Automatic Pattern Search

This is a discussion on Automatic Pattern Search within the Trading Software forums, part of the Commercial category; Dear Alex, I see that you are an experienced user of APS and most probably a very experienced trader too. ...

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Old Feb 5, 2009, 9:42am   #231
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Dear Alex,

I see that you are an experienced user of APS and most probably a very experienced trader too. I'm thinking of getting a copy of this program and I would like to hear from you if it does what it's developers describe on their website.

Jim
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Old Feb 5, 2009, 2:56pm   #232
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I do not think this program would help to experienced traders. This program may help you for some period of time, but testing it on "new data", using few alternative aproaches, I see that it may lead you to a disaster in long run. And APS actually understands it, recommending to rerun the search every 6 months for daily bars. But every rerun means invalidation of the work you did before.
Any trading system must be based on some well sounded idea. APS has one, when it teaches how to calculate and use profitability. But that's it. Just searching for random combination of bars, where only boolean logic was under consideration (i.e. true or false, 1 or 100 points difference in price considered as same statement), and offering this statistical result of the past will not give you an edge in thrading business. Everyone should understand clearly, this software does a good job finding what was promised - combination of bars based on your criteria. It is a good use for theorists, but for traders it is under a big question.
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Old Feb 5, 2009, 4:02pm   #233
 
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Originally Posted by jimbotrader View Post
Dear Alex,

I see that you are an experienced user of APS and most probably a very experienced trader too. I'm thinking of getting a copy of this program and I would like to hear from you if it does what it's developers describe on their website.

Jim
It does what is supposed to do and much, much more if you can figure out ways to use patterns to configure advanced systems.

Alex
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Last edited by alexander; Feb 5, 2009 at 4:19pm.
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Old Feb 5, 2009, 4:18pm   #234
 
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Originally Posted by fobos View Post
Just searching for random combination of bars, where only boolean logic was under consideration (i.e. true or false, 1 or 100 points difference in price considered as same statement), and offering this statistical result of the past will not give you an edge in thrading business.
I do not agree that APS searches for random combinations of bars. Actually, it does not do that:

Using APS FAQ

If you have the program just look at the results. Most patterns exhibit some kind of logic and order, for example double bottoms, key reversals, etc. Also, random patterns are unlikely to stay profitable any any market for 6 years as it is shown in this article:

Tradingpatterns.com Michael Harris paper on pattern robustness

I know there are some other programs that do combinatorial searches but this is not what APS does to the best of my knowledge. Maybe some people think that because Michael Harris presented a combinatorial method of finding patterns in one of his books but I was told by his staff that APS is not based on such method.

Alex
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Old Feb 5, 2009, 6:25pm   #235
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Michael Harris idea is a simple one (to find statistically profitables price patterns) but the way he presented it is quite deep and somewhat circumvoluted (he's a systems engineer, for goodness's sake!) so he is bound to confuse those people who are less inclined to use maths for finding solutions which can be found in a less exacting and more intuitive way.
The APS is a data mining engine (Harris himself made this clear) and it does what it says - boy, can you find patterns "in them thar hills" when you run it.
Trading successfully is, however, more than selecting a few patterns (harris was also quite clear about this, too) and trading them, which is where the difficult bit starts.

Eduardo.
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Thanks! The following members like this post: alexander
Old Feb 9, 2009, 5:20pm   #236
 
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Trading successfully is, however, more than selecting a few patterns...

Eduardo.
True. Trading successfully requires proper capitalization, psychology and above all a dynamic risk and money management method.

Alex
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Old Feb 12, 2009, 5:50pm   #237
 
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"...and above all a dynamic risk and money management method"

example?
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Old Feb 16, 2009, 11:48am   #238
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"...and above all a dynamic risk and money management method"

example?
I would recommend Van Tharp for psychology and money management. Try 'Trade your way to Financial Freedom' for its commentary on position sizing, expectancy and system development. Van's site - Trading Education.

Van is a coach of traders so his work extends into psychological development and resolving the inherent flaws and disadvantages that each of us has. These flaws prevent us from achieving our best and we can see their effects in the biases that each of us brings to our life/trading, i.e. The need to be right, lotto, representation, etc.

Van was one of the experts that appeared in Jack Schwager's 'Market Wizards'. One of the truths that both Jack and Van identified is that any trading system must fit the psychology of the person using it. Jack interviewed the great and good of the trading world and found they were all very successful because their trading fit their personal beliefs. Their success had nothing to do with the market they chose, timeframe or geographical location. It had everything with their character, trading plan and successful use of money management.

APS looks like an excellent program but if it does not fit with how you live your life or the beliefs that you bring to the market then you will not get the full benefit of it because you and it will clash. Depending on your beliefs you could go your own way and ignore its signals or create new signals because you think it should trade differently.

I attended a conference in London where the famous trader Larry Williams was a speaker. He told a story of how his laptop with all his trading setups and data was copied at another con. He wondered how the person who did that got on with all the different systems he would use from day to day. He looked each year at the ratings in the Robbins world trading cup for someone getting similar results to himself, there never was. He was the secret to his own success. I remember him saying that he could give each of the attendees daily updates detailing what to buy, how much to buy, when to sell, how much to sell and no one would follow it precisely because everyone's personal biases would get in the way.

Mr Williams colourful life story - http://en.wikipedia.org/wiki/Larry_Williams_(trader)

Personal psychology and a sound money management plan are the bedrocks of trading success. I also like the book Way of the Turtle - Way of the Turtle: The Secret Methods that Turned Ordinary People into Legendary Traders: Amazon.co.uk: Curtis Faith: Books

Last edited by jorune; Feb 16, 2009 at 11:57am. Reason: Edited for grammar.
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Old Feb 17, 2009, 10:13pm   #239
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Originally Posted by jorune View Post
I would recommend Van Tharp for psychology and money management. Try 'Trade your way to Financial Freedom' for its commentary on position sizing, expectancy and system development.
Fixed fractional position sizing:

http://www.tradingpatterns.com/PositionSizing.pdf

Expectancy derivation and %Kelly position sizing:

http://www.tradingpatterns.com/Kelly.pdf

Both from a person who actually trades.
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Old Feb 18, 2009, 1:32am   #240
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Quite.
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