Wall Street = Casino. Minus Sum Game.

This is a discussion on Wall Street = Casino. Minus Sum Game. within the General Trading Chat forums, part of the Reception category; Originally Posted by zupcon TA is NOT predictive, its not supposed to be predictive, nobody with the slightest amount of ...

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Old Jan 24, 2010, 4:55am   #151
 
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Re: Wall Street = Casino. Minus Sum Game.

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Originally Posted by zupcon View Post
TA is NOT predictive, its not supposed to be predictive, nobody with the slightest amount of credability ever claimed TA was predictive. The only people who believe TA is predictive are the retards who waste ther time on trading forums !

TA does not need to be predictive in order to profit from its use.

I've asked this question 1000 times before to people who whitter on about predictive TA, WHERE exacly did you read that TA was predictive, what exactly is the source of this ridiculous urban myth ? Is there anyone who can answer that ?
Well - there's plenty of books at your local book store that claim TA provides you an 'edge', that certain technical set ups make a move in a certain direction probable.

If something is more probable based on past information, then it has a predictive quality.
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Old Jan 24, 2010, 2:16pm   #152
 
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Re: Wall Street = Casino. Minus Sum Game.

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Well - there's plenty of books at your local book store that claim TA provides you an 'edge', that certain technical set ups make a move in a certain direction probable.
Technical Analysis does provide an edge. Statistical analysis of my trading results proves this to be the case. The validity of TA is simply not in doubt.

I personally havn't seen any reasonable discusion of Technical Analysis in a book, or on a public forum (and I'm quite widely read). This would certainly account for why the majority fail using a fundementally flawed TA approach. You would expect no less
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Old Jan 24, 2010, 2:29pm   #153
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Re: Wall Street = Casino. Minus Sum Game.

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Originally Posted by DionysusToast View Post
Well - there's plenty of books at your local book store that claim TA provides you an 'edge', that certain technical set ups make a move in a certain direction probable.

If something is more probable based on past information, then it has a predictive quality.
Is this 50% probable , or more than 50% or less than 50%?
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Old Jan 24, 2010, 3:28pm   #154
 
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Re: Wall Street = Casino. Minus Sum Game.

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Is this 50% probable , or more than 50% or less than 50%?
The probability of the set up is a completely irrelevant question and you know it !
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Old Jan 24, 2010, 3:44pm   #155
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The market can tank at any time. I didn't see any TA guys predicting the drop last week.
In that case, can I jump in here just to point you to the "swinging the FTSE 2010" thread, where you'll see exactly that from Max, using Elliot Wave TA?

I should add I'm not saying anyone here is wrong, or right, about TA/FA/discretion etc.

Just giving an example of a "TA guy" that seems to have predicted the moves to a nicety.

regards
Tess
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Old Jan 24, 2010, 4:43pm   #156
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Originally Posted by DionysusToast View Post
Well - there's plenty of books at your local book store that claim TA provides you an 'edge', that certain technical set ups make a move in a certain direction probable.

If something is more probable based on past information, then it has a predictive quality.
Most of the time TA gives a signal to keep going in the direction of the main trend. Trends change with difficulty...so they say. However, there is a saying that a price can turn on a dime. Who is right?

Edges are the product of one's own interpretation of the Law of Probabilities. TA provides no edge, it only presents the positions of price closings, openings, highs and lows. The trader always interprets that information however he is inclined and we are all different.

That is why I believe that constant repetition of a proven pattern is what a trader must learn and, if he is right enough times out of ten, then he has an edge.

Without that, TA is as helpful as a candle in a gale.
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Old Jan 24, 2010, 4:49pm   #157
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Re: Wall Street = Casino. Minus Sum Game.

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Originally Posted by DionysusToast View Post
Dante - has already admitted that his methods do not work on all markets. Doesn't this qualify as using discretion ?

Mr Charts - You don't know the whole picture. How do you think he's got the right stocks on his screens at the right moment ? You think he has all of them up ? What about the other parts that he uses, tells you about on the thread but doesn't harp on about because he doesn't want to come across as a salesman ?

Do you think as well that Mr Charts will be in a day trade during an FOMC announcement ? Isn't this a fundamental.

Again and again, fundamentals will trip you up if you only focus on technicals.
Of course TA can involve discretion, I dont think there has been anyone arguing that discretion should not be used as part of a TA method. The level of discretion can vary from method to method, ranging from almost fully mechanical systems to ones with high levels of discretion. However, that discretion typically would not involve any aspect of FA.

Staying out of the market ahead of major news such as earnings or FOMC announcement is not trading using FA. Any decent TA trader knows to stay out of market ahead of such news. Even FA investors would often go to cash ahead of such news. This is not Fundaemntal Analysis - it is not gambling ahead of a major event of which you do not know the outcome. So there is no argument that if you are a TA trader you should stay out of market with pending news. It would also be common for FA investors to stay out of market ahead of such news.


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You have some misconceptions about fundamentals. What you have done is limit yourself to technicals and convinced yourself that to expand this, you would have to learn everthing. Let's say you have a nice pullback in the stock - good time to go long, but the company is about to go bankrupt. It would not take a genius to find this, it'd take about 1 minute.
This is a ridiculous statment. If the company was about to go bankrupt, and you can find this out in one minute, do you not think that there may be a possibility that price might already be reflective of the impending banruptcy, ie tanking rather than pulling back nicely ?

I have absolutely no misconceptions about fundamentals - unlike you I have a clear understanding of what Fundamental Analysis is about.

Quote:
The market can tank at any time. I didn't see any TA guys predicting the drop last week.
This guy did :

http://tradermike.net/


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Like I said. You are limiting yourself to a subset of information which by it's very nature is limited to a very small number of parameters. Real life is not like that.
Oh gee, thanks for giving me some of your expert insights about real life....

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There is simply no reason to distinguish between TA & FA.
Of course there is - they are two completely different approches to trading markets, with clearly generally accepted definitions.

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All you have is information about the past. Using that information about the past, you can make judgements about the future. With fundamentals though - there is also information about the future. When a stock is first put on the market, there's a 4 month quiet period and a 6 month lock-up period during which insiders can't sell the shares they gave themselves. So - 4 months where they can't pump the price up followed by 2 months where they can at which time they can start to offload their holdings. For this scenario, you don't have to know everything about the company. Like a game of poker, the players may tip their hands as to what they are going to do.

Like I say - if you only use technicals, a lot of your trades WILL go bad because of fundamentals. If you don't look back on your losing trades, you wont see it. If you do look back on your losing trades, you will stay out of the market at key times..
Again, you are confusing Fundamental Analysis with taking account of news.....one of the first things I do prior to taing a position is to check if there is any upcoming company events, news or earnings etc. I am not analysing the company from a fundamental viewpoint ie is the company good value, is there product good, what are current / projected market demand etc..etc. When I take the position I wont know much about the company, but I will know that there is no upcoming news or events.

Your your definition of FA switches one minute from putting yourself in the shoes of the directors to figure out what way the company is going to take to on the other hand saying that FA involves staying out of market ahead of news, two very different things.

The latter is not Fundamental Analysis and only confuses the issue. Likewise, saying that the only thing that makes TA work is discretion muddies the waters also, when discretion can be an intrinsic part of TA.

However, the main point of your arguments on this forum, which appear to be ever increasing in number, is that TA wont work without incorporating Fundamental Analysis is absolutely wrong, and your continued refusal to accept that there are many people making lost of money from TA trading is getting more and more irritating despite the evidence in front of you.....I would respectfully suggest that you undertake more research......
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Old Jan 24, 2010, 5:35pm   #158
 
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Re: Wall Street = Casino. Minus Sum Game.

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Edges are the product of one's own interpretation of the Law of Probabilities. TA provides no edge, it only presents the positions of price closings, openings, highs and lows. The trader always interprets that information however he is inclined and we are all different.
You are completely wrong, and I could, if I wished, show solid evidence to prove that is the case.

Even the simplest of technical indicators can provide an edge, even used mechanically and without discretion. I can derive a tradable edge from practically ANY common indicator, or TA concept.

before anyone asks, no, I'm not sharing anything with anyone
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Old Jan 24, 2010, 5:47pm   #159
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aaaawwwwwww, go on! *G*
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Old Jan 24, 2010, 6:11pm   #160
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Re: Wall Street = Casino. Minus Sum Game.

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In that case, can I jump in here just to point you to the "swinging the FTSE 2010" thread, where you'll see exactly that from Max, using Elliot Wave TA?
Does this imply that Elliot Wave TA is capable of predicting that when a United States President makes a speech that the content of it then causes the markets to fall ?


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Old Jan 24, 2010, 6:21pm   #161
 
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Re: Wall Street = Casino. Minus Sum Game.

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Does this imply that Elliot Wave TA is capable of predicting that when a United States President makes a speech that the content of it then causes the markets to fall ?
I'm sure thats exactly the sort of riduculous claim that Robert Pretcher might actually make. The majority contributing to this thead really do need to read some Nicholas Taleb
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Old Jan 24, 2010, 7:22pm   #162
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Re: Wall Street = Casino. Minus Sum Game.

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Does this imply that Elliot Wave TA is capable of predicting that when a United States President makes a speech that the content of it then causes the markets to fall ?
Well certainly not implied by me. My post was in direct response to the remark in the post I quoted. I've no idea if Max did it with a combination of Elliot waves and entrails...just that he did it. Further comment would have to be from him.

regards
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Old Jan 24, 2010, 7:42pm   #163
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You are completely wrong, and I could, if I wished, show solid evidence to prove that is the case.

Even the simplest of technical indicators can provide an edge, even used mechanically and without discretion. I can derive a tradable edge from practically ANY common indicator, or TA concept.

before anyone asks, no, I'm not sharing anything with anyone
No. neither am I ! But I would put to you that whatever it is that you see is a product of your own interpretation of what there is to see. After all, we are all looking at the same thing.
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Old Jan 24, 2010, 9:07pm   #164
 
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Re: Wall Street = Casino. Minus Sum Game.

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No. neither am I ! But I would put to you that whatever it is that you see is a product of your own interpretation of what there is to see. After all, we are all looking at the same thing.
Part of my trading methodology, involves taking completely random trading decisions. These crazy trades result in a distribution of gains and losses. In addition, I also take trades based on technical and statistical analysis, and these trades also result in a distribution of gains and losses.

If you compare the distributions from both approaches, they are different, and the difference is statistically significant. The difference are not imaginary, and the statistics suggest that they are not due to random chance. The difference between the means are statistically significant, and the shape of the distributions in returns are completely different.

Experience shows me that I can profit by trading with my TA signal, but more importantly I can equally well make a loss by trading against that signal. A key part of the ongoing development of my strategy is to continually demo trade fading the TA signal.

You might argue that gains may be due to good luck (its an argument that I've made), but the probability of simultaneously incurring losses from fading TA signals on other instruments and timeframes, on the basis of chance, surely has to be quite astranomical (although I concede its possible).

I would therefore argue that there is no imagination involved. I have a bunch of equity curves with positive gradients based on TA, and a bunch of equity cures with negative gradients based on trading against the TA, but the evidence for TA is actually much stronger.

The TA that I use, in common with most of the stuff out there has adjustable parameters. Some weeks parameter X may provide the optimum results, the week after parameter Y, and the week after parameter T etc. The returns between the best and worst can typically differ by a factor of 2. For the last 3 years, I've been banging my head against the problem of determining methods for self optimisation of these parameters.

Until this particular problem is solved, I'm forced to trade a larger number of small diversified positions and to take the rough with the smooth.

You are not going to like this one little bit, but if parameter X results in the best result over a given time period, then fading parameter X in the majority of cases results in the worst results over the same period. I'd argue thats quite compelling evidence.

Before anyone says, well of course, the opposite to a winning system will be a losing system, I need to make things clear. If I get a signal to buy EURUSD, the systems that are fading the TA signals do not necessarily take a sell trade, it happens on occassions, but its actually quite rare. They are totally independant systems that are running out of phase, they may already be in another trade, or they may be in a dormant state as they are programmed to randomly activate and deactivate throughout the day.

The other issue is that all of the elements of my systems contribute to my edge, so even in the case where you fade a TA signal, the other system components tend to compensate, and the system performs better than might be expected.

However, If I strip systems down to their most basic elements, the equity curves from the TA signal, v fading the TA signal are practically mirror images, one goes up, the other goes down.

I've been trading this method since 2005, I have tens of thousands of trades, and more statistics than you can shake a stick at. I use some pretty clever proprietry indicators, but only because I spent a great deal of time and money devloping them, to be brutally honest I can get similar (if not better) results from practically any indicator that I've tried. If you think about it, that really shouldnt come as a surpise.

I've had arguments with the "all is known in advance crowd", Mr Socco, Starspacer, Mr Marcus etc. I've argued that its possible that there is no cause and effect, and that a profitable traders results could be due to luck, and intellectually, I understand that allthough very improbable, it is a possibility. It was entirely due to these issues that I took a far more statistically rigorous approach to my trading.

There's loads of evidence I could present, I'm only scratching the surface as most of what I do is proprietry. Its one of those things you cant prove or disprove without revealling full details of the methodology, but anyone whose done a bit of basic research into system design, probably knows enough to realise that TA can provide a mechanical edge.

Everyone goes wrong by assumming TA is predictive and it isnt.
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Old Jan 24, 2010, 9:11pm   #165
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Re: Wall Street = Casino. Minus Sum Game.

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Does this imply that Elliot Wave TA is capable of predicting that when a United States President makes a speech that the content of it then causes the markets to fall ?


Paul

What if the markets were already at a top just before the speech......

http://tradermike.net/2010/01/januar...k_market_recap
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