Why Do We Trade? For Real.

Very interesting point of view, StarDust, thanks a lot for that. With my background being quite different however, I have to talk with my father (professor of physics) to understand some of what you said.
 
That is why I am a lonely lonely man LOL. If you give me some more background on your own background I can try to say it less abstractly.

Cornix: A single trade is two conscious egos disagreeing about a price - no disagreement, then no trade. If one conscious ego programs a computer agent to act for him as he would act , isn't the program really just an extension of his/her own ego? If we put ONLY two equal speed, equally programmed computers to trade against each other, could one possibly profit at the expense of the other?

IMO markets are moved by individual traders' thoughts and emotions not by something magically encoded in past price data that can predict the future. If a computer could predict the future consistently - there would be no market and no trading! There could be no error in pricing to profit from.

Most people act emotionally and then explain it rationally in my experience. A person with no emotions is a horrible trader (LOL or maybe a broker) according to psychology.

When I used to play computer chess, I would take the machines "out of the book" for they could not think and my own thinking would often trounce them as they made basic positional errors. A computer could have every move and game ever played programmed in but then why would I CHOOSE to play? Every game would end in a draw.

You, Cornix can CHOOSE to play, I contend a computer will never be able to CHOOSE to do anything. Hope that is more clear.
 
My professional background is psychology (MA and practice) and philosophy (near PhD). Not sure how useful in trading compared to math/physics skills. :)
 
Mr Ronny said:
I trade at first for broading my mind. I raed a lot so i understand more about economy. And of course for money.
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That relates much to my own interest (other than monetary) in financial markets. Understanding the dynamics really makes you very informed and probably more adaptive in other business decisions.
 
StarDust9182 said:
For your own answer consult certainly one of most intelligent people IMO on this board - Nitro - where he said "Because otherwise P=NP." I think I understood what he meant while some did not but my own thought was around this Turing machine subject:
http://en.wikipedia.org/wiki/P_versus_NP_problem

It was a brilliant insight for traders who really think deeply and provided some evidence for my own thoughts about investing/trading theory.

Some simplified thoughts (please keep in mind they are hypotheses and opinions and not proven for me yet.)

An edge is an inefficiency in the market. The strong eat what they kill (mostly the weak).

Technical Analysis started failing many decades ago. Program trading arose to defeat it.

Many years ago program trading was popular when large firms had better quality tools than amateurs and amateurs were fewer in number. Specialists were the hammer.

In the 90s that changed as smaller traders TEMPORARILY gained enormous computing power and could game the pros with better information and faster timing. Amateurs were the hammer.

Prop shops then arose where pros gamed large numbers of amateurs that believed in TA essentially by painting TA indicators since they had better indicators and ties to the heart of the market - specialists who wanted their hammer back.

Amateurs moved to daytrading. TA indicators started completely losing their power as information was disseminated. The Edge of the big shops and prop shops was lessened. (Such is the nature of markets. There is an astounding indicator that shows this clearly since about 2005 which will remain secret until someone else raises it first).

Prop shops died to HFT who gained a market inefficiency by regulation. Curious that that has never been corrected IMO - do the legislators not know what to move to now?

HFT are savaging HFT now. Michael Lewis spilled the beans and the weaker traders fled.

Something even worse is appearing (that will defeat HFT) and traders must adapt yet again. This particular though very preliminary for me and will not be clarified because it could be a future edge for me.

Market change. Markets stay the same. And change always appears from the fringes (as it must): http://en.wikipedia.org/wiki/The_Structure_of_Scientific_Revolutions

So in short, in the very early days hard edges existed as market inefficiencies but already in the early 90s I realized that computers had limited shelf life in trading and it is my opinion that discretionary trumps system ultimately. That is why I have steered that course from early on in my own investing/trading.

Interesting you would ask about this as CERN is being restarted. Will rainbow gravity be found or the Big Bang or will Nitro absolutely be proven correct in his brilliant brilliant insight. BYW consciousness itself doesn't play a role in our models of physics - a rather glaring omission don't you think? Recall even our physics requires an observer - a piece of discretion that makes the system work. So IMO, computers will NEVER be intelligent and CAN never be conscious.

If consciousness is required to trade and win, then all systems have some discretion don't they?

Hopefully that answer it. Sorry for the length of the post.
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This is good stuff star. Very insightful. I would boil it down to say that traders must evolve with the market to survive. This repeating mantras from yesteryear is a sure way to the poor house.

surf
 
marketsurfer said:
This is good stuff star. Very insightful. I would boil it down to say that traders must evolve with the market to survive. This repeating mantras from yesteryear is a sure way to the poor house.

surf
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Yea it looks to me to have a decent edge a trader better be ahead of the public. As something is widely known, consider it gone.

I had this experience with binary options. Great inefficiencies while relatively unknown, eventually gone soon after it was widely discussed on the Internet.
 
marketsurfer said:
Funny stuff, thanks!!! However, the overwhelming evidence is on my side in this case. You neec to face the truth or continue to be deceived.
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I watch my statements and my account, isn't that the truth?

I just a finger so I am sure I am not dreaming.
 
marketsurfer said:
Exactly. Thats how the market works. Its how it survives. This is how I KNOW these "price action" TA gurus claims are ridiculous and they are leading traders down a bad path. surf
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By your agreement with this statement, do you not now understand then why certain people would not reveal a mathematically proven (even if TA-based, gasp) strategy to incessant questioning on forums?
 
lucysparabola said:
By your agreement with this statement, do you not now understand then why certain people would not reveal a mathematically proven (even if TA-based, gasp) strategy to incessant questioning on forums?
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Of course. But then they would provide other evidence of success. No one is asking for exact parameters of a system. is it possible, yes. Is it likely, no way as the underlying premise is proven wrong based on all evidence I have seen.
 
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