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The Flip-A-Coin trading strategy and lessons learned from it
- Thread starter NET
- Start date
Quote from NET:
Abogdan, I've enjoyed the debate!
The information you've provided is indeed quite interesting. However, what you are doing is no different than other forms of technical analysis.
Here's what I mean:
You've taken years of data and analyzed it to derive patterns and formulas for the purpose of developing some predictive value on future behavior. No matter how you cut it, or what you call it, you're using past human behavior to gain insight to future human behavior.
Your method is different, in that you're using patterns in bids, asks, sizes, etc., but you're still predicting future behavior from past behavior. This is the essence of technical analysis, which comes in many forms.
The way I see it, you're confirming that technical analysis has validity. Your really arguing about the mechanics or method one uses...
Technical analisys, by definition, is a group of methods that deal with Price vs. Time charts. If you include other parameters into it it is not a Technical Analisys anymore. I also do not analyze
historical data, I measure the current sentiment that results in the price moves. I only used historical data to prove the algorithm. But on the end, I only wanted to draw the line between what I do and traditional TA. If you still would like to call it TA I have no objections.
Regards
Quote from abogdan:
Technical analisys, by definition, is a group of methods that deal with Price vs. Time charts. If you include other parameters into it it is not a Technical Analisys anymore.
I'm not so sure I agree with that. The two schools of thought are fundamental analysis and technical analysis. Your method does not sound like fundamental analysis.
How does your method deal with trader psychology? After all, this is really what the debate is about. Traders miss trades because of a desire for certainty. TA at best is not certain, but only speaks to the probability of one outcome over another. As I posted previously, I do not believe traders lose money because of a failure of technical analisys.
You have challenged TA (chart reading) because of this uncertainty, in fact, state that it is at best random, i.e, like picking patterns out of clouds. Have you eliminated this trader issue (desire for confirmation and certainty) with your new method? Or are we still dealing with an uncertain outcome, i.e., probability based trading?
Quote from NET:
I'm not so sure I agree with that. The two schools of thought are fundamental analysis and technical analysis. Your method does not sound like fundamental analysis.
How does your method deal with trader psychology? After all, this is really what the debate is about. Traders miss trades because of a desire for certainty. TA at best is not certain, but only speaks to the probability of one outcome over another. As I posted previously, I do not believe traders lose money because of a failure of technical analisys.
You have challenged TA (chart reading) because of this uncertainty, in fact, state that it is at best random, i.e, like picking patterns out of clouds. Have you eliminated this trader issue (desire for confirmation and certainty) with your new method? Or are we still dealing with an uncertain outcome, i.e., probability based trading?
I don't think that anybody can eliminate uncertainty because of very fabric of the markets. What I think I achieved is the higher degree of correlation between the parameters that I measure and the upcoming price moves. At least my probability is 82.756% . My self and my partner traded 26,300,250 shares (primarily MSFT, AMAT etc) in the past 5 months. The average return per share was $0.039 (that is net after $0.005 per share commissions that we get from IB). We are working now on the Robotic System that would work the same way, but we are long way from it yet.
Today we have tested it for the first time live and made only 0.3% return on our capital which is way below from what we expected. We are working hard and time is ticking away. I have shared my system with 6 more traders. They trade live also and all of them are positive. Mind you that they only have traded for the past 4 weeks and their efficiency is less then mine. I have to develop a better teaching tool, I guess.
Very nice, Abogdan, very nice. U can tell a scientist by the way they think and operate, no deep is deep enough.
What u discovered/measured doesn't belong to TA and FA. There is not much written about it yet. U might even start a new way of analysis, Sentiment Analysis or Psycho Analysis or something.
But the fundamental principal of trading is still the same. U need a clue as to whether u buy or sell. U found that clue by identifying some behavioral patterns. I find that clue by studying price action. Those are just different roads to getting the same result.
But what we are talking about here is once u get that clue, what u do about it. And that seems to be the thing why there is so much money available to very few people.
What u discovered/measured doesn't belong to TA and FA. There is not much written about it yet. U might even start a new way of analysis, Sentiment Analysis or Psycho Analysis or something.
But the fundamental principal of trading is still the same. U need a clue as to whether u buy or sell. U found that clue by identifying some behavioral patterns. I find that clue by studying price action. Those are just different roads to getting the same result.
But what we are talking about here is once u get that clue, what u do about it. And that seems to be the thing why there is so much money available to very few people.
Quote from abogdan:
Today we have tested it for the first time live and made only 0.3% return on our capital which is way below from what we expected. ... I have shared my system with 6 more traders. They trade live also and all of them are positive. Mind you that they only have traded for the past 4 weeks and their efficiency is less then mine.
At the beginning of this thread, I divulged that I had a horrific losing streak.
Prior to that occurrence, I actually had a win rate better than 80% trading short term. My primary tool was a spreadsheet that calculated fibonacci targets. I've attached a picture of the spreadsheets. In fact, those samples have the NDX and COMP projections; I believe the NDX sheet is from September and the COMP is from November. The two sheets use different formulas; I created the first one through trial and error. If fibonacci is nonsense, it will be interesting to see where we end up before a correction sets in. For those not inclined to download the pictures, basically the september projection for the NDX was approximately 1458 to 1483 (the green boxes for those who look at the picture). At the time of the projection, the high was around 1406.60. The COMP projection (different spreadsheet and different formula) shows an objective of 2056.30.
Since you've challenged conventional TA because it's historical, at some future point we will know what the high in the market ends up being, because hindsight is 20/20. As of the date of this post, we do not know where the high is, because the market has been "trending" up. You have my fib projections from September and November. We'll see how they pan out.
The point I'm making is that TA is not why traders lose money. Back when I came up with those projections, I didn't believe them. Let me say that again: I did not BELIEVE the market could sustain a move above 2000, and I had been shorting the market. Well, thus far the TA was right and my beliefs were wrong. I was so convinced in my beliefs that I completely lost sight of what had worked in the past. This is why traders lose money, I came to that realization, and I shared the experience.
You've challenged the voracity of TA, and I think the debate was pretty good. After you posted your numbers, however, I don't think you offer anything more than what a fibonacci spreadsheet can provide. Your system requires hyper-scalping, which is beyond the means of the average trader. ...and it's not any better! In fact it's worse, because my average gain was far more than four cents a share, meaning positions could be much smaller for the same net gain.
Please don't take this the wrong way; criticism goes both ways.
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Quote from coffeezoo:
Very nice, Abogdan, very nice. U can tell a scientist by the way they think and operate, no deep is deep enough.
What u discovered/measured doesn't belong to TA and FA. There is not much written about it yet. U might even start a new way of analysis, Sentiment Analysis or Psycho Analysis or something.
But the fundamental principal of trading is still the same. U need a clue as to whether u buy or sell. U found that clue by identifying some behavioral patterns. I find that clue by studying price action. Those are just different roads to getting the same result.
But what we are talking about here is once u get that clue, what u do about it. And that seems to be the thing why there is so much money available to very few people.
Thank you and Happy New Year!
Quote from NET:
You've challenged the voracity of TA, and I think the debate was pretty good. After you posted your numbers, however, I don't think you offer anything more than what a fibonacci spreadsheet can provide. Your system requires hyper-scalping, which is beyond the means of the average trader. ...and it's not any better! In fact it's worse, because my average gain was far more than four cents a share, meaning positions could be much smaller for the same net gain.
Please don't take this the wrong way; criticism goes both ways.
OK then! Happy New Year!
P.S. You know, when the first color TVs just came out they were ugly, bulky, poor quality and could not compete with the latest slick and polished Black and White TVs. Would you invest in Black and White technology back then?
Quote from abogdan:
OK then! Happy New Year!
P.S. You know, when the first color TVs just came out they were ugly, bulky, poor quality and could not compete with the latest slick and polished Black and White TVs. Would you invest in Black and White technology back then?
Or invest in a new fledgling technology?
There is a choice, you know. A fundamentalist would make the decision based on his or her own appraisal of what they thought the potential was, i.e., what's the future growth prospects were, etc. A technical analyst would watch the share price of Zenith and/or RCA and buy a breakout.
You also have a Happy New Year!
Abogdan, I really enjoyed your comment that a poster had successfully proved that the World was flat. I laughed so loud that I woke up my daughter. I have been trading successfully for about three years now. I use supports and resistance mainly but also level 2 reading for entries and exits (and a few other tricks and tactics). How can I best use the information you have discovered using only my eyes and my mind to organize the data into a decision and using no outside computer.