Do we over complicate this?

[Lodian1019]

Just a thought, we massivley over complicate trading, with our hundreds of indicators and theories. It goes up or it goes down(flat on occasion) You buy or you sell. Make a set amount of money and out or lose a set amount of money and out.

Instead of "well when it does this , and crosses that i will look for this to do that"

Just my 2 cents.

Lodian

 

[HowardCohodas]

Has this outlook made you successful as a trader?

 

[FX Bandit]

LOL.

But yes, successful trading really is very simple (and very hard of course). That said, in my case it took a lot of study and testing, along with a little fairly bitter experience, to realise that simple is better, for me at least.

 

[Ambrose Ackroyd]

Yes

 

[meanreversion]

I think that we do over-complicate things. However, if you look at a fund such as Winton, run by David Harding, ex of AHL fame, he claims to employ hundreds of PhDs and astro-physicists blah-di-blah. Now, this fund is successful but is really just a systematic trend fund. Part of me wonders whether the spiel about all the academics on board is to reassure the investors, or whether there really is some edge in getting very complex.. I dunno.

Here's a useful website - http://www.automated-trading-system.com/resources/trend-following-wizards-fund-performance/

All these funds are systematic trend followers. Now, if all their returns were within, let's say, two percent, then maybe you could argue 100 PhDs is better than 50 PhDs. But their returns are incredibly varied, so I'm simply not convinced that adding a bunch of academics to the payroll means better future performance.

So in essence, I agree with the OP, I think people in general DO over-complicate.

 

[Albert Carey]

Computer bytes are also simple. You get 1 or 0. So instead of using a compiler, it is simpler to write programs or read computer output using 0 an 1 according to you.

 

[glyder]

To me everything seems too bloody overcomplicated these days.
And not much of it needs to be that way.

 

[meanreversion]

I'm sure Avril Lavinge would agree with you. Why d'ya have to go and make things so complicated .. ?

 

[HowardCohodas]

To me everything seems too bloody overcomplicated these days.
And not much of it needs to be that way.

Surprisingly, as an automation specialist, one spends most of ones time simplifying things.

The same goes for my trading life. So many tools, displays, graphs, data, newsfeeds, etc. drain your brain of it's ability to notice opportunity or danger and take appropriate action. After completing my trading strategy, I noticed that I had way to much information that I was looking at to make effective management decisions. I embarked on a process of reducing it to its bare minimum. My Trader's Dashboard now is quite sparse. Only the information needed to identify that action is required. Then I move to a display containing the necessary information to carry out the action.

I'm in the process of writing an article on my Trader's Workbench a part of which is the Trader's Dashboard. In the process of writing the article I found I could simplify even more when I came to writing the justification in including some items that had still remained on the Dashboard.

 

[0007]

Information overload and the brain's difficulty in coping (apart from just doing a dump) is the biggest hindrance to successful trading IMHO.

William of Occam (who wasn't a trader) got it right centuries ago. Research him and you will have one of the keys to successful trading.

 

[glyder]

.

William of Occam .

Its a new name to me, I'll have to look it up.
But if he wanted to get rid of govt, local councils, income tax, red tape, form filling administrative time wasting , bureacracy in general, nonsensical airport security, and facebook twitter type things then he is a good bloke IMO.
Humans want to complicate things. They generally don't know how to simplify things.

 

[HowardCohodas]

Information overload and the brain's difficulty in coping (apart from just doing a dump) is the biggest hindrance to successful trading IMHO.

William of Occam (who wasn't a trader) got it right centuries ago. Research him and you will have one of the keys to successful trading.

Ahhh, Occam's Razor which postulates, "the simplest explanation is more likely the correct one." It deals with choosing between hypotheses.

While true, I'm not sure how that applies here. We are not taking about competing hypotheses as much as simplifying the data/information used in making a decision

Back to Occam's Razor, had my doctors followed that to the letter, I would be dead at the moment. Physicians are taught in medical school that "when you hear hoofbeats, think horses, not zebras." That is, the simplest explanation of a phenomena is usually the correct one. I wear a zebra wristband to remind me that sometime the hoofbeats signal a zebra.

 

[0007]

Ahhh, Occam's Razor which postulates, "the simplest explanation is more likely the correct one." It deals with choosing between hypotheses.

While true, I'm not sure how that applies here. We are not taking about competing hypotheses as much as simplifying the data/information used in making a decision


Back to Occam's Razor, had my doctors followed that to the letter, I would be dead at the moment. Physicians are taught in medical school that "when you hear hoofbeats, think horses, not zebras." That is, the simplest explanation of a phenomena is usually the correct one. I wear a zebra wristband to remind me that sometime the hoofbeats signal a zebra.

"It deals with choosing between hypotheses." Yes - you're right! Perhaps what I had more in mind was Eistein's "make it simple enough for purpose but no simpler" - which if you have a number of systems to choose from then perhaps Wm of Occ. can help us.

I empathise greatly with your comments on doctors; but it's those doctors that know or are prepared to find out the difference between horse & zebra hooves that are the good (and often rare) ones.

As for over-complication in general - am I being cynical in thinking that there is an "over-complication industry" with an agenda?

 

[HowardCohodas]

"It deals with choosing between hypotheses." Yes - you're right! Perhaps what I had more in mind was Eistein's "make it simple enough for purpose but no simpler" - which if you have a number of systems to choose from then perhaps Wm of Occ. can help us.

I empathise greatly with your comments on doctors; but it's those doctors that know or are prepared to find out the difference between horse & zebra hooves that are the good (and often rare) ones.

As for over-complication in general - am I being cynical in thinking that there is an "over-complication industry" with an agenda?

Einstein's reference is spot on.

I'm less cynical about the reason for over-complication. I think it's generally a result of laziness. When trying to "control" things we put all kinds of restrictions (what ifs) on things without taking the time to understand their effect on the result. This tendency to over complicate is also a result of using complexity to obfuscate a lack of understanding what are the fundamental principles.

My conclusion... Laziness. It takes work to make things simple.

 

[sinimini]

Surprisingly, as an automation specialist, one spends most of ones time simplifying things.

The same goes for my trading life. So many tools, displays, graphs, data, newsfeeds, etc. drain your brain of it's ability to notice opportunity or danger and take appropriate action. After completing my trading strategy, I noticed that I had way to much information that I was looking at to make effective management decisions. I embarked on a process of reducing it to its bare minimum. My Trader's Dashboard now is quite sparse. Only the information needed to identify that action is required. Then I move to a display containing the necessary information to carry out the action.

I'm in the process of writing an article on my Trader's Workbench a part of which is the Trader's Dashboard. In the process of writing the article I found I could simplify even more when I came to writing the justification in including some items that had still remained on the Dashboard.

I say! You type with such magniloquence, but you lost me when you started talking about trader's workbenches dear man. Is that like wot joiners use?

 

[jel31]

I like this quote with reference to indicators etc. versus simple PA:

"The ability to simplify means to eliminate the unnecessary so that the necessary may speak." - Hans Hofmann

Written by a statistician not a trader but rings true nonetheless IMVHO...

 

[HowardCohodas]

I say! You type with such magniloquence, but you lost me when you started talking about trader's workbenches dear man. Is that like wot joiners use?

I apologize. I made a reference without proper background.

The idea of a Trader's Workbench comes from the idea that successful traders take more of a "Trade School" approach to the subject rather than a "University Education" approach.

I used this idea as a model for explaining my tool sets for managing my trades in an article I am writing.

I've been criticized by BlackSwan for offering to send anyone who wants a copy when it is complete to PM me. Therefore, I will try to publish it in this forum or start a thread linking to a copy.

 

[Depth Trade]

Lol, you are not ever going to find a profitable trader that will make the statement about trading being simple. If that was true, you would have 200k+ profitable traders. This should be totally obvious, trading profitably and consistently is one of the hardest jobs in the world.
I highly doubt one person that commented on this thread can turn a profit.

Are you watching the price of Cotton, Oats, Bund and know how it correlates with the E euro?

 

[Depth Trade]

OK then, show us how easy it is. It is 10am where I am at and it will eventually roll into pacific market opens, certainly there is enough time to show us how simple this game is.

 

[HowardCohodas]

Lol, you are not ever going to find a profitable trader that will make the statement about trading being simple. If that was true, you would have 200k+ profitable traders. This should be totally obvious, trading profitably and consistently is one of the hardest jobs in the world.
I highly doubt one person that commented on this thread can turn a profit.

Are you watching the price of Cotton, Oats, Bund and know how it correlates with the E euro?

Your post is what my friends in the military call "a target rich environment." Thanks for the target practice.

Simple does not imply easy...
Einstein's equation relating energy to mass was simplicity in itself. Yet is required insights, leaps of imagination and deep thinking that I can barely imagine.

Euler's equation, known as the most beautiful equation in mathematics, relates the five most important constants in mathematics, e, i, pi, 0, and 1. It is beautifully simple. I love it's beauty, but I could not have come up with it myself.

You doubt that anyone commenting in this thread can turn a profit...
Does that include you? If it does, then it puts you in a place of being outside looking in. Not a good position from which to understand what is inside.

I worked on my strategy for over a year. When I decided to teach it, I opened a separate auditable account devoted exclusively to this strategy to give confidence to my students.

I funded that account on 9/1/2010. That account is now 34% larger then when I funded it and grew solely from the proceeds of the strategy. That comes out to about 10.6% per month. I don't know if this performance will continue, but I will work the strategy until it proves no longer successful. And I will teach it until it no longer proves successful. Then I'll develop a new strategy and exploit and teach it.