trend following - quo vadis?

[makosgu]

Quote from Holmes:

...
When money flows into my pocket then it comes out of someone elses...... As simple as that.

Limited view here. It is always evident when individuals fail to think open-mindedly. Consider the following example. GOOG Pre-IPO dutch auction of shares $85+. Someone in on Pre-IPO and selling at IPO loses NOTHING since it opened >$85. Trader A acquires GOOG @ IPO value $95 for hypothetical since I don't remember off top of head. Trader B buys from trader A @ $100. Tracer C from trader B @ $110. Eventually no one wants the share at a higher price... Who in this chain is losing? Trader Z who sells at market (BE in best of circumstances). Then the whole chain REPEATS inverted. This is a non losing scenario. So your limited scope is unwholistic. Furthurmore, there is continually inflow of additional capital via the increase in participants. This is not splitsville which is why markets have moved higher and higher from its inceptions.



And if one group profits consistently then the losing source will simply dry up.

You incorrectly assume that all losers remain losers. Fact of the matter is that traders choose losing as opposed to winning. Traders who consistently choose to lose dry up via blowouts or crippled mentalities. This is why so many lose. So to not be a loser, you simply choose to win. I have exploited this very scenario right down to a tick and in a gaming theory fashion. It performs quite nicely. This is really difficult to grasp but if one were to really think about how it is that there losses were in fact losses that they chose for one reason or another, you wind up nailing cycles.


Keep on dreaming that it will never stop working, the old market is a funny thing for people that have that attitude. Remember LTCM?

A few of these guys were my profs. Some are acquaintances of my superiors. The mistake LTCM made was predicting and CHOOSING to hold on to their losers. Tough mistake that the majority make out of hope, another dreadful emotion tied to predicting markets.

I'm not criticizing here, just providing some Q's to promote being more open minded. I am winner everyday. I don't expect to lose ever simply because I make immediate efforts that keep my out of the losing side continually. When your trading actions stem from choices oriented with the single goal to not to lose, then how can you lose? EEK!

 

[makosgu]

Quote from Holmes:

and when cycles flat-line (likely after it initially fibrillates) it is all over.

and yes I understand in depth cycles.

Flat-lines occur for one reason and one-reason only
Ans. Volume (lack of)

 

[man]

gents

please. get a little more specific. this talk about talk elsewhere is partly entertaining. so, what is it that "Prof" says so clearly and killing eye opening and i do not know what? can it be said within one post, paragraph, sentence ... or a formula?

i mean i respect when hank leaves me in the dark space of guessing what his sharpe ratio is ... but, guys, if you have hard facts, published elsewhere here, name that or at least add a link. otherwise you end up with a private conversation in the midst of a party ... partly entertaining to the rest of us. yes.

peace

 

[man]

"I can randomly enter any market (sufficient liquidity just makes it easier) and auto correct myself to immediately go with the ebb/flow (no indicators either although I'm working on adding 2 edgeless perfectly leading as opposed to misleading indicators).

A couple of comments. No doubt there are some very hardworking individuals here and in ET. What really needs to be considered here about Profs work is that it is very clean/crisp/contrite. I have split the market many many ways, to the extent that not a single app can provide what I need so I pushed everything into excel with several Regular Expressions just based off Profs ridiculously crisp trend term/concept. I read every single tick and throwout 99% of them. Oh it's a killer."


dear. what the hell are you talking about. and, sorry if i hurt your feelings, are you serious wiht this post? or is it sarcastic? i am really not sure 'bout it ...

"edgeless indicator" ... what is that supposed to be? a warning flag against things that have an edge? is the new "edge" to claim that one does not need one?

 

[man]

LTCM failed because a five sigma event hit a four to five times overleveraged portfolio. if they had not overdone it they would have come out with a 20% or something draw down and that would have been it.

are some people here on a kind of drug? there is a kind of euphoria in some posts that is very untypical for people who are successful over a longer period of time. at least from my experience ...

 

[makosgu]

Quote from man:

gents

please. get a little more specific. this talk about talk elsewhere is partly entertaining. so, what is it that "Prof" says so clearly and killing eye opening and i do not know what? can it be said within one post, paragraph, sentence ... or a formula?

i mean i respect when hank leaves me in the dark space of guessing what his sharpe ratio is ... but, guys, if you have hard facts, published elsewhere here, name that or at least add a link. otherwise you end up with a private conversation in the midst of a party ... partly entertaining to the rest of us. yes.

peace

This is for you and the hundred others who continually PM me looking for things. I suspect they won't like this pic but at the very simplest of terms, here's a Prof like execution. I could be very explicit but that would be self defeating on your part. You need to see these things in action in order to believe this. When you look at this chart, you need to ask yourself why choose these green and red lines and without an indicator. Why are these valid hindsights points great profit taking points looking forward. EARNESTLY LOOK AT THESE. Print and leave it near your toilet. Eventually they will make perfect sense as why they are so potent and yet safely tradeable simply because markets always cycle.

So here's a prioritized list of things to consider.
1) What consitutes a cycle?
2) What is recursive about these red/green lines (fractals are a clue)?
3) What action is taken at these lines?
4) Why are these points perfectly consistent?

Not answering these questions using this chart will leave you clueless to what Prof does. This is very simple very potent stuff. What you'll then find is that your greatest trading weakness is a lack of being timely (ASAP action - ie. don't wait and see just act).

Really think about this chart. Once you GET it in the wholistic sense, then start cross referencing it with every concievable approach in order to improve. It should sink in after relaxing your assumptions quite a bit on indicators and many other segmented trading actions that people do (that's edge stuff which is very weak compared to edgeless stuff). It is somewhat peculiar also since this type of approach fails well after edges fail. Therefore it is a cut above any edge stuff. It worked like a charm today despite the feds waywardness...

Kindest Regards,
G33M4K Type A (non-BEginner)

PS...
I only had 12 actions that day for nearly 2x (H-L)

 

[makosgu]

Quote from man:


dear. what the hell are you talking about. and, sorry if i hurt your feelings, are you serious wiht this post? or is it sarcastic? i am really not sure 'bout it ...

"edgeless indicator" ... what is that supposed to be? a warning flag against things that have an edge? is the new "edge" to claim that one does not need one?

I'm a New Yorker so my skin is pretty tough. The post was 100% serious. Nothing sarcastic whatsoever. There is a reason why edges are called edges. I use comp sci edges (ie. graph theory) for my directed graphs that consititute my regular expressions. It is all besides the point. The problem with trading edges is that they are a very weak signal that pops thru by some indicator means. People fear them being exploited because soon the signal disappears into the noise, the point at which it is no longer tradeable. It is likely that its still there somewhere but nonetheless, you may have needed to adjust your indicators. The only way you know to adjust the indicator is after having seen too many edge calls that went against what you expect (ie. drawdown/RR<.5/etc). Tough stuff since traders hold on to them like a sinking life raft from the titanic.

Edgeless indicator are those that show exactly why price is varying. In other words, x must be true in order for price to change. Volume is 1 such indicator but the one you see on your charts is generic. Preceding volume is availability. If something has limited availability with respect to volume, then Price will trend into the direction of limited availability. This is not an assumption. You can see this day in and day out on any tradeable instrument. The more liquid an asset, the easier/slower it is to watch the action. The key is to keep upcoming trades locked and loaded to go. I always keep four trades in my queue at all times so that all I need to do is "KLICK" (ie. hit "T"). When things get crazy (ie. crapping out datafeed) I "T" out, and just leave the market sinse my visual has then been disabled... Ordinarily, when the day starts, I "T" in. At market close, I "T" out (at least for daytrading). In between the initial "T" IN & final "T" OUT, I continually "T" over to the profitable side of the market. How tough is that? Certainly not tough at all... The combo of these two posts is never lose territory.

I truly hope this helps.

KINDEST REGARDS,
G33M4K Type A (non-BEginner)

PS...
Look at the channels on the chart of my previous post. The channel is the trend. The trend is a combo of what there was a limited supply of in addition to what the majority of participants were queuing for. This is consistent EVERYWHERE

PSS...
Any chart you look at is exactly the wrong chart to pick off the pivot point unless you have a tape chart (I had to build one from scratch and with the ability to throw out 99% of the ticks using a real time Regular Expression). That is what the sub fractal is for. Recurse this logic if your an uber ace and with independent accounts.

 

[lar]

---------------------------
Man said,

sorry. i did not use the quote function. why are the options relevant for you. so far we just talked about trading delta here ...
----------------------------

For what it's worth, I should qualify myself as very small potatoes compared with many of the folks here. When I get as big as some of the traders here seem, I'm gonna change my handle from Lar to BSD. (G!)

Hi Man,

I trade options because that is where I found my edge. I trade markets with serial options because I hedge and serial months are all fungible with the last month's underlying. I put ATM/ITM diagonal spreads on with only five days left in the short front month in such a way that I will be with the trend if assigned. My biggest risk is gamma risk in those last five days.

If assigned, I have been hedged and holding in anticipation of the market resuming it's trend in the hopes of collecting on one of those outlier fat tail/long tail market moves. I have been profitable a decent percent of the time except I have often given much back. Dispite giving so much back, I now still think long term success can be found in holding for the larger move - hence my interest in this thread.

If the short front month expires OOM I have a different set of responses to that occurance as well.

Your introduction of this thread has given me a more clear view of the "big picture" potential payoff with this approach than I had before. I now think that method is worth continuing ~ I have been waivering on that resolve recently.

Thanks again Man,

Peace and gtty,

Lar

 

[ptunic]

Quote from makosgu:
So here's a prioritized list of things to consider.

Thanks for your efforts in posting this. Ok let me take a stab at this, I've read some of ProfLogic's posts too, including looking at 2 or 3 charts he's posted a few months ago, but not in great detail due to time constraints though it appears interesting. I'm curious if I'm anywhere close or way off the mark

1) What consitutes a cycle?

The market flows and ebbs, in a series of momentum (directional or trending) moves. These price movements may come quickly in one-sided moves or slowly, and with/or without consolidation (chop) in between.

Turning points, or places of inflection, can be identified. Let's call these pivot highs and pivot lows. The are points/areas in which price changes direction. There are various ways of quantifying this: either visually looking for V shaped price action which shows pivot lows or the reverse for pivot highs; or identifying pivot lows as simply bars that are surrounded on each side with bars that have higher highs and higher lows than the pivot bar (and so on on higher fractals if that is too much detail); or by using an Oscillator that shows areas of momentum both oversold and overbought and drawing the pivots at the extreme prices that occur when the oscillator is in an extreme. ProfLogic (I believe) uses the last approach using the Ergodic oscillator.

In any event, cycles are simply series of these pivots.

2) What is recursive about these red/green lines (fractals are a clue)?

Not sure what to say here, other than these red/green lines (aka pivot highs and lows) can be drawn at multiple timeframes, eg a 1 min chart as well as an hour or day chart for example.

3) What action is taken at these lines?

These lines, or pivots, represent critical decision making points for the market. If these lines hold, then the current trend is intact. If price trades through these lines, the trend has changed.

As far as actionable strategies, one could look at opportunities where price creates a new pivot and subsequently fails to go through the newly created pivot, thus continuing with the current trade. In these instances, as soon as one sees this behavior occurring, one could enter a trade in direction with the trend, aka entering on the pullback. A stop loss would be placed past the pivot, eg a logical stop, as if price moved to hit the stop you would no longer want to be in the trade anyway. Targets aren't immediately clear; perhaps upon seeing a pivot in the opposite direction would be a good place.

4) Why are these points perfectly consistent?

These points are consistent in the sense the trend of the market is clearly known; if the most recent pivot that tried to test the trend held, the trend is in place. Otherwise you have a change in trend.

Also what is consistent is if you followed the strategy on the recently attached chart in question, is there would be 100% (or pretty close depending on stops/target placement) wins I believe.

-Taric

 

[ProfLogic]

Quote from makosgu:

This is for you and the hundred others who continually PM me looking for things. I suspect they won't like this pic but at the very simplest of terms, here's a Prof like execution. I could be very explicit but that would be self defeating on your part. You need to see these things in action in order to believe this. When you look at this chart, you need to ask yourself why choose these green and red lines and without an indicator. Why are these valid hindsights points great profit taking points looking forward. EARNESTLY LOOK AT THESE. Print and leave it near your toilet. Eventually they will make perfect sense as why they are so potent and yet safely tradeable simply because markets always cycle.

So here's a prioritized list of things to consider.
1) What consitutes a cycle?
2) What is recursive about these red/green lines (fractals are a clue)?
3) What action is taken at these lines?
4) Why are these points perfectly consistent?

Not answering these questions using this chart will leave you clueless to what Prof does. This is very simple very potent stuff. What you'll then find is that your greatest trading weakness is a lack of being timely (ASAP action - ie. don't wait and see just act).

Really think about this chart. Once you GET it in the wholistic sense, then start cross referencing it with every concievable approach in order to improve. It should sink in after relaxing your assumptions quite a bit on indicators and many other segmented trading actions that people do (that's edge stuff which is very weak compared to edgeless stuff). It is somewhat peculiar also since this type of approach fails well after edges fail. Therefore it is a cut above any edge stuff. It worked like a charm today despite the feds waywardness...

Kindest Regards,
G33M4K Type A (non-BEginner)

PS...
I only had 12 actions that day for nearly 2x (H-L)

That is so pretty. Bravo Bravo!