Why Do We Trade? For Real.

[lucysparabola]

Drummond's methodology is powerful. I took what I learned there and developed it further into my own. essentially, took some of his variables (/indicators) and derived further variables from them. This gave me the framework I desired.

the PLDot is decent, but what I was given is much better... much 'faster.' I am in process of developing a hard strategy to approach all price bars within that framework. I have one strategy now with a greater than 80% win rate, so I can attest to 'i am nobody' seeing that. the frequency on that one is very small though, which is why I am building out the rest of the framework.

tl;dr - yes it works, what i have is awesome but infrequent, working on the rest as we speak.

How would you define a trend Surf? The point I made earlier with quoting you & 'i am nobody' was that you both say the same thing about your indicators / price drivers. It's rather entertaining to see you both go at it so hard when you're saying the same thing.

 

[StarDust9182]

In early 1990's, two of the fastest computers were Cray C90 and NEC SX3 (processor by processor). Yet, they are much slower than a high-end Intel i7 or Xenon CPU. If computers had limited shelf life in trading then, the future may look bleak.

So far, I do not think computer can replace human creativity.

Just my two cents.

Good point moonmist. I didn't express myself that well.

I meant to say that in the period that I was searching for the best methodology and 'edge' I came to the realization that computers would never do it for me because they would soon be so powerful that millions of eager traders would test every conceivable system methodology a million times and find any working ones. Given that edges decay, there was no permanent edge there for me. So I changed my focus to look for discretionary methods and gave up the big hunt for buying on a left handed monkey wrench pattern with a tight stop.

FWIW: I liked the supernova machines and I started programming with a PDP8E (E for extended memory - a massive 12K). Nobody could conceivably write a program larger than that at the time and anyways there was always plenty of paper tape to run through. Bill Gates came out with his 640K quote later on.

Creativity almost certainly lies in the NP space but not the P space. All turing machines (state machines) run in NP space by definition. Therefore humans are safe for the moment. Of note, there are such things as non-turing machines. I worked on one of those as well.

 

[StarDust9182]

My trading mentor explains this fact way better than I can

" Any trend that exists can be quantified and its departure from randomness can be measured with the usual statistical procedures, such as confidence intervals and likelihoods. Serial correlation coefficients, regression coefficients of current changes versus past changes, and magnitudes of the impact of past moving averages on the future, distributions of the length of runs, the correllelogram, the expected waiting times between peaks and valleys, survival statistics. All these techniques are very good at discovering any non-random elements.

To join a proper debate, such measures must be quantified for various markets and various times, and the degree of uncertainty and departure from randomness must be ascertained. I have never found a movement in prices that anyone could make money with by a trend following method that didn’t also show a major departure from randomness revealed by the standard statistical measures I mentioned. The tragedy is the mysticism and blind acceptance of trendism, that trend following exponents proclaim, without any evidence as to magnitude and uncertainty. No self-reported results that selected individuals or leaders might have made in the past shed light on the debate."

Ask your mentor if trends can be shown to exist, doesn't it demonstrate that the market is not random? And if it is not random what other choice could exist? Markets are tied to masses of opinions (for example TA works and TA doesn't work) and not tied to any physical processes IMO. Just a thought.

 

[StarDust9182]

Yeah, Surf let's avoid the accusations of poor (& personal attacks) when you have no evidence to prove as such.

Again, the problem continues to be lack of / differences in definitions.

Surf and anyone else - please give your definition(s) of a trend in any underlying market. Be as specific as possible.

I will start with my own: 3 consecutive closes on the same side of "indicatorX" - which is proprietary and was given to me years ago by a (believed to be deceased former) member of ET. It is very close to an indicator that is used by a private trader located somewhere in North America who is moderately well-known, but rarely discussed.

LOL! Busted! Your reasoning doesn't make any sense because someone from the Cook Islands who trades would point out that there is no such place as North America cause he/she has never been there! Therefore we can ignore everything else you say after that. LOL (tongue in cheek) ... and don't get me started on indicatorX - I have searched for that as well on the "drums"-net in the Cook Islands .....

 

[StarDust9182]

Huh? Exploitable is the key word. Can you exploit trends effectively in randomness?

This is a fantastic statement. An edge must be exploitable - knowing 10 minutes later that the stock will move this way in 2 minutes is not really usable. In my experience, such things do in fact exist.

 

[kut2k2]

trends don't exist in the stock market, only upward drift. If you flip a coin 10 times and get heads 10 times, are you in a heads trend? surf

Yes, surf, despite the random process, you really are in a trend.

Here's the proof:

Your first bet: $0

Toss # 1: heads ; Total win: $ 0 ; Your next bet: $0
Toss # 2: heads ; Total win: $ 0 ; Your next bet: $0
Toss # 3: heads ; Total win: $ 0 ; Your next bet: $2 on heads
Toss # 4: heads ; Total win: $ 2 ; Your next bet: $3 on heads
Toss # 5: heads ; Total win: $ 5 ; Your next bet: $4 on heads
Toss # 6: heads ; Total win: $ 9 ; Your next bet: $5 on heads
Toss # 7: heads ; Total win: $14 ; Your next bet: $6 on heads
Toss # 8: heads ; Total win: $20 ; Your next bet: $7 on heads
Toss # 9: heads ; Total win: $27 ; Your next bet: $8 on heads
Toss #10: heads ; Total win: $35 ; Your next bet: $9 on heads
Toss #11: tails ; Total win: $26 ; Your next bet: $0

So putting just $2 of your principal at risk in a timely fashion could've earned you $26.

That's the power of trading with the trend.

Huh? Can you exploit trends effectively in randomness?

See above. If the trend is sufficiently long, it very obviously can be exploited. But most randomly generated trends are too short to be exploited profitably. And since you never know in advance which trends will be long, trying to exploit them all will make you a net loser.

What any of this has to do with the nonrandomly generated stock market, you've yet to explain.

 

[lucysparabola]

LOL! Busted! Your reasoning doesn't make any sense because someone from the Cook Islands who trades would point out that there is no such place as North America cause he/she has never been there! Therefore we can ignore everything else you say after that. LOL (tongue in cheek) ... and don't get me started on indicatorX - I have searched for that as well on the "drums"-net in the Cook Islands .....

Not sure if you're agreeing with me or Surf? I think me...

 

[marketsurfer]

This is a fantastic statement. An edge must be exploitable - knowing 10 minutes later that the stock will move this way in 2 minutes is not really usable. In my experience, such things do in fact exist.

thanks. hence my issue with all the chartmasters on this site. Its really sad to see such hindsight blindness, i mean bias in full effect --trashing the minds of otherwise decent and reasonable folks. surf

 

[marketsurfer]

Yes, surf, despite the random process, you really are in a trend.

Here's the proof:

Your first bet: $0

Toss # 1: heads ; Total win: $ 0 ; Your next bet: $0
Toss # 2: heads ; Total win: $ 0 ; Your next bet: $0
Toss # 3: heads ; Total win: $ 0 ; Your next bet: $2 on heads
Toss # 4: heads ; Total win: $ 2 ; Your next bet: $3 on heads
Toss # 5: heads ; Total win: $ 5 ; Your next bet: $4 on heads
Toss # 6: heads ; Total win: $ 9 ; Your next bet: $5 on heads
Toss # 7: heads ; Total win: $14 ; Your next bet: $6 on heads
Toss # 8: heads ; Total win: $20 ; Your next bet: $7 on heads
Toss # 9: heads ; Total win: $27 ; Your next bet: $8 on heads
Toss #10: heads ; Total win: $35 ; Your next bet: $9 on heads
Toss #11: tails ; Total win: $26 ; Your next bet: $0

So putting just $2 of your principal at risk in a timely fashion could've earned you $26.

That's the power of trading with the trend.


See above. If the trend is sufficiently long, it very obviously can be exploited. But most randomly generated trends are too short to be exploited profitably. And since you never know in advance which trends will be long, trying to exploit them all will make you a net loser.

What any of this has to do with the nonrandomly generated stock market, you've yet to explain.

Man, this is really twisted logic--- but it's money management/ luckif you were able to profit from the coin flip nothing to do with trends. surf

 

[StarDust9182]

Not sure if you're agreeing with me or Surf? I think me...

Sorry, I liked your comments. It was my poor attempt at thread humor by reviewing some of the past comments and you seemed to be supplying interesting comments and thus wouldn't get offended. (The best traders don't get emotional or arrogant as their trading persona carrys over into real life.) Sorry, I have never heard of Drummond's methodology.

BTW, here in the cook islands they have a new laptop called bongos and are working on a thimble-based wristwatch version. LOL.