Why do I see "Trends" in Randomly Generated Data?

[PitchBlack]

Quote from marketsurfer:

i have no reason to doubt or bash your claims. however, you must realize, your results are an abberation, picasso like performance that is likely due to some type of intuitive abilility, tape reading, etc that you developed within yourself and not objective TA--- ---with that said, is your trading automated?

Even supposing that i am the only person who can achieve it (which is surely not the case), the fact is that in that case i'm able to do something that is impossible if the market would be at random. So the number of persons that can achieve something is irrelevant. Something can be done or not.
Example:
If 1 person can break the code of DNA, than the code is broken and there is a pattern. Or do you need X persons able to break the code before it is proven that the code has been broken?

My system is based on mathematics. It can be fully automated, but due the complexity and the fact that i'm not smart enough, it is only partially automated. The things i cannot automate myself are done by hand. I don't trust anyone enough to let him do the rest of the programming. The value of my system is to precious to me.

But what's the diffrence with a fully automated system? Suppose that my system would be to buy or sell each time we cross the 50 days MA. Would it make a difference if the computer would trade directly with my broker without my interference, instead of me calling my broker to do the same action at the same time?

Or do you think i was lucky? Based on my thousands of trades anyone who has knowledge about statistics can prove that it has nothing to do with luck. Luck cannot continue for years in a row and especially not if in smaller timeframes the numbers of winning and losing trades stay in the same range, as well as the performance. When it is luck, you have a wide ranger of different results in the smaller timeframes because sometimes you have more luck and some times you even have bad luck. The consistency of the performance proves that there is a systematic approach.

 

[marketsurfer]

Quote from ammo:

there is nothing random about you needing groceries or water or heat or a roof over your head or transportation or an occasional dentist or doctor or new laundry,those are all things we need every day, there is a market for them and it fluctuates,,the weather is fluctuating ,not random, the amount of daylight fluctuates thru out the year ,every thing that happens is confined to our planet and its finite,without getting philosophical and trying to prove this ,i just except it, and the easiest way to see it(,becuase when we define it its easier to accept)is with charts, it would be hard to trade off a 20 yr chart so we narrow it down and down and down to these days tick charts, and react to them as we would a couple of drops of rain

actually, price charts are very deceiving. read "winer take all" by gallacher for a brief overview.

surf

 

[jficquette]

Random numbers are a esoteric concept anyway. No such thing as a purely random number because they are always selected by a devised algorithm which has a bias.

John

 

[ammo]

Quote from marketsurfer:

actually, price charts are very deceiving. read "winer take all" by gallacher for a brief overview.

surf

they are decieving like a wife or girlfriend,you have to be aware of that and work around it,i use em everyday and without them i couldn't trade from home,the tv and walls are just not good enough indicators,thanks for the book reference iwrote it down,i'll check it out

 

[marketsurfer]

Quote from spike500:

Even supposing that i am the only person who can achieve it (which is surely not the case), the fact is that in that case i'm able to do something that is impossible if the market would be at random. So the number of persons that can achieve something is irrelevant. Something can be done or not.
Example:
If 1 person can break the code of DNA, than the code is broken and there is a pattern. Or do you need X persons able to break the code before it is proven that the code has been broken?

My system is based on mathematics. It can be fully automated, but due the complexity and the fact that i'm not smart enough, it is only partially automated. The things i cannot automate myself are done by hand. I don't trust anyone enough to let him do the rest of the programming. The value of my system is to precious to me.

But what's the diffrence with a fully automated system? Suppose that my system would be to buy or sell each time we cross the 50 days MA. Would it make a difference if the computer would trade directly with my broker without my interference, instead of me calling my broker to do the same action at the same time?

Or do you think i was lucky? Based on my thousands of trades anyone who has knowledge about statistics can prove that it has nothing to do with luck. Luck cannot continue for years in a row and especially not if in smaller timeframes the numbers of winning and losing trades stay in the same range, as well as the performance. When it is luck, you have a wide ranger of different results in the smaller timeframes because sometimes you have more luck and some times you even have bad luck. The consistency of the performance proves that there is a systematic approach.

yes, i think your lucky.

with all due respect, if you have 80% winners over a 10 year period ( while directionally trading) why are you not SAC or a simons, seriously, that question needs to be addressed---as your returns should allow you to build a monsterous capital base, starting very small.

surf

 

[marketsurfer]

Quote from ammo:

they are decieving like a wife or girlfriend,you have to be aware of that and work around it,i use em everyday and without them i couldn't trade from home,the tv and walls are just not good enough indicators,thanks for the book reference iwrote it down,i'll check it out

ok,cool. let me know what you think of the book.

best, surf

 

[Jerry030]

Quote from spike500:

Are the markets composed of randomly generated data? No.


These are the results of my generated trades for the last 7 trading days in the ES (3/11 till3/20):
Number of days:7
Number of trades:11
Profitable trades:11
Avg points per trade:13.20
Avg trades per day:1.57

Do I post signals in advance: NO, the reason can be found in the following thread:

http://elitetrader.com/vb/showthread.php?s=&threadid=53761&highlight=spikey


People started to bash me even before I was able to start the thread; some negative posting were deleted.
I sometimes post signals by PM, only to people who appreciate it. Most people on ET don’t.

Is it useful to post signals in real time? No, because bashers will always find reasons why your results are not representative.

Discussing this topic is a waste of energy, and most successful traders don’t feel the need to convince others. On top of that daytrading and posting the signals within the minute is sometimes difficult and might lead to errors in trading because you have to do 2 things at the same time. I prefer to be concentrated on the fills of my orders and the pricing than on typing in my signals.

Statistically 11 trades is far to small a sample to indicate anything.
However if in say 100 trades your W/L rato is above 90% then you're putting this random question to rest.

 

[PitchBlack]

Quote from marketsurfer:

yes, i think your lucky.

with all due respect, if you have 80% winners over a 10 year period ( while directionally trading) why are you not SAC or a simons, seriously, that question needs to be addressed---as your returns should allow you to build a monsterous capital base, starting very small.

surf

I answered that question already a long time ago.
Not everyone wants to be the biggest and the best (especially if your not an american, we as european have other priorities), there are many other aspect besides a powerful system that make you decide what to do. Your personality (can you deal with the pressure caused by huge positions), your family ( not all women are fond of traders that only think about their fund), i can decide when to trade and when not, i don't have to call while on holiday to see what happens in the fund.

Ten years ago i ran several businesses at the same time, till i realized that the business ran my live. Working 16 hours a day, 6 days a week, never more than 1 week on holidays, always checking if all the shops where open as supposed, always checking if my personal did not steal (i catched two of them).

I sold everything and realized that you only live once. I wanted enough money to have a decent live. I make much more than needed for that decent live, so i'm not ambitious anymore. I enjoy life; trying to become the best trader in the world but being forced to stop living is not an option for me.

 

[PitchBlack]

Quote from Jerry030:

Statistically 11 trades is far to small a sample to indicate anything.
However if in say 100 trades your W/L rato is above 90% then you're putting this random question to rest.

I know, but most people on ET don't know enough about statistics to know that you don't even need 1000 trades to prove your point. So discussing with them is useless, as i already said before.

 

[ammo]

Quote from spike500:

I know, but most people on ET don't know enough about statistics to know that you don't even need 1000 trades to prove your point. So discussing with them is useless, as i already said before.

i don't have the patience or the cash to sit idly making 12 trades a year ,but if i did i would, there are about a dozensetup trades a year which are slam dunks , risk reward 30 to 1,so if spike has enuf money where these are the trades he chooses and plays big when they come up,good for him, one was last week selling gold at 1000 back to 880 -890 and another was oil at 110 back to 100