Hey, Techies......Reality Check

[marketsurfer]

hey hank - you still short oil??

yes, i shorted oil, once again, yesterday @ an average price of 60.60

 

[ducati998]

rogue

That, you would have to elaborate on, though I suspect you have used my generalisation as an excuse to make a generalisation of your own,

To a certain extent. Generally it is taken to mean that for every buyer there is a seller, and one of them is wrong, therefore one will lose money and the other will make money at their expense.

This is obviously inaccurate, but that is not the point that is relevant.

To make a profit in the market, through trading or investing, you have to define how you will be paid.

Example;
If I buy GOOG @ $300 a share, how will I be paid?
There is no dividend...........cross of the list.
If it goes bust, and is either reorganised or liquidated, will I see my money again?...cross off.
Is it likely to be bought out, and if so what is a reasonable price to pay?
Does it have "Options" that I can utilize during a holding period........yes, so 1 possibility.
Are the reinvested profits expanding the capital base at a rate that the earnings will amortize my purchase price, over what timeframe?
Can the business make a return on capital that allows others to also? This is the theory underlying the cost of capital
Am I relying on someone else paying a higher price...........greater fool theory.

Now, to raise the prospect of being paid in the market, the more of the above conditions that you and others can employ, the easier it becomes to make money.

In other words, if others can make money, as well as yourself, you as an individual will do well.
As soon as you start to rely on a single method, viz. "the greater fool" the less likely, and more difficult it becomes, as you are simply banking on hope, that others are more stupid than yourself.

Now technical analysis, what does it rely on?
Well in some cases, any number of the above.
In others, simply the greater fool theory.

The problem of course is that from a chart, you have no idea of the ones that incorporate a number of factors, and those that incorporate just the one, and shift you into the reality of the zero sum game.

cheers d998

 

[SOCRATES]

hey socrates,

you are a good writer, i enjoy reading material! Have you read "Winner Take All" by Gallacher regarding TA? I am not baffled nor confused by TA but merely question the validity of something that can not be tested objectively and relies on the past to make decisions into the future. in addition, price patterns only exist in hindsight by definition--there are inherent logical issues with absolute reliance on TA that i will be happy to elaborate on if anyone cares.

stay well,

surfer

Hello surfer, thanks for your reply.

No, I have not read the book you mention. In fact I haven't seriously put my attention on any books related to the market for a very long time. The last book I read was written by Schultz, and that was about four years ago.

I agree absolutely with your viewpoint since I am now more clearly able to verify your frame of reference.

What you say is correct.

Using the past as a yardstick to compare what might develop is unreliable, and I agree with you. This is because market conditions are forever changing, and this presents a kaliedoscope of possiblilities.

My approach is the other way round. I am not necessarily concerned with the past, because the object of my interest is the net present, the immediate future and the future.

I arrive at my conclusions by looking in via the opposite end of the pipe.

I will tell you that after a very long time of familiarity with this viewpoint it has become second nature to me.

I would find it very difficult to view what you describe with all its unavoidable uncertainties.

This is why I am not interested in the idea of backtesting at all.

What I do is forward testing, by looking along the pipe of time to discern future developments not clearly manifest, but clearer and clearer as net present time overruns net future time.

After one is "grooved" into this way of being and thinking, it becomes second nature to detect what is being prepared to be "released" from net future time into net present time and thus synchronise with what is actually happening now, this very minute.

The advantage of this is to be able to anticipate what is going to happen next before it happens and to prepare how to act in response to it in good time in order to take full advantage ot the event when it eventually synchronises, which could be minutes or hours and sometimes days in advance of the event.

 

[marketsurfer]

zero sum??

first, trading is actually a negative sum game. you always lose more than the amount risked and make less when you win due to the vig or commission. the question here is not FA or TA as FA falls on its face often as we saw in grand fashion during the internet boom. the market is a game of perception not reality. to the TA people, i ask, ever see a chart of random numbers within the parameters of an average stocks daily movement? if you have, you will see double tops, pennants, et al all over the place. are they predictive? of course not, as we know they were created randomly.

 

[roguetrader]

OK Ducati, you're gonna have to bear with me on this one as it isn't something I have given a great deal of thought to, even though it is something I have quoted. On the surface it seems reasonable to me, and also depending on how you look at it. Here is one concept, not I confess my own work. Your example deosn't really make any sense to me as none of it is relavant to me. Is GOOG going bust, hopefully not in the next 10 minutes.

Try this.


In financial markets, the “majority is always wrong.” When the investing majority or the crowd is overly bearish, this is the best time to be buying stocks. When the crowd is overly exuberant, this is the time to be selling stocks. The financial markets work in this ironic way because not everyone can win in the market. If it were possible for everyone to win in the markets, this would mean that money is being created from nothing. The creation of money, in this manner, is impossible. Therefore the markets are a zero-sum game. Zero-sum means that for every winner, there is a loser. The winner takes the losers money. Zero-sum games are games where the amount of "winnable goods" is fixed.

 

[marketsurfer]

Hello surfer, thanks for your reply.

No, I have not read the book you mention. In fact I haven't seriously put my attention on any books related to the market for a very long time. The last book I read was written by Schultz, and that was about four years ago.

I agree absolutely with your viewpoint since I am now more clearly able to verify your frame of reference.

What you say is correct.

Using the past as a yardstick to compare what might develop is unreliable, and I agree with you. This is because market conditions are forever changing, and this presents a kaliedoscope of possiblilities.

My approach is the other way round. I am not necessarily concerned with the past, because the object of my interest is the net present, the immediate future and the future.

I arrive at my conclusions by looking in via the opposite end of the pipe.

I will tell you that after a very long time of familiarity with this viewpoint it has become second nature to me.

I would find it very difficult to view what you describe with all its unavoidable uncertainties.

This is why I am not interested in the idea of backtesting at all.

What I do is forward testing, by looking along the pipe of time to discern future developments not clearly manifest, but clearer and clearer as net present time overruns net future time.

After one is "grooved" into this way of being and thinking, it becomes second nature to detect what is being prepared to be "released" from net future time into net present time and thus synchronise with what is actually happening now, this very minute.

The advantage of this is to be able to anticipate what is going to happen next before it happens and to prepare how to act in response to it in good time in order to take full advantage ot the event when it eventually synchronises, which could be minutes or hours and sometimes days in advance of the event.

very interesting, socrates. your post reminds me a little of this philosophy www.probablefuture.com . is this what you are talking about?

best,

surfer

 

[roguetrader]

first, trading is actually a negative sum game. you always lose more than the amount risked and make less when you win due to the vig or commission. the question here is not FA or TA as FA falls on its face often as we saw in grand fashion during the internet boom. the market is a game of perception not reality. to the TA people, i ask, ever see a chart of random numbers within the parameters of an average stocks daily movement? if you have, you will see double tops, pennants, et al all over the place. are they predictive? of course not, as we know they were created randomly.

Hi Marketsurfer,
Zero-sum has nothing to do with risk, it is simply the relationship between losses and gains. The original concept comes from game theory, a branch of applied mathmatics, hence anything considered zero sum is referred to as "zero sum game"

 

[ducati998]

surfer

to the TA people, i ask, ever see a chart of random numbers within the parameters of an average stocks daily movement? if you have, you will see double tops, pennants, et al all over the place. are they predictive? of course not, as we know they were created randomly.

Interesting that you have brought this up.
Interesting as studies have now shown this to be inaccurate. Inaccurate in the sense that "randomly generated numbers" do not resemble stock price charts.

The study of Fractals however does show the same types of "Patterns"
As to predictive power.................I agree, nonsense.

rogue

In financial markets, the “majority is always wrong.” When the investing majority or the crowd is overly bearish, this is the best time to be buying stocks. When the crowd is overly exuberant, this is the time to be selling stocks

Probably quite true, it is the "timing" aspect that is difficult, and that is the aspect TA seeks to exploit.

The financial markets work in this ironic way because not everyone can win in the market. If it were possible for everyone to win in the markets, this would mean that money is being created from nothing

Agreed.
We are not looking at making money for everyone, simply defining how you can make money yourself.

And the answer is, if you look to make money directly off someone else (zero sum) you will struggle as you are in direct competition.

If you can make money with others also making money, as a team or in collusion, your likelihood of profit is enhanced as the money is less volatile, as everyone knows how they are getting paid.

cheers d998

 

[marketsurfer]

Hi Marketsurfer,
Zero-sum has nothing to do with risk, it is simply the relationship between losses and gains. The original concept comes from game theory, a branch of applied mathmatics, hence anything considered zero sum is referred to as "zero sum game"

hey rouge,

sorry you misconstrued my post. trading is a negative sum game due to the vig or commission. zero sum implies that you only will lose what is risked on the event----actually, when trading, one losses more than what is risked due to the vig making trading a negative sum game.

 

[marketsurfer]

surfer



Interesting that you have brought this up.
Interesting as studies have now shown this to be inaccurate. Inaccurate in the sense that "randomly generated numbers" do not resemble stock price charts.

The study of Fractals however does show the same types of "Patterns"
As to predictive power.................I agree, nonsense.

rogue



Probably quite true, it is the "timing" aspect that is difficult, and that is the aspect TA seeks to exploit.



Agreed.
We are not looking at making money for everyone, simply defining how you can make money yourself.

And the answer is, if you look to make money directly off someone else (zero sum) you will struggle as you are in direct competition.

If you can make money with others also making money, as a team or in collusion, your likelihood of profit is enhanced as the money is less volatile, as everyone knows how they are getting paid.

cheers d998

please note, i prefaced my random number statement with "within the parameters of an average stock price movement within the day". not random without parameters.

surfer

 

[SOCRATES]

Well, it's a start, and a step in the right direction for individuals whose faculties are disabled.

We are all the product of ourselves and we have free choice.

There is a problem however, being that it is more comfortable to ordinary people to cling to what is known rather than to what is unknown.

Therefore free choice as a concept is only available to those who are able to recognise they need it.

 

[ducati998]

surfer

Sure, understood. Even so, the studies found that the charts generated from random numbers did not "look like stock charts"

cheers d998

 

[RUDEBOY]

Ducatti, come on now, this TA/FA thing.....you know and i know.....and probably some of the others, know it's a 'WIND UP'! Game is up matey! Talk about something else. How can somebody of your inteligence keep droning on? Unless it's a 'WIND UP'! We've all had a laugh, but now it's boring. You used to talk about so much more. Rude.

 

[roguetrader]

And the answer is, if you look to make money directly off someone else (zero sum) you will struggle as you are in direct competition.

Generally speaking, the concept of trading.

Non zero sum may have credence in the stock market as a whole, with particular reference to investing, strip out dividends and other incentives and a stock simply changes hands at different prices, some traders win many more lose.
The futures market is a more accurate depiction of a zero sum game.

 

[ducati998]

Rude

I've never talked about anything else. It is all inter-related. One of the really big decisions that everyone in the markets must make is on their methodology.

Once their methodology is chosen, they must then educate themselves in the requirements of that methodology, and then have the courage of their intellect to implement their methodology.

Its that simple.

However, as we all know there is a controversy regarding the merits of any broad methodology.
In essence there are 3
Fundamentals
Technicals
Quants.

This site is 98% technical, 1% Fundamental 1% Quant, so there is a large gap to be filled.
If you are profitable with technicals, congratulations, and you will just ignore me, however, if you are not profitable, then you may be interested in an alternative.

So far, all quiet on the recruitment front.

But the # posted .............................2.90%......they suck.
cheers d998

 

[ducati998]

rogue

Generally speaking, the concept of trading.

Thats right.
Look at all the popular statistics, 95% of traders fail to make money, yada, yada.

The numbers tell a story.
70 trades.................2.90% return Quite honestly that is desperate. On $100K that represents $2,900, you could do better just putting it in a term deposit for 12mths.

cheers d998

 

[marketsurfer]

ducatti,

you forgot to include a combination of the 3 main methods.

surfer

 

[ducati998]

surfer

I did.
I believe that mixing & matching is a huge error. However, I am sure many will disagree.
cheers d998

 

[RUDEBOY]

I certainly don't want to ignore your threads/posts, you obviously know what you are on about FA wise. What type of analysis is used most on the stock market? Please, don't make your answer up to suit yourself. If you don't know look into it. Rude.

 

[roguetrader]

Thats right. Look at all the popular statistics, 95% of traders fail to make money, yada, yada

Of course, but that is only of concern to the 95%.And if they are trading full time it will not be a concern for even them for too long.

70 trades.................2.90% return Quite honestly that is desperate. On $100K that represents $2,900, you could do better just putting it in a term deposit for 12mths

Not if he's a scalper and did that in a day.