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Conflicting information

  #11 (permalink)
Legendary Guesser
Reading UK
 
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Johno1 View Post
How did you get my photo.lol

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Johno1 View Post
Price is history, it is like watching an apple fall from a tree, more important to understand and anticipate the forces that come to bear that cause the apple to fall. Quantify those forces and you will be in front of the price (apple falling)

The whole RR profile changes.

Cheers John

The only way you can ever be in front of price is if you have inside information or you guessed right. What you look for in a spreadsheet is exactly the same thing I look for on a chart just using a different technique. If you only had a single price point to work with your job would be impossible. You have to consider history in some way or other in order to form an opinion on future events. Even the orderflow purists that rah rah about never looking at charts, still need to (almost blasphemously) reference a chart to determine where they stand in the bigger picture. Ive never spreadsheet traded so my point of view is complete speculation

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  #12 (permalink)
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Grantx View Post
FBI most wanted list



The only way you can ever be in front of price is if you have inside information or you guessed right. What you look for in a spreadsheet is exactly the same thing I look for on a chart just using a different technique. If you only had a single price point to work with your job would be impossible. You have to consider history in some way or other in order to form an opinion on future events. Even the orderflow purists that rah rah about never looking at charts, still need to (almost blasphemously) reference a chart to determine where they stand in the bigger picture. Ive never spreadsheet traded so my point of view is complete speculation

]FBI most wanted list Was that the photo before or after yours. lol



The only way you can ever be in front of price is if you have inside information or you guessed right.

How can anyone know what they don't know? I have a good knowledge of Charting/TA, I was running Metastock in the mid 90s or even earlier, doing end of day feeds for the charts and trading Futures live data off my pager linked to the SFE and other major indexes including the FTSE although there I was doing reasonable size in FTSE100 Index Options hedging with Futures. In those days I had to ring my broker in Sydney to place trades and he would call back to confirm, pretty rudimentary compared to one click exercution now days. I have bookcases worth of books parked in the garage on Charting/TA, game theory,risk management mathematics, ect, and being academically inclined I looove to study/explore. For the same reason I love to play in Texas Holdem Poker Tournaments and make the money very very often, many of the skills I developed in trading enhance Poker performance.

Once I realized the inherent short comings of Price I developed maths based models that work well with what I do specifically, but would be useless as a generic strategy. So I can understand your scepticism but that doesn't mean that you are correct in your assertion in all cases. Just like breeding where generally a male and female are required but in certain limited situations females can reproduce without male input, parden the pun.lol

Yes in certain circumstances you can get ahead of price by projecting forward. At the end of the day isn't that what all traders are looking for, my experience has taught me that it can't be found with price, maybe other people can but not me.

Cheers John

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  #13 (permalink)
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Johno1 View Post
. Just like breeding where generally a male and female are required but in certain limited situations females can reproduce without male input

Thats not even a funny matter, us males need to work together and stop this absurdity. Our future depends on it! Ever heard of female sperm?
https://en.wikipedia.org/wiki/Female_sperm
Turning Stem Cells Into Sperm


Heres the way I see it:

Working off a spreadsheet, you apply mathematical formulas to historical number sequences to postulate high probability setups. Left brain.
I attempt to do exactly the same thing just via a different method. Taking the same set of data (in picture form) and filtering it through the right hemisphere of the noodle with the hopes it will provide me a high probability setup.

We are both doing the same thing just in our own peculiar way. What Im interested in is why you say 'inherent short comings of Price'. What do you mean by this?

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  #14 (permalink)
North Carolina
 
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Let me take a stab, imagine the market has two states "trend" and "mean reversion". All the rules, based on price, for state A will lose money in state B and vice versa. Second imagine the market randomly switches between the two modes based on a hidden secondary variable. If you can know whether A or B is more likely then you can profit. This is "predictive". On the other hand, a trading system can also profit if the mixture between A or B favors A or B over some period and the trading system is designed to favor A or B. However, the trading system's profits are the result of random factors. The trading system is seeking a type of global optimal based on the mixture.

Sometimes traders can combine price and other information to make useful trades. The information frequency of the other information will determine how often and when those traders can trade.

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  #15 (permalink)
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The problem with any "system"(charts, t&s, indicators, tea leaves) exists whether or not you look at it. The problems are inherent in the system itself; the probability of designing a perfect system is unimaginably low.

That's problem #1(your 'system').

Problem #2 is you - your brain is "interpreting" your system, and deciding when to follow it. The system already has it's flaws, but at least they are defined and unchanging(unless you are changing them constantly, in which case you have a problem #3 as well). Once you add yourself as the interpreter to your system, you have unlimited potential flaws in your system, and they change every day with your mindset and physiological state.

Now that you know you have (at least) 2 problems, why not eliminate the one you have control over? Automating your "system" means that problem #2 no longer exists for you. Now you only need to be concerned with the defined and static flaws of your system. The good news is there is a tolerable rate of flaws within a profitable system. Your goal is to reduce your flaws below that tolerable limit.

tldr; Time spent automating your system is the best time you will ever spend on your system. Now you can backtest and logically modify your system towards the goal of maximum profitability. You can also throw it all out and start from scratch when the numbers tell you it's not going to work out.

Lastly, if "automating" scares you off, because you associate it with teaching yourself to be a computer programmer...don't despair. Things like EasyLanguage and NinjaScript are orders of magnitude simpler and more approachable than what you would encounter in a general introduction to computer programming. Pick a platform with a decent language and support community, master that language, and proceed from there.


Last edited by module0000; July 30th, 2017 at 03:16 PM. Reason: grammar
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  #16 (permalink)
North Carolina
 
Trading Experience: Beginner
Platform: NinjaTrader, Tradestation
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Posts: 644 since Nov 2011

Let me play devil's advocate and suggest some reasons that traditional system trading may not be the solution:

Pattern recognition
Humans are still generally far better at pattern recognition then computerized methods especially methods that are easily/readily available in most trading platforms. Deep learning is certainly improving this area.

Cognition
Humans can think. Algorithms merely capture a specific line of thinking but do not think themselves. Computers are basically Turing machines but human cognition is nothing like that. Humans have achieved far more then AI has ever achieved.

Repeat-ability
Trading systems are primarily based on the idea of repeating patterns. However, we know that some of the best times to profits in markets are the result of unique factors and events. We, also, know that the HFT spend enormous amounts of money and energy to buy access to the fastest time frames suggesting that truly consistent and robust repeatable event trading may not exist beyond the smallest time frames. If just as profitable and repeatable patterns could be found on higher time frames then why would they invest so much in getting the fastest connections, speeds, etc?

But, generally I do agree trading systems do offer many other types of advantages. The solution, as such, is probably to focus on market cognition and ways of quantifying the risk or what is quantifiable while accepting the uncertainty inherent in trading.

Accepting market cognition can not be captured in any singular system
It is probably impossible to capture human-like market cognition in any singular system and even if it did the method would likely be as blackbox as discretionary trading. However, some assortment of systems could start to simulate such a thing. This suggests that one should focus not on building the best or greatest system but rather building a set of systems established on understandable principles.

Moving toward mixed graybox style solutions
Using the backtest to help quantify the risk and position size and the exact entry while leaving aspects of the prediction and pattern recognition to the trader. This type of logic can be summarized as: It is prerequisite but insufficient to justify taking a trade merely because it was profitable in the past. As well, it is is prerequisite but insufficient to take a trade merely because one has an speculation about what the market will do in the future. Rather, you need both a historical validated conception in the past and an intuition about the future.

Building different types of systems that do not rely (as much) on past market data
This would be moving toward cognitive systems. It is a bit difficult to imagine exactly how such a system might look or behave. However, some examples might look like, if a model suggest mean reversion is going to be higher in the market with a given level of volatility then even though a particular market may not have expressed any mean reversion in the past (historical prices) that one would trade it using a mean reversion paradigm should certain predictive or indicative factors come into play, such as higher volatility. This is a simple example, obviously but illustrates the concept of how trading systems could be built in a quantitative way without relying on historical data. Such systems can trade the far right edge of the possibility, they are able to trade patterns that have never been expressed in past data.

Another example of a cognitive system might be to build a strong quantitative model of where oil prices are likely to be over the next 6 months and if they fall outside that level to trade with the breakout on the expectation that other traders bet on the quantitative model. For example, if the best quantitative models predict oil prices to stay below $60 and oil prices rise above $60, you buy oil because you know that other traders are likely caught off guard which should result in at least some temporary continuation of the move. The problem is if your models are good then you may have to wait a long time for the models to be wrong. In this way, you are inferring the actions of the other participants.

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  #17 (permalink)
Legendary Guesser
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module0000 View Post
The problem with any "system"(charts, t&s, indicators, tea leaves) exists whether or not you look at it. The problems are inherent in the system itself; the probability of designing a perfect system is unimaginably low.

That's problem #1(your 'system').

Problem #2 is you - your brain is "interpreting" your system, and deciding when to follow it. The system already has it's flaws, but at least they are defined and unchanging(unless you are changing them constantly, in which case you have a problem #3 as well). Once you add yourself as the interpreter to your system, you have unlimited potential flaws in your system, and they change every day with your mindset and physiological state.

Now that you know you have (at least) 2 problems, why not eliminate the one you have control over? Automating your "system" means that problem #2 no longer exists for you. Now you only need to be concerned with the defined and static flaws of your system. The good news is there is a tolerable rate of flaws within a profitable system. Your goal is to reduce your flaws below that tolerable limit.

tldr; Time spent automating your system is the best time you will ever spend on your system. Now you can backtest and logically modify your system towards the goal of maximum profitability. You can also throw it all out and start from scratch when the numbers tell you it's not going to work out.

Lastly, if "automating" scares you off, because you associate it with teaching yourself to be a computer programmer...don't despair. Things like EasyLanguage and NinjaScript are orders of magnitude simpler and more approachable than what you would encounter in a general introduction to computer programming. Pick a platform with a decent language and support community, master that language, and proceed from there.


Quoting 
Time spent automating your system is the best time you will ever spend on your system.

This can be achieved by using your brain as well!

1. A trading system is a set of guidelines. As a discretionary trader if your system is any more complicated than basic guidelines then you are fighting yourself.
2. The brain should not spend time interpreting your system. If you have to spend even a few seconds ‘interpreting’ system rules then that is time wasted. That is why you ‘KISS’.
3. There is only ever one of two things happening, the opportunity either exists or it doesn’t:

a. The trade is on: your structure has become evident and an appropriate entry exists within the structure.
b. No trade: No structure is evident.


The most powerful multi threaded processing unit available to you is your brain. Your training should be spent figuring out how to bypass the firewall (emotions, beliefs, assumptions etc) so that you can get access to the core processing unit. Once your basic framework has been embedded in your subconscious (through repeated practice) then it becomes a lot easier for you as the heavy lifting gets handled automatically.

If you look at the hard right of you chart, you know that a pattern is about to unfold which has occurred countless times before. Which one? No one knows but what is 100% knowable is that a pattern is about to repeat. The sequence in which these patterns occur is random and in my opinion that is where the skill and art of trading lies.

Navigate the path as it unfolds before you.

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  #18 (permalink)
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Grantx View Post
This can be achieved by using your brain as well!

1. A trading system is a set of guidelines. As a discretionary trader if your system is any more complicated than basic guidelines then you are fighting yourself.
2. The brain should not spend time interpreting your system. If you have to spend even a few seconds ‘interpreting’ system rules then that is time wasted. That is why you ‘KISS’.
3. There is only ever one of two things happening, the opportunity either exists or it doesn’t:

a. The trade is on: your structure has become evident and an appropriate entry exists within the structure.
b. No trade: No structure is evident.


The most powerful multi threaded processing unit available to you is your brain. Your training should be spent figuring out how to bypass the firewall (emotions, beliefs, assumptions etc) so that you can get access to the core processing unit. Once your basic framework has been embedded in your subconscious (through repeated practice) then it becomes a lot easier for you as the heavy lifting gets handled automatically.

If you look at the hard right of you chart, you know that a pattern is about to unfold which has occurred countless times before. Which one? No one knows but what is 100% knowable is that a pattern is about to repeat. The sequence in which these patterns occur is random and in my opinion that is where the skill and art of trading lies.

Navigate the path as it unfolds before you.

Generally, I agree with what you are saying but I don't know about patterns being evident prior to the trade entry. My view is more conditions are indicating either a bullish or a bearish underlying tone, establish the S/R level, trade the direction of the tone, buy the bull, sell the bear and let the market outcome unfold .On that basis there is often a pattern evident after the move and I most certainly would agree from decades of observation that these repeat regularly. I realize that it sounds like I am splitting hairs but there is actually a world of difference between pre trade and post trade observations, horses and carts. But then again I hold the firm view that none of us peons can know whether the next tick will be a continuation of the existing trend or the first one in the reversal. I have even seen a thread in here where they dispute the existence of trends. lol

Cheers John

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  #19 (permalink)
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Johno1 View Post
My view is more conditions are indicating either a bullish or a bearish underlying tone, establish the S/R level, trade the direction of the tone, buy the bull, sell the bear and let the market outcome unfold .

Cheers John

That is exactly what I am teaching myself to do. Use the context of the market to form an opinion on the underlying direction.



Johno1 View Post
I have even seen a thread in here where they dispute the existence of trends. lol

They must be getting mentorship from the flat earth society. I guess every village has to cop its fair share of nutcases lol.

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  #20 (permalink)
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Grant, have a look into dark pools and then realise how far behind the curve we are lol.


Sent from my iPhone using Tapatalk

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