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trend following delusion shattered
- Thread starter hank rollins
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These Markets all politely confirmed their Prime Resistance tops today or going into today as in the Euro FX.
Most traders tend to forget that every Trend is made up of two distinct parts, price moving in the direction of the Trend and price moving in the counter direction. Both are equally important because without the Prime counter oscillation, the Trend has no foundation to build from to continue. All of these Markets will, in the future, oscillate back up to create another Prime oscillation of Resistance. That particular oscillation will either make a Prime HH and continue the Trend on its way or make a Prime LH and begin its sequential process of reversing the Trend . . . one chart time/volume increment at a time.
Most traders tend to forget that every Trend is made up of two distinct parts, price moving in the direction of the Trend and price moving in the counter direction. Both are equally important because without the Prime counter oscillation, the Trend has no foundation to build from to continue. All of these Markets will, in the future, oscillate back up to create another Prime oscillation of Resistance. That particular oscillation will either make a Prime HH and continue the Trend on its way or make a Prime LH and begin its sequential process of reversing the Trend . . . one chart time/volume increment at a time.
Quote from ProfLogic:
Three sequential primary oscillations objectively defined in a non-varying price interval environment. The slower (more volume per bar) the chart interval the clearer the trading oscillations within that defined Trend and the less noise is created from minor oscillations.
Finally!!
Someone steps to the plate, attempting to actually answer the question. Very nice!
Let's take this a little further, however, and define the terms to see if this stuff has any meaning whatsoever--- please define the the following terms exactly so that the words can be used to develop a test of the method:
1. primary oscillations
2. non varying price interval environment
3. minor oscillations
in addition--- , it seems, that the wiggle point in your form of analysis may be in the differentiating a minor oscillation from a primary oscillation as they are occurring--thereby allowing for reinterpretation of the past data at will.
regards,
surfer
Quote from marketsurfer:
Finally!!
Someone steps to the plate, attempting to actually answer the question. Very nice!
Let's take this a little further, however, and define the terms to see if this stuff has any meaning whatsoever--- please define the the following terms exactly so that the words can be used to develop a test of the method:
1. primary oscillations
2. non varying price interval environment
3. minor oscillations
in addition--- , it seems, that the wiggle point in your form of analysis may be in the differentiating a minor oscillation from a primary oscillation as they are occurring--thereby allowing for reinterpretation of the past data at will.
regards,
surfer
1. Primary Oscillations - Real-Time Validated Price Oscillations that occur either equal to or greater than a specific value level ([+] or [-] 10) on the specific indicator I prefer (Ergodic). The Ergodic settings are geared towards matching the oscillations of price on each chart it is applied to. These setting are universal regardless of chart interval.
2. Non-varying Price Interval Environment - I define and explain this in detail in the thread - "Why do people use odd sized Tic Charts" here: http://www.elitetrader.com/vb/showthread.php?s=&threadid=80582&highlight=Tick+Charts
3. Minor Oscillations - Any oscillation that is not either Prime or contained in a Convergence or Divergence oscillation to create Prime.
There is absolutely "NO" wiggle room in differentiating a Minor Oscillation from a Prime Oscillation in real-time because of the specific objective definition of a Prime Oscillation. A Price point either IS or ISN'T Prime. There is no grey area.
Everything I do I have gone over in detail within these threads many times before. The only thing I won't give you, personally, is the parameters that make up Ergodic settings. That took me 4 years to tweak and I figure you can work on those on your own. If you have the patience. You can use standard Ergodic settings and that will give you a reasonable understanding of the consistency I constantly am referring to though, again, if you do the work.
I don't help the institutional community, which you are a part of, for one main reason, greed. The independent trader or investor is doing what he is doing to better his position and to better the position of his family. The independent trader or investor is just trying to survive and at the same time make a good, comfortable and consistent living. On the other hand, the institutional community uses their clients to make money not their skills. This is the reason you see very very few performance based funds. If the institutions HAD to preform to certain standards to make money for their clients, a good deal of them would go belly up. I ask the same question everytime I see a fund at a Trade Show, "Do you have any performance based funds?" The response is always the same, either a dumbfounded look or a giggle.
Good luck in your testing.
PL,
Marketsurfer aside, I'm sure those who are trying to wrap their brains around your approach would be interested in what went through your mind when you entered the "aggressive reverses" on the ES chart you just posted, i.e., step one, step two. For example, I assume you began with your trend chart and the major swing points (which, I assume, you defined using the ergodic outside the +/-10 band). Or maybe you began somewhere else.
LC
Marketsurfer aside, I'm sure those who are trying to wrap their brains around your approach would be interested in what went through your mind when you entered the "aggressive reverses" on the ES chart you just posted, i.e., step one, step two. For example, I assume you began with your trend chart and the major swing points (which, I assume, you defined using the ergodic outside the +/-10 band). Or maybe you began somewhere else.
LC
Quote from ProfLogic:
These Markets all politely confirmed their Prime Resistance tops today or going into today as in the Euro FX.
Most traders tend to forget that every Trend is made up of two distinct parts, price moving in the direction of the Trend and price moving in the counter direction. Both are equally important because without the Prime counter oscillation, the Trend has no foundation to build from to continue. All of these Markets will, in the future, oscillate back up to create another Prime oscillation of Resistance. That particular oscillation will either make a Prime HH and continue the Trend on its way or make a Prime LH and begin its sequential process of reversing the Trend . . . one chart time/volume increment at a time.
This is what SCT is looking at as well.
You are statin how a trend ends and a new trend begins by over lapping the old beginning at the LH which we call the FTT.
The dominant and non dominant traverses of the trend (oscillations) continue where the dominant traverse advances the trend and the non dominant is a retrace back to the TL.
It is very natural for a scientific person to enhance this phenomena with tools. Tools being extentions of personal mental activity.
At some point anyone engaged in this comes to the point of not using the odds to figure things out but, instead, to use optimizing techniques to extract what is available from the markets.
The stanard of this measure is to compare trading success with the evident potential demonstrated by the markets. Optimizing on this is where iteratie refinement plays a role.
Trends, in PL's case are on two levels: the trend and the internal oscillations acting as miner trends bounded by the prime trend.
The geometry and periodicity are evident.
What else is evident is the time when the fialure of another miner oscillation in the dominant direction occurs.
Depending on the commodity, this configuration can be played in four ways: trade just the primary trend; trade the minor oscillations of the trend; trade both by having a major position on the prime and smaller positions within the prime (See AMT4SWA and powergirl); and SCT trading (this is simply trading on three levels of prime, minor and micro trends using the number of contracts (up to 50 is common) that is supported by the commodity flow magnitude and liquidity)
PL exemplifies what hapens when a person designs, develops and institutionalizes a view of the markets that is based upon their dynamics which is embedded in the psychology and values of markets. It is a movement away from the conventional paradigm followed by the financial institutions which are motivated more by sales and capital pools than making money for their clients.
To debate whether trends are valuable as trading tools is mostly demonstrated by perfomance of methods that re compared to the potential the market offers. The PL science shows how trends are very valuable as a component of making money.
Principles of market operation lead to rule based performance. Carryinng out trading operations is an optimizing effort to fullfill what the rules scope and bound. There is no gaming component in this.
The distaff views on trends come about as conseqence of misapplication of gaming to the markets. This is largely a consequence of prediction entering the picture. It is a paradox that predictors do not use projection of primary, minor and micro price movement in the form of trends.
Quants move from "bounding" price movement to macro statistics that focus on anomolies for eeking gains during reversions while they ignore the "slope" of the value lines which represent the trend rate of change. It is simply moving the DOW trendline to the center of the distribution.
To make money as a trader, the job is to take out of the markets what is offered as it is offered. It is not competition for the money, it is just being in the market to participate optimally by two things: staying on the right side of he market and taking profits as trends end. HOLD and REVERSE are the trader's primary trading tools; they are based on trends
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