trend following - quo vadis?

[Equalizer]

Quote from makosgu:

Your question is silly and indicative of the belief that he must be FOS.

Any inferences are purely your own. There were no hidden implications in my question. Further, my question is valid, especially when you start dispensing wisdom with such abandon.

Of course, this earlier post piqued my curiosity...

Earlier quote from makosgu:

I assume most disagree. Prof, my hats to you. Your post was like the red/blue pill. This vantage of never lose is nearly unexplicable and fortunately irreversible.

Surely if you never lose, you won't need a coding job in Credit Derivs very soon. Or, let me guess, that was just a figure of speech.

All the best,
Equalizer.

 

[makosgu]

Quote from Equalizer:

Any inferences are purely your own. There were no hidden implications in my question. Further, my question is valid, especially when you start dispensing wisdom with such abandon.

Of course, this earlier post piqued my curiosity...



Surely if you never lose, you won't need a coding job in Credit Derivs very soon. Or, let me guess, that was just a figure of speech.

All the best,
Equalizer.

I am nearly fresh out of college. Started trading just equities about 3 months ago. Realized the wonder of cycles about a month ago and putting minis to work using it's wonder. Should my awareness have progressed more slowly? You can filter back thru ET and see how I began. I was nwb for a good while. Your assumptions are curious as are many others it appears. You provide a consistent example of how wide the distribution of people in ET are and it is because this distribution is so wide that all types of differences arise. Be assured that Prof and I are different. His awareness is greater than mine for sure. I am not claiming to be an authority, just showing my awareness. You see it as limited and contradictory. So be it. We are different people who do things for different reasons. My inner circle know why I currently hold down a job. It is not for obvious reasons that you speculate over. Nonetheless...

 

[Holmes]

Quote from icarus618:


<cut>
Personally, I like the mini-skirt length indicator the best.

LBR's or the real skirt one?

Hank: it reminds me of the old hand on the floor: new guy starts and has his hands full of charts. Old hand: "Sonny, what are those lines?"

Sonny "Sir, you see that line, that's called resistance and price will go up to there. And hten it will turn around and go back down to there where it will go up again, that is called support"

Old Hand: "Is that so? And you are sure it will go all the way up to there, what you call that, resistance?"

Sonny: "Yes Sir"

And the old hand sells 5000 cars and the price drops like a brick through the next few "support levels".

"what was that Sonny? Where did you say it would go?"



PS remember Turtle Soup?

Edit: PPS: I am really done this time

 

[ProfLogic]

Quote from slacker:

I agree. The major purpose of the True Strength Indicator seems to be to help accurately identify the major and minor pivots.

I would say that Livermore's "Natural Reaction and Natural Rally" are similar to minor pivots, and "Up trend & Down trend" in Livermore approach are similar to major pivots in the Prof's approach.

makosgu, if you are interested in 'price action' approaches I also suggest a look at the '123System' by Crips which can be found at http://www.trading-naked.com/library/123system.pdf

Prof, please feel free to correct any statements made that are wrong or incomplete, you have looked at this for years longer than I have....Perhaps the Prof can compare and contrast the differences in price action approaches?

No, I'm getting chills. Makosgu and yourself are spot on. Those Minor oscillation tops and Bottoms aren't a real aggravation to stop but those extreme one can be a real bugger. Having something perfectly consistent to read them is a lifesaver.

 

[ProfLogic]

Quote from Holmes:

LBR's or the real skirt one?

Hank: it reminds me of the old hand on the floor: new guy starts and has his hands full of charts. Old hand: "Sonny, what are those lines?"

Sonny "Sir, you see that line, that's called resistance and price will go up to there. And hten it will turn around and go back down to there where it will go up again, that is called support"

Old Hand: "Is that so? And you are sure it will go all the way up to there, what you call that, resistance?"

Sonny: "Yes Sir"

And the old hand sells 5000 cars and the price drops like a brick through the next few "support levels".

"what was that Sonny? Where did you say it would go?"



PS remember Turtle Soup?

Edit: PPS: I am really done this time

No you're not. I'm enjoying your little stories. I'm still waiting on a reference to one itty bitty book that you say exists as well. You know, the one-you-can't-mention-because-your-whole-edge-will-implode book.

 

[hank rollins]

Quote from ProfLogic:

Is this another link to a dinosaur interview......

dinosaur? young man, you are talking about a grandmaster. wiped out and within 8 years back on top in WORLD WIDE RANKINGS in this business. ON TOP again, what don't you understand?

 

[ProfLogic]

Quote from hank rollins:

dinosaur? young man, you are talking about a grandmaster. wiped out and within 8 years back on top in WORLD WIDE RANKINGS in this business. ON TOP again, what don't you understand?

Was asking? You did interview Woody. I didn't know, you are a journalist. Are you putting them in the same league?

 

[easyrider]

Quote from hank rollins:

dinosaur? young man, you are talking about a grandmaster. wiped out and within 8 years back on top in WORLD WIDE RANKINGS in this business. ON TOP again, what don't you understand?

Interesting article Hank. I really like this:

Victor: In general you get paid for taking risk in the market. The basic idea of value investing is to invest in companies that can’t lose money. If you can’t lose money there’s no profit, there’s no return, since there is an unchanging demand structure.The rate of return quickly goes down to the risk-free rate. ]

 

[Cutten]

Quote from easyrider:

Interesting article Hank. I really like this:

Victor: In general you get paid for taking risk in the market. The basic idea of value investing is to invest in companies that can’t lose money. If you can’t lose money there’s no profit, there’s no return, since there is an unchanging demand structure.The rate of return quickly goes down to the risk-free rate.

VN forgets that valuations are not determined by risk, so much as by *perceived* risk, along with other factors such as risk-aversion (sentiment) and liquidity preference. When perceived risk is higher than actual risk, this creates value, in terms of an excessively large risk discount. This discount may exist due to high demand for liquidity, high risk aversion, or simply a poor risk analysis by the market. The discount can then be earned by investing in the asset in question.

So, although the value investor tries not to take on too much true risk, he is quite prepared to take on huge *perceived* risk, so long as he is highly confident in his analysis of value. The risk of a further short-term price fall (which is determined mostly by perceived risk) is not so much of a concern as the possible range of values in 5 years' time (which is determined much more by true risk).

Apart from that, I thought it was a good article.

"Victor: The public must always believe absolutely, with the strongest conviction, the idea that will make them contribute the most to the market"

Great point. This is one of the keys to trading IMO - fading excessive sentiment in one direction is IMHO one of the few genuinely persistent market edges.

 

[jsp326]

I didn't bother reading VN's interview and I'm not a fan of Woodie, but did like your interview with Nelson Freeburg. He's a great mechanical trading system tester and designer. Of course, he's also partial to price behavior and trend-following systems...