Determine Trend Direction

[Quantt]

If that worked so good, why they stop ? Too hard work throwing darts ?

These kind of studies are normally done on past data, something that beginners do. This is also why beginner's lose. They disregard the business entity that is on the other side of their trade. Businesses are for profit, they are not there to give you money.

For sure he did not trade in his hedge fund trowing darts, this study was done to illustrate that risk management is more important than precise entries and he actually did not stop, but retired very wealthy and still trading for his own account...

 

[piphoe]

risk management is more important than precise entries

i suspect this is true but don't know it for a fact yet, or with any confidence.

i'm trying to figure it now, working on it walking forward

although a great entry makes risk management less problematic

 

[EnlightenedJoe]

For sure he did not trade in his hedge fund trowing darts, this study was done to illustrate that risk management is more important than precise entries and he actually did not stop, but retired very wealthy and still trading for his own account...

According to wiki, he managed only $65M. He can't have retired as wealthy as you suggested.

https://en.wikipedia.org/wiki/Tom_Basso

If his risk management worked, he would have found a lot more customers.

 

[Quantt]

i suspect this is true but don't know it for a fact yet, or with any confidence.

i'm trying to figure it now, working on it walking forward

although a great entry makes risk management less problematic

For risk management, you might want to look in to the Kelly criterion and check the works by Ed Thorp.

 

[Quantt]

According to wiki, he managed only $65M. He can't have retired as wealthy as you suggested.

https://en.wikipedia.org/wiki/Tom_Basso

If his risk management worked, he would have found a lot more customers.

He is a multimillionaire retiree... can you please let me know what wealthy means to you, 100M, 1B? 10B? 1T?

 

[EnlightenedJoe]

He is a multimillionaire retiree... can you please let me know what wealthy means to you, 100M, 1B? 10B? 1T?

Demo pips suggested by Post 2508 at https://www.elitetrader.com/et/threads/money-management.59325/page-14

Multimillionaire is wealthy. Had he been able to to translate his demo pips into real pips, he would have a lot more money.

 

[Quantt]

Demo pips suggested by Post 2508 at https://www.elitetrader.com/et/threads/money-management.59325/page-14

Multimillionaire is wealthy. Had he been able to to translate his demo pips into real pips, he would have a lot more money.

Or he could have lost everything and living Under the Bridge (by RHCP)

 

[EnlightenedJoe]

Or he could have lost everything and living Under the Bridge (by RHCP)

Demo pips wouldn't have bought him a spot under the bridge. He was wise to retire early. That should serve as a lesson for other demo pip fanciers.

 

[Quantt]

Demo pips wouldn't have bought him a spot under the bridge. He was wise to retire early. That should serve as a lesson for other demo pip fanciers.

Yep, I am sure his demo account made him the millions...

 

[EnlightenedJoe]

Yep, I am sure his demo account made him the millions...

I said no such thing. I said demo pips made him nothing. It's a warning about demo pips and those who chase after demo pips.

 

[Quantt]

I said no such thing. I said demo pips made him nothing. It's a warning about demo pips and those who chase after demo pips.

The point was that he did in fact used the same risk management strategy in his real trades and that is what made him money, because he can actually control the risk through the betting size...

 

[EnlightenedJoe]

The point was that he did in fact used the same risk management strategy in his real trades and that is what made him money, because he can actually control the risk through the betting size...

Retiring early is a sign it didn't work.

 

[Quantt]

Retiring early is a sign it didn't work.

Or a sign that at age 50+ one doesn't want to run a business anymore, manage people, do all the regulatory paperwork and have more than enough money to trade them only for himself and enjoy life and play golf all day with friends...

 

[Dowser]

One of the ways I define a trend is bar closes above/below a moving average (typically 5 EMA) this can be applied to any time frame, but for me and my trading style it will range from M5 to H1

A nice example on both the 15 minute and 5 minute charts today from the 14.30 open, blue line is 5EMA. It not normally this easy or obvious btw!

 

[EnlightenedJoe]

Or a sign that at age 50+ one doesn't want to run a business anymore, manage people, do all the regulatory paperwork and have more than enough money to trade them only for himself and enjoy life and play golf all day with friends...

Possible.

But people who don't play demo pips are more motivated because the reward is way better. Take soros, he now looks like the emperor from star wars and he still wants to work. Take warren buffet. Have you ever heard about these people play demo pips ?

 

[Quantt]

Possible.

But people who don't play demo pips are more motivated because the reward is way better. Take soros, he now looks like the emperor from star wars and he still wants to work. Take warren buffet. Have you ever heard about these people play demo pips ?

We live in 21st Century, so indeed everything is possible... And Soros and Buffett do back tests based on past data, as far as I know no one has invented the crystal ball yat...

 

[EnlightenedJoe]

And Soros and Buffett do back tests based on past data

That's just your wishful thinking. Economic value is not determined by past data. It is determined by current data.

If a shop had 10 trays of cakes on the shelf last week, it has no bearing on how many trays on the shelf this week.

 

[Quantt]

That's just your wishful thinking. Economic value is not determined by past data. It is determined by current data.

If a shop had 10 trays of cakes on the shelf last week, it has no bearing on how many trays on the shelf this week.

How do you think Buffett evaluates a company? Looking only at the data from this week or maybe the last two weeks?

 

[Dowser]

Objective: Build a master list of methods for determining trend direction.

Please read the thread objective before posting. Thanks

Are we getting a bit off track lads?

 

[Quantt]

Are we getting a bit off track lads?

Yep sorry, looks like we are both very passionate and it got completely out of hand...