frugi
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The Gamboni appears in an anecdote in Victor Sperandeo's seminal "Trader Vic: Methods of a Wall St Master"
It features a poker player, Joe, who is extremely good at poker and has to move from city to city in order to play anonymously for high stakes. Eventually he ends up playing a few slack jawed yokels in a barn in the middle of nowhere. He thinks he's already won, given the unsophisticated nature of the competition. Soon, he gains a full house, the others fold and the game is down to two people. He calls and the other fella has a dreadful hand, just three clubs and two diamonds. So Joe thinks he has won and tries to grab the pot, but is told to look behind him where, tacked to the wall, is a notice that says "Three clubs and two diamonds constitute a Gamboni, the top winning hand in this establishment". So he loses that round, but continues to play. Rules are rules after all. Eventually he ends up with his own Gamboni and bets everything on it. Unfortunately when he calls, he is pointed to another notice that says "Only one Gamboni will be permitted per night in this establishment", meaning poor old Joe loses the lot.
A long winded shaggy dog story that says, quite simply, the secret of the Gamboni is if you want to win in the financial markets you've got to know the rules; and also you can't win without being at the table. A bit of a let down as a story climax perhaps, but still very true.
This may apply to trading programs because they don't take account of the fact that some "rules" in the market are in a state of continual change and must always be watched for variation.
It features a poker player, Joe, who is extremely good at poker and has to move from city to city in order to play anonymously for high stakes. Eventually he ends up playing a few slack jawed yokels in a barn in the middle of nowhere. He thinks he's already won, given the unsophisticated nature of the competition. Soon, he gains a full house, the others fold and the game is down to two people. He calls and the other fella has a dreadful hand, just three clubs and two diamonds. So Joe thinks he has won and tries to grab the pot, but is told to look behind him where, tacked to the wall, is a notice that says "Three clubs and two diamonds constitute a Gamboni, the top winning hand in this establishment". So he loses that round, but continues to play. Rules are rules after all. Eventually he ends up with his own Gamboni and bets everything on it. Unfortunately when he calls, he is pointed to another notice that says "Only one Gamboni will be permitted per night in this establishment", meaning poor old Joe loses the lot.
A long winded shaggy dog story that says, quite simply, the secret of the Gamboni is if you want to win in the financial markets you've got to know the rules; and also you can't win without being at the table. A bit of a let down as a story climax perhaps, but still very true.
This may apply to trading programs because they don't take account of the fact that some "rules" in the market are in a state of continual change and must always be watched for variation.
Well done frugi
There is one bit I think you missed and that is the rules change.
Like today great news releases, double the market expectations and yet the Dow dived at the end of the day.
I think that because the market can react in two different ways is why many programs fail.
The market should have risen today, but it doesn't matter what we think, the market is always right.
As traders we must admit when we are wrong and get out of a losing trade.
You deserve a vote for your reply.
There is one bit I think you missed and that is the rules change.
Like today great news releases, double the market expectations and yet the Dow dived at the end of the day.
I think that because the market can react in two different ways is why many programs fail.
The market should have risen today, but it doesn't matter what we think, the market is always right.
As traders we must admit when we are wrong and get out of a losing trade.
You deserve a vote for your reply.
frugi
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No worries Juan - Despite its faults I love that book and am always happy to reacquaint myself with its peculiar charms.
Perhaps there are a body of market (or poker) rules that remain essentially eternal and always worth observing, while at the same time these fixed, 'major' rules are continuously distorted by a set of capricious 'minor' rules that fluctuate depending on who is playing the game, where it played and when.
Joe stuck to the rules of poker that he knew intimately and expected to hold true in this game and would have won if his forgivable supposition were true. Trouble is the yokels chucked in a couple of new ones on top.
Yet if Joe had bothered to look around the barn before playing, the new rules were there on the wall clear to see. However his engrained preconceptions about poker prevented him from doing this.
To remain disciplined and observant of the rules is an extremely hard task for man and an extremely easy one for trading program. But perhaps a man can choose to look over his shoulder occasionally as well as rigidly following those 'old rules' and this may make all the difference between success and failure. Therein lies our somewhat accursed edge.
.
Perhaps there are a body of market (or poker) rules that remain essentially eternal and always worth observing, while at the same time these fixed, 'major' rules are continuously distorted by a set of capricious 'minor' rules that fluctuate depending on who is playing the game, where it played and when.
Joe stuck to the rules of poker that he knew intimately and expected to hold true in this game and would have won if his forgivable supposition were true. Trouble is the yokels chucked in a couple of new ones on top.
Yet if Joe had bothered to look around the barn before playing, the new rules were there on the wall clear to see. However his engrained preconceptions about poker prevented him from doing this.
To remain disciplined and observant of the rules is an extremely hard task for man and an extremely easy one for trading program. But perhaps a man can choose to look over his shoulder occasionally as well as rigidly following those 'old rules' and this may make all the difference between success and failure. Therein lies our somewhat accursed edge.
.
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oatman
The Dow ended the day 96 points off its high and minus
47 points for the day. I think you will find that the concenus was a down day.
frugi
It's a simple passage in the book, but as you have pointed out there is much to it. Quite thought provoking and that was the intention of this thread.
We as traders can often get lost in the mass of data and sometimes we need to step back and reveiw things
The Dow ended the day 96 points off its high and minus
47 points for the day. I think you will find that the concenus was a down day.
frugi
It's a simple passage in the book, but as you have pointed out there is much to it. Quite thought provoking and that was the intention of this thread.
We as traders can often get lost in the mass of data and sometimes we need to step back and reveiw things
Yes it's a down day, but hardly a collapse.
I said earlier that a rise of 126000 jobs instead of 65000 (unexpected by all except UBS Warburg apparently) appears to be good news in a jobs market of millions!
Get real. This is not bull news, this is wishful thinking.
Where is the surprise?
There is a natural (unfortunate) bias towards bull markets/sentiment and I see it here in the posts on this board all of the time.
Clear your mind and see the market, not the noise.
I said earlier that a rise of 126000 jobs instead of 65000 (unexpected by all except UBS Warburg apparently) appears to be good news in a jobs market of millions!
Get real. This is not bull news, this is wishful thinking.
Where is the surprise?
There is a natural (unfortunate) bias towards bull markets/sentiment and I see it here in the posts on this board all of the time.
Clear your mind and see the market, not the noise.
oatman
Just cos you got more teeth than me.
I think the problem is that we trade in different ways, you are looking at the bigger long term picture.
Today I was in the market for just 3 minutes and made my money for the day, I trade on the news/data releases it doesn't matter to me what next week brings. You are probably right.
But back to the gamboni, the futures market read this as good news then the rules changed about an hour and a half latter the cash market began to take the opposite view.
Just cos you got more teeth than me.
I think the problem is that we trade in different ways, you are looking at the bigger long term picture.
Today I was in the market for just 3 minutes and made my money for the day, I trade on the news/data releases it doesn't matter to me what next week brings. You are probably right.
But back to the gamboni, the futures market read this as good news then the rules changed about an hour and a half latter the cash market began to take the opposite view.
