trend following delusion shattered

[5yrtrader]

Quote from NickelScalper:

No.

The trader sets the minimum value of d so that if the calculated price differential between prospective entry and exit is less than it, no trade is made.

So you are asking the trader to predict what the future price will be before entering the trade?

 

[NickelScalper]

Quote from 5yrtrader:

So you are asking the trader to predict what the future price will be before entering the trade?

I am advising the trader to use a system that signals a trade entry only when there is a sufficient expectation of a profitable difference between present and near future price.

 

[FredBloggs]

Quote from NickelScalper:

I am advising the trader to use a system that signals a trade entry only when there is a sufficient expectation of a profitable difference between present and near future price.

ahh - so thats what ive been doing wrong all this time

 

[John Merchant]

Jack. I wouldn't be so confident about predicting that ho-hum reaction pattern if I were you. FVX and TNX have been creeping up this morning. The fix may be in. I would not be surprised to see half a percent.

 

[5yrtrader]

Quote from NickelScalper:

I am advising the trader to use a system that signals a trade entry only when there is a sufficient expectation of a profitable difference between present and near future price.

But how does one come up with that expectation. The only way that I can see is to make up a future price. Whether I think oil is going to infinity doesn't make it so and if I think that coffee is going to pull back from its recent highs doesn't mean it will. You go long both markets because there is no way anyone can accurately estimate what p1 or in that case d will be for any trade.

My system showed that it has a positive d with a 52% win rate. Actually other systems that have a lower win rate, like 25% can actually work better because they cut their losses and make big profits on their winners.

I asked when I first entered this thread if you were looking for someone to predict the future, you answered no. But to come up with D or p1 you need to estimate a future price, which I don't know about other people but I am not very good a that. My system wasn't guessing at the future price all it was doing was saying that the 50 dma will continue to stay above the 200dma if not the trader will get short.ng at the future price all it was doing was saying that the 50 dma will continue to stay above the 200dma if not the trader will get short.

Hank I don't know how you think the 50dma and 200dma are "curve fit" they are the most generic indicators I could think of and believe me there are much better indicators then MA. I know this because I currently work for a small hedge fund that uses trendfollowing as its primary source of profits.

ANd you use the the terminology "riding the wave on your website" what is that if not trendfollowing?

 

[Grob109]

Quote from NickelScalper:

A couple of specific questions:

1. How many traders do you estimate are using this method?

I assume that "this method" is what is described below as "General point of clarification". You describe it as a trader decision making tool when d is in a range that shows a trading approach is viable. I do not know how many traders there are out there so I can't guess. Hopefully there are very few.

You bring up two cases for the way you determine d or the use of d: small and in a bogus system. Both methods give bad results for a trader so those traders would not use it longer than their capital lasts. So I conclude all successful traders have methods that give bigger d's and they have non bogus approaches. All of this group is unconsciously doing the calculation that you do.

So the total consciously doing what you do is about none.


2. Are you ready to take the real time trading call challenge?

I took it in the late 1950's. There are public records of my trading results starting when PC's and web sites were invented. On occassion third parties have been given records (31 pages of T&S annotated) for an exit on a trade of 100,000 shares in the 30 dollar range). All involved understood that when a stock was reaching new highs that a porfit was occurring. I have been cited by the SEC many times. Their records may be available to you. I was never cited for losing capital.

Since the rates are changing today, I anticipated your typing and posted a trading call of four trades with a bracket entry. The trades are coming up between 2:08 and 3:15 market time.
Sorry there are no d's there. Entry at a price that market comes to (bracket), reverses (use DOM extreme), market exit (use 3:15 as time).

General point of clarification:

Any system of directional trading must be capable of determining a sufficiently large (positive or negative) d, which is the difference between present price and a price to be marketable in the near future. The value of d is generated by the system in real time, and then the trader decides whether or not that d is of sufficient size to warrant a trade. If a system is incapable of generating a large enough d, or if it gives a wrong d too often, the system is bogus.

snip..snip..

 

[jonnyy40]

When MACD is above 75 and below 25

 

[Thunderdog]

Quote from 5yrtrader:

...Hank...ANd you use the the terminology "riding the wave on your website" what is that if not trendfollowing?

A very good observation! I am certain we all await Hanksurfer's considered response.

 

[Lefty62151]

I was just getting used to the idea that the trend following delusion was

"Shattered"

 

[Grob109]

Quote from John Merchant:

Jack. I wouldn't be so confident about predicting that ho-hum reaction pattern if I were you. FVX and TNX have been creeping up this morning. The fix may be in. I would not be surprised to see half a percent.

I agree that there will be a smaller reaction today. If the series is muted so be it. In the extreme the run up to 2:00pm will not be flat but just a creep. Putting the vibs on an inclined carrier is not unusual these days. The world is a global market now and "Greenspans" do not matter much any more.

There are many different global occurances that do the ho hum thing nowadays as well.

Unfortunately the US economic process or whatever is at very extreme points in various sectors so we have contemporary market that are just a continuing grind to pull down profits in relation to the daily h/l's.

What can i say. I knew the typing was going on so I posted the answer as soon I finished typing it.