Using nature and natural eco and bio systems to style your trading

[Equalizer]

Jacques,

speaking of nature, did you ever read this post from JM?

http://www.elitetrader.com/vb/showthread.php?s=&postid=762172#post762172

something tells me that perhaps you have read it already

 

[Boy Plunger]

Funny post by JM ... if i started a thread about sex and women we'd be here for eons.

Pootay is a commodity in a sense.

 

[hanseng1]

Quote from mhashe:

Natures lesson is pretty simple.

In any ecosystem, there are a few predators. And lots of prey.

Oooh this stirred some thought......

In a typical predator-prey model, there is an efficiency factor for the predators feeding on the prey. Though the quantity of prey will be high in the beginning, eventurally the prosperity of the predator will create large population growth and the stock of prey will greatly diminish to a point where it can no longer sustain the predator population. At this point, the predators will begin to die off while the prey replenish. And then the cycle repeats.

In other words, once the big boys kill off all the small scale speculators, there will no longer be enough "food" to feed them all and they will die off slowly while the little guys replenish.

There's your volatility cycle.

 

[Boy Plunger]

....Is another reason why traders/people get into a herd mentality....

studying a predator's macro and micro universe structure is very telling about their plight but i would hesitantly say that well capitalized outfits die off. some, of course, do but the majority of accredited traders wait out the dead zone and most are mobile and can get into other instruments. we're living in and progressing into a global market structure. the prey is plentiful. imo

Thanks for your words.

 

[hanseng1]

Quote from Cluseau:

....Is another reason why traders/people get into a herd mentality....

studying a predator's macro and micro universe structure is very telling about their plight but i would hesitantly say that well capitalized outfits die off. some, of course, do but the majority of accredited traders wait out the dead zone and most are mobile and can get into other instruments. we're living in and progressing into a global market structure. the prey is plentiful. imo

Thanks for your words.

I disagree, but I think the disagreement is based on our definitions of "Big Boys". I consider anyone with substantial sums to trade as a "Big Boy". This means houses like ML, CTA/CPOs, hedge funds, and large traders. A lot of large traders have blown out in the low volatility (at least from what I've gathered). Hedge funds blow out (VN and LTCM as examples). From what I hear, the brokerage houses are having a tough time this year with their own trading.

There are always opportunities and prey, but when the prey diminish the predators will feel it. The prey does not have to be extinct for the predators to decline. I personally think we hit a predator peak over the last few years, as the quantity of hedge funds has grown tremendously.

If you're curious about modelling of natural phenomena, try this program. It is free and is commonly used in academia for environmental sciences. If your not into that stuff, it's also fun to play with. There are many pre-build models for your enjoyment.

http://ccl.northwestern.edu/netlogo/

 

[Boy Plunger]

Quote from hanseng1:

I disagree, but I think the disagreement is based on our definitions of "Big Boys". I consider anyone with substantial sums to trade as a "Big Boy". This means houses like ML, CTA/CPOs, hedge funds, and large traders. A lot of large traders have blown out in the low volatility (at least from what I've gathered). Hedge funds blow out (VN and LTCM as examples). From what I hear, the brokerage houses are having a tough time this year with their own trading.

There are always opportunities and prey, but when the prey diminish the predators will feel it. The prey does not have to be extinct for the predators to decline. I personally think we hit a predator peak over the last few years, as the quantity of hedge funds has grown tremendously.

If you're curious about modelling of natural phenomena, try this program. It is free and is commonly used in academia for environmental sciences. If your not into that stuff, it's also fun to play with. There are many pre-build models for your enjoyment.

http://ccl.northwestern.edu/netlogo/

I think you make some valid points however i look at the majors as having supermarket type outfits. The firms have many failure and success stories but i look to that individual who is mobile and consistently performing in every setting. It's very difficult to put into words what i mean. I apologize for this. But, your underlying premise about predator/prey relationships is correct in my view. It's just not something that i can say, here, we start at Point A and end at Point B--this is the plight of said predator/prey. To me, the systems seem much more complex with varying levels of interdependencies. Not that i imply you take less of an approach. Thanks for your words.

 

[nononsense]

Quote from Cluseau:

...

I want to know how you use nature in your trading?

...

Thanks.

I principally use nature's air when trading.
Hope this helps.

 

[bobbyod]

If it's sunny, I go long, otherwise short. I exit positions when I have to get up to go potty.

 

[nitro]

Thanks for the great link.

nitro

Quote from slacker:

'Flock' behavior like birds or fish seem to also have a lot in common to market behavior. (IMVVVHO)

Check out a great resource of some work done is this area at:

http://www.red3d.com/cwr/boids/

A lot of great information in this area on this page...

Now how to translate into a trading system?

 

[Boy Plunger]

Quote from bobbyod:

If it's sunny, I go long, otherwise short. I exit positions when I have to get up to go potty.

I trade while on the potty. I have a gold plated one with a fax machine and telephone. My broker complains about hearing my trades over the constant flushing and sometimes i mistakenly use fax paper instead of toilet tissue... Always have to stay one step ahead of the competition you know....the case is sol-ved.