signal is generated upon.
to go to slowerand slower fractals one after another is worse than using lagging indicator signals. Ho hum Wally.
Thanks.
Anyone have a theory as to why Seykota tends to favor futures markets over stocks?
more leverage maybe?
more "choices" of markets, as in Lean Hogs, Coffee, Oil, etc?
rumors are that Ed actually is quite involved in stocks
more "choices" of markets, as in Lean Hogs, Coffee, Oil, etc?
rumors are that Ed actually is quite involved in stocks