trend following delusion shattered

[NickelScalper]

Your answer was a bit diffuse. The question is quite simple.

Do you claim a system that gives winning signals despite its inability to anticipate whether price will move both in the right direction and to a certain minimum extent after the trader has committed to a prospective entry?

 

[hank rollins]

Quote from peterfigliozzi:

Like Justin Mamis said, "TA is attacked for what people wish it could do". Trend followling like any TA is a risk management tool, not a price prediction tool. Once again, this is why Nickel's demand for a predictive model using trends it downright silly. There is no such model and that is *not* inconsistent with the fact that trend following is valid TA.

i would change mr. mamis's qoute to read:

"ta is attacked for what people are led to believe it can do"


thank you for the cogent answers, however, i have a question. how is the probability for a trade entry determined?




hank

 

[PetaDollar]

Yes
Absolutely
100% in the affirmative


And it is not a "claim". It is how traders and also poker players make money (and how casinos make money in slots, craps, etc.).

 

[hank rollins]

Quote from peterfigliozzi:


Yes
Absolutely
100% in the affirmative


And it is not a "claim". It is how traders and also poker players make money (and how casinos make money in slots, craps, etc.).

yes, i understand what you are saying--however the probabilities in the casino and poker are far different than the probability of a trade being profitable after an entry. is there a quantifiable method of clearly and specifically determining probabilities of trade entry success or lack thereof ?

thanks

 

[PetaDollar]

oopps, MarketRollins got his post in between Nickel's question and my answer to it.

 

[PetaDollar]

Quote from hank rollins:

yes, i understand what you are saying--however the probabilities in the casino and poker are far different than the probability of a trade being profitable after an entry. is there a quantifiable method of clearly and specifically determining probabilities of trade entry success or lack thereof ?

thanks

Yes sir. The cards never change but the market does. However the method is very simple: # of times the good thing happened after the precondition / the total number of times the precondition happened. I am also a big fan of "Max Gain vs. Pain Required to Reach Max Gain" scatterplots as a quantitative measure of the effectiveness of an entry. I have attached one of them from my own stuff.

 

[NickelScalper]

Quote from peterfigliozzi:


Yes
Absolutely
100% in the affirmative


And it is not a "claim". It is how traders and also poker players make money (and how casinos make money in slots, craps, etc.).

So, in other words, you trade according to a system the signals of which are not associated with whether price will move both in the right direction and to a certain minimum extent after the trader has committed to a prospective entry.

Good luck. You're going to need it.

 

[PetaDollar]

Quote from NickelScalper:


Do you claim a system that gives winning signals despite its inability to anticipate whether price will move both in the right direction and to a certain minimum extent after the trader has committed to a prospective entry?

Yes
Absolutely
100% in the affirmative


With my explanation and scatter plot you can see why. Or you can handwave it away as many do. Makes no difference to me...

 

[PetaDollar]

Quote from NickelScalper:

So, in other words, you trade according to a system the signals of which are not associated with whether price will move both in the right direction and to a certain minimum extent after the trader has committed to a prospective entry.

Good luck. You're going to need it.

Indeed, as do the casinos. The point is I make more money with my good luck than I lose with my bad luck.

 

[hank rollins]

Quote from peterfigliozzi:

Yes sir. The cards never change but the market does. However the method is very simple: # of times the good thing happened after the precondition / the total number of times the precondition happened. I am also a big fan of "Max Gain vs. Pain Required to Reach Max Gain" scatterplots as a quantitative measure of the effectiveness of an entry. I have attached one of them from my own stuff.

thanks !