Trading as a Science Blog

Quote from virtualmoney:

21brrwl.jpg


Whether you believe trading systems is Science or not is irrelevant,
mathematically the risk of ruin is always there...
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You are correct, that is true all we are doing is changing the games bias. The amount of this bias and leverage is what is key in reducing this risk of ruin to a near zero number. For example everytime you drive there is a chance of dying in a car accident, the risk is small so no one things about it.
 
Jack… I’m not trying to be “positioning [my]self to really help Murray out”, but rather convey that I agree with this general idea. The idea is that trading can be discussed scientifically, which as traders on this forum we must all somewhat believe to be true. If we can use the scientific method to build and test tools for prediction then that will help us all become better traders overall. I do believe that systems can be built using logical principles and that is a concept that is naturally worth exploring more.
 
Quote from TraderSystem:

Jack… I’m not trying to be “positioning [my]self to really help Murray out”, but rather convey that I agree with this general idea. The idea is that trading can be discussed scientifically, which as traders on this forum we must all somewhat believe to be true. If we can use the scientific method to build and test tools for prediction then that will help us all become better traders overall. I do believe that systems can be built using logical principles and that is a concept that is naturally worth exploring more.
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TraderSystem:

My compliments on your statement of the general idea.

There have been many comments in this thread about how science works to deliver the conclusions about the system of operation of markets.

The history of market trading/investing is well documented. For me I just made a chronological list of the 100 achievements that got us from point A to point B.

The implied HS and PM is found in the work of Dodd and Granville.

It can be made explicit by using the paradigm theory of Keynes with regard to assuring "completeness" and "in-kind" hypotheses.

Form that point onward logic theory (Carnap) provides for the details of completing the system's three components.

The system of the market's operation turns out to have no flaws, no anomalies and no noise.

The scientific test of any design is whether any of these three items remain after the work is completed.

Thus, it is possible to check out the work of others. If there is risk or is a requirement for money management, then, logically, the system is still incomplete. Risk and the need for management come from not dealing completely with perceived flaws, the appearance of noise and/or what appear to be defined anomalies.

As we see in the sciences most sciences still explore their unknowns.

The system of market operation, however, it simple and contained. There are no unknowns.

Here in this forum if anyone has a question, then the answer can be supplied.

From what I read, mostly no one has ever seen the market in operation, scientifically speaking.

A lot of the posts in this thread have a "fudging" component. Too bad, these people verred off topic.

Has Murray named any of the scientists involved with developing the system of the market's operation?
 
Quote from kut2k2:



The social sciences -- the so-called "soft sciences" -- are studying a subject (hunan behavior) which is almost infinitely more complex than the subjects of chemistry and physics, which are mindless electrons, mindless atomic nuclei, mindless photons and mindless subatomic particles.
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You have a pretty limited understanding of modern physics and the complexity it can handle. The largest scientific experiment currently underway (the LHC) requires years of fine-tuning to produce the quality of results it was designed to deliver.

That's only one hallmark of the complexity of this experiment. There are others, like the amount of data collected. To gather and analyze and differentiate between all the signals you can expect to see in this sea of data is an enormous task.

Tasks like that cannot be handled by the social sciences. Once, because of the vaguely defined human complexity but primarily because the social sciences lack tools for that. They do not have the theoretical apparatus to design the experiments at this scale of complexity that you can draw some conclusions from.

Physics does. It can handle complex things quite well. There may be limits to what it can handle, but at this point they are still largely determined by the technology and not by the lack of theoretical understanding, so even more complex phenomena could be handled by physics given a more advanced technology.

Biology deals with humans too and has made brilliant advances over the last few decades (the discovery of the DNA code, understanding the human genome) mostly because of the use of physics tools. Neuroscience has been able to make some remarkable progress too, again because of the same reason. That means that we are making progress in solving the human complexity whatever it means and it may turn out that we do not need social sciences to solve it at all.

But what we definitely need are the right tools. Even Archimedes already knew it: "Give me a lever long enough and a fulcrum on which to place it, and I shall move the world."
 
Quote from kut2k2:


But psychology is no less a science than chemistry
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Utter and complete BS.

Psychology was part of philosophy for a long time and became independent of it only relatively recently. It has more in common with philosophy than it has in common with science.

And, obviously, by the same lame declaration of yours, the feminist studies are to be taken as seriously as physics and the only reason it's not so in the real world is because of the vast male conspiracy that prevents it from happening.
 
Quote from kut2k2:



Science IS the scientific method.
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Science is the scientific method.

That's brilliant! Almost as good as "butter is buttery stuff" or something. You may want to take a remedial logic class with the focus on circular reasoning before you give another tutorial for the unwashed masses.
 
Quote from TraderSystem:

Jack… I’m not trying to be “positioning [my]self to really help Murray out”, but rather convey that I agree with this general idea. The idea is that trading can be discussed scientifically, which as traders on this forum we must all somewhat believe to be true. If we can use the scientific method to build and test tools for prediction then that will help us all become better traders overall. I do believe that systems can be built using logical principles and that is a concept that is naturally worth exploring more.
More...

after your post, bighog set up a thread for making some money over time.

I responded with a system dervived by using the Scientific Method. Below I snaged all the maths of this scientifically deterimined system. SQL is the language to use to fully automate it.

after I copied and posted it I find that bighog's and my remarks are no longer differentiated by color. oo bad. I think you can follow who is who.



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Quote from bighog:

Jack

Yes it can be done.

You lost me when going to the google remarks, sorry.

On ET, you cannot search for "6 steps"; I did not know about this failing of ET. Here are the 11 attachments:

http://www.elitetrader.com/vb/attac...&postid=3831294

http://www.elitetrader.com/vb/attac...&postid=3831305

http://www.elitetrader.com/vb/attac...&postid=3831309

http://www.elitetrader.com/vb/attac...&postid=3831311

http://www.elitetrader.com/vb/attac...&postid=3831320

http://www.elitetrader.com/vb/attac...&postid=3831328

http://www.elitetrader.com/vb/attac...&postid=3831333

http://www.elitetrader.com/vb/attac...&postid=3831336

http://www.elitetrader.com/vb/attac...&postid=3831340

http://www.elitetrader.com/vb/attac...&postid=3831333

http://www.elitetrader.com/vb/attac...&postid=3831334

http://www.elitetrader.com/vb/attac...&postid=3831336

http://www.elitetrader.com/vb/attac...&postid=3831336

http://www.elitetrader.com/vb/attac...&postid=3831340

http://www.elitetrader.com/vb/attac...&postid=3831347

the 6 steps shows where to use the other attachments to learn the complete system of the market operation.

Compounding is not used, though you are correct it has a place in other situations such as interest bearing accounts etc.

what I meant was compounding profits. making 5K a day allows the addition of 4 contracts, at least.

Yes a single instrument could be used in another contest. If the restrictions allowed more than 8 contracts per trade I would simply use 20 cars for $250 a tick and seek 17 ticks and be done. That is VERY doable unless a prolonged tight daily range comes along to mess with the average and destroy the days where you get shall we say 13, 15, 20 handles. I do NOT trade 20 cars a pop now. ES itself can manage 5 handles a day as an average for a decent trader.

I am an MAT type trader. So I do trade over 100 contracts a pop. I showed this on prints for just doing opening trades for a few days to point this out to readers, but they could not read prints. I didn't search for those prints; if there is an interest maybe someone can put them in a post as attachments.

The math part of the contest can surely be understood by many, what I am doing is seeing WHO can contemplate using a strategy that is more automatic than shooting from the hip. Rambo traders are not going to make a million in a single year, NO WAY.

When conditions are right with this strategy, there will be few trades made daily.
I suspect by tomorrow evening the riddle will be solved ....

Forget about making a million a million, think about HOW you plan on making a million.. Think what you will do to make it happen... http://www.youtube.com/watch?v=298nld4Yfds

Find the way..... http://www.youtube.com/watch?v=DohRa9lsx0Q
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as you say it is summer time. the following show the open for last Friday:

http://www.elitetrader.com/vb/attac...&postid=3852582

http://www.elitetrader.com/vb/attac...&postid=3852583

http://www.elitetrader.com/vb/attac...&postid=3852584

as you see this beginner's work shows that in 25 bars plus exiting the long, that the beginner has made 6 points per contract. for me trding in parallel with my MAT accounts, I have over 100 contracts making the 6 points per contract.

As I said, I am not good at contests since I am trading to make money for others who spend the money to solve local problems.

The solution for making money is to use the expressions and filters presented in the charts above. I'm glad you will be putting up another solution this weekend.
 
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