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 Trader333 Does this imply that Elliot Wave TA is capable of predicting that when a United States ...

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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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Originally Posted by Trader333 View Post
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
Joined Nov 2009
Re: Wall Street = Casino. Minus Sum Game.

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Originally Posted by Trader333 View Post
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
Tess
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Old Jan 24, 2010, 7:42pm   #163
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Re: Wall Street = Casino. Minus Sum Game.

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Originally Posted by zupcon View Post
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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Originally Posted by Splitlink View Post
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
Joined Nov 2008
Re: Wall Street = Casino. Minus Sum Game.

Quote:
Originally Posted by Trader333 View Post
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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Old Jan 24, 2010, 9:56pm   #166
Joined Nov 2008
Re: Wall Street = Casino. Minus Sum Game.

Originally Posted by Splitlink
Quote:
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.
Of course it provides an edge isnt that the whole point of it ?

Quote:
the trader always interprets that information however he is inclined and we are all different..
Not sure how to read this .....if price is a strong uptrend and retraces to a moving average from which it has bounced on a number of occasions previously, surely this is a commonly recognised signal, which is not open to interpretation differently by all traders....surely the point is that the more commonly recognised a signal from TA is the more effective it is..... hence support / resistance etc...its real and it works and is commonly recognised....

Quote:
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.
Sure isnt that just what TA is - constant repetition of proven pattern to get an edge ????

Dont know why I get sucked into these discussions ....
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Old Jan 24, 2010, 9:57pm   #167
Joined Nov 2001
Re: Wall Street = Casino. Minus Sum Game.

Quote:
Originally Posted by zupcon View Post
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.
Not all of us go wrong. Many of us are trend followers and that is predictive, once started. At least, I think so. However, we are all looking at the same chart but we all interpret it differently.

You say that you do not want to show us your system. Well done, and I agree with you but, if you did I would wager that many of the other posters, me included, would fail to use it as you do and, therefore, would lose money simply because we cannot see and act upon it, as you do. The correct way to trade it is your edge

Last edited by Splitlink; Jan 24, 2010 at 10:03pm.
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Old Jan 25, 2010, 12:50am   #168
Joined Oct 2008
Re: Wall Street = Casino. Minus Sum Game.

Quote:
Originally Posted by Trader333 View Post
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
Your assumption is incorrect I am sorry to have to tell you. Correlation does not imply causation. The markets would have fallen irrespective of any "Presidential Speech".

For those tuned to the intent it is obvious in advance of the event. The correct time to sell the American markets was just after 09:00 EST last Thursday. As far as I am aware this is in advance of any speech making and other theatrics. The weakness was confirmed on Friday January 8 and Monday January 11.

You cannot complain I do not tell you everything.
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Old Jan 25, 2010, 2:49am   #169
 
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Re: Wall Street = Casino. Minus Sum Game.

DionysusToast started this thread
Quote:
Originally Posted by Trader333 View Post
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
No - it's a coincidence.
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Old Jan 25, 2010, 3:12am   #170
 
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Re: Wall Street = Casino. Minus Sum Game.

DionysusToast started this thread
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Originally Posted by Prawnsandwich View Post
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......
Actually - I agree with people making 'lost' of money from TA. That's the problem.

There are thousands of pieces of information that can be used to make a trading decision. I put them into 2 categories. Technical Analysis and 'Everything else'. The everthing else, I also call 'Fundamental Analysis'. A company coming to the end of it's lock-up period is part of fundamental analysis but has nothing to do with price-earnings, price-book, debt to equity etc. It is simply a moment in the life-cycle of the company where things change.

As far as tehnical analysis goes - there are 3 parameters that are generaly used and thousands of ways that these pieces of information are manipulated. Still - it's the same data.

- Volume
- Time
- Price

As far as 'everything else' is concerned we have
- market participant information
- scheduled announcement information
- insider activity information
- news
- company financial information
- company life-cycle information
- product release/approval/patent expiration
- industry information
- economic information (employment, inflation, interest rates, inventories, retail sales etc)
- index re-balancing

The list goes on & on (and to be honest, so do I).

Now - in a previous post,you stated that to use fundamentals you would have to effectively know everything about a company. This is very far from the truth. Depending on what you trade, you need to know different things.

Your state I 'categorise' information incorrectly. I see that as a compliment. My argument is there is no need to categorise information as all information is pertinent to making a decision regardless of which camp it falls into.

I would further add, that once you take a dogmatic approach and fit yourself into one of the camps and then defend it's pure use in denial of all other information, you have sealed your fate.

People do pure TA because it appears to offer a short cut. Then the short cut becomes a long route to nowhere.
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Last edited by DionysusToast; Jan 25, 2010 at 8:21am.
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