The Flip-A-Coin trading strategy and lessons learned from it

Short term trends do exist.

I have developed several systems that can ride trends
on very small scales. 1 minute candles.

But here is the problem.
They only work with zero commission and zero slippage :D

You see... the lower the timeframe you drop down to,
the smaller the edge and the larger the price of doing business
(commish and slippage). Also...more random noise, which
the edge must overcome. Very tough.

There is a break even point for any system.
MOST systems are not capable of dropping down into
the smaller timeframes and staying profitable.

This does NOT mean that the trends dont exist, it simply
means that you can't profit from them because of the
"cost of entry + random noise" VERSUS the "profit potential".


peace

axeman
 
>The fact that neutrino had a 50/50 chance of
>predicting the trend still remains.

This is an opinion of course, not a fact. There is quite a difference and stating it as fact does not make it so.

>Abogdan could have just as easily stopped posting
>and ignored the thread, back when the prediction
>was made you couldn't have known.

Your right, Neutrino could not have "known". He didn't pretend to "know". He didn't bet the farm on the trade (if he was smart). I'm guessing that he felt that Abogdan was not going to use a coin to determine how to handle the posting situation and that he had a reasonable edge with this trade. No different than the market. I never assume to know.

>I want to see neutrino make this kind of prediction
>on a newbie that posts a 'how do I trade' thread, I
>want him to predict whether the newbie will start
>posting regularly or whether after a few posts will leave
>the site. Your chances of success (without cheating) are 50/50.

And I'll bet you don't find him over on that thread trying to make money (analogous of course).

You make my point for me...there are times that one can make better predictions regarding human behavior than others and one must acknowledge the difference.

If you think I'm trying to prove something here, forget it...I am unwilling to spend the time nor to present the data to "prove" anything. Science is only good science if it can take a pounding and as a student of science I enjoy both ends of the hammer. It makes me a better trader.

JB
 
So you concede that longer term trends do exist then?
...and only wish to discuss shorter times frames less than 10 days?

Yes, as I said, extremely long trading cycles (2 or more years) do have a DC component. But the money you earn by participating in them get devaluated at almost the same rate. I have data to support both statements.


Also.... I wager that if you bought the index in 2000, you have
a better than 50% chance of making money in 50 years.
Even the great crash of the 30's only took 15 years to recover from.

Well, I have no doubts that you will have gains in 50 years. But is it what you want to do?
 
Yes, as I said, extremely long trading cycles (2 or more years) do have a DC component. But the money you earn by participating in them get devaluated at almost the same rate. I have data to support both statements.

Id like to see the data then. That would be interesting.
This is a very complicated issue. Many variables need to
be taken into account, including inflation, devaluation, and
the cost of goods.

What we are really interested in is "Effective buying power".

So If I were to invest $1000 in the stock market in 1905,
and then sold in 2004, would I be able to SUBSTANTIALLY
purchase far more goods in 2004 than in 1905?

I would wager yes. What you say?



"Well, I have no doubts that you will have gains in 50 years. But is it what you want to do? "

Better than NOT having gains in 50 years :D
But seriously.... the duration of my hold times are system dependent.
If a system only trades 10 times in 50 years with HUGE hold times,
but makes more money than a scalping system that trades 100
times a day, which would you choose?

Im interested in the final result, not how I get there.

peace

axeman
 
Quote from Turok:

>The fact that neutrino had a 50/50 chance of
>predicting the trend still remains.

This is an opinion of course, not a fact. There is quite a difference and stating it as fact does not make it so.

>Abogdan could have just as easily stopped posting
>and ignored the thread, back when the prediction
>was made you couldn't have known.

Your right, Neutrino could not have "known". He didn't pretend to "know". He didn't bet the farm on the trade (if he was smart). I'm guessing that he felt that Abogdan was not going to use a coin to determine how to handle the posting situation and that he had a reasonable edge with this trade. No different than the market. I never assume to know.

>I want to see neutrino make this kind of prediction
>on a newbie that posts a 'how do I trade' thread, I
>want him to predict whether the newbie will start
>posting regularly or whether after a few posts will leave
>the site. Your chances of success (without cheating) are 50/50.

And I'll bet you don't find him over on that thread trying to make money (analogous of course).

You make my point for me...there are times that one can make better predictions regarding human behavior than others and one must acknowledge the difference.

If you think I'm trying to prove something here, forget it...I am unwilling to spend the time nor to present the data to "prove" anything. Science is only good science if it can take a pounding and as a student of science I enjoy both ends of the hammer. It makes me a better trader.

JB
More...

I guess I see your point, while the newbie could be considered an IPO, Abogdan could be considered a stock that's been around for a little bit already and has shown bullish tendencies. Btw, I wasn't being serious with actually doing as I said, and no, you don't need to prove anything. This is a pretty good discussion
 
Turok wrote:

"You make my point for me...there are times that one can make better predictions regarding human behavior than others and one must be knowledgeable enough to know the difference."

NET wrote:

“Isn't this what happens when stock prices are advancing? Human behavior, driven by the greed emotion (this is not a negative by the way) will have many jumping on board up until the value does not seem so good. Resistance is established, and profit taking sets in.”

Bingo! This I support 100%. It was my point! Price chart patterns do not exist! (Like cloud patterns in the sky). Human behaviour patterns do! (Winds that form those cloud patterns). I call it the Underlying Sentiment Analysis. And what I have discovered in the past 5 years is that the Inertia of Sentiment is one of the most important measurable parameters that you could have. It took me all these years to find the way to measure it. This is the cause and the price movements are the results! This information does not exist in any of Price vs. Time charts. But it does exist. I'll share with you my findings if it interests you.
 
Quote from abogdan:
I'll share with you my findings if it interests you.
More...

Please share, I for one am very interested :) If one could measure inertia of sentiment as you call it, wouldn't one be able to find the blow off tops and bottoms in the market, where the inertia is too great and reversal is imminent?
 
Quote from abogdan:

I humbly ask you to go and buy the index in Feb 2000 because it was clearly a bullish trend.
More...

Abogdan, this is a followup to my previous post and part of the same argument:

Those who make the "there is a trend" argument (this includes me) recognize that there are three market directions: Advancing, declining, and sideways.

Part of technical analysis is having a method of measuring which one of the three market directions is in control, i.e., using a method of measurement would have identified a change in the behavior of the masses in 2000.

Look what happened when the behavior of the masses changed. It persisted. Those who measured this change and shorted $100.00 stocks that went to a dollar would be hard to convince that trends don't exist.

My argument is that it is measurable and predictable--predictable in the sense that the trend continues until a measuring device (trend line, for example) shows the masses have changed behavior. Then that new behavior persists until yet again another measurable change manifests itself.

Abogdan, Do you disagree with this thinking?
 
Quote from abogdan:


Bingo! This I support 100%. It was my point! Price chart patterns do not exist! (Like cloud patterns in the sky). Human behaviour patterns do! (Winds that form those cloud patterns). I call it the Underlying Sentiment Analysis. And what I have discovered in the past 5 years is that the Inertia of Sentiment is one of the most important measurable parameters that you could have. It took me all these years to find the way to measure it. This is the cause and the price movements are the results! This information does not exist in any of Price vs. Time charts. But it does exist. I'll share with you my findings if it interests you. [/B]
More...

"Sentiment Analysis" as you put it is exactly what the chart reader is attempting to figure out from the chart. As the actions of the various traders filters into the chart itself, the chart reader should be able to detect the shifts in sentiment.

OldTrader
 
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