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equtrader
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Posts posted by equtrader
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Is anyone here using this indicator ? I would be interested in disccusisng findings and ways of best use.
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"Although the amount made or lost on any given day will differ
depending on how far from its open the session closes, over time (or
large sample size) this should become insignificant, as small losses will
negate small gains and large losses will negate large gains."
I'm not sure about this statement. If the game is rigged to your disadvantage then this may not happen. IMO it depends on the distribution function. If it skewed positively then you have a chance of making money with random trading. This article that was posted before is about the positive skew of SPY and the high chance of profitable random trading in that market. The problem is that distributions are known after the fact.
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Probably around $1350 there will be a lot of selling and new short positions.
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if you are trading, yes..if you are investing then the trend down is the time to buy...as it nears its end..No difference. Money is money.
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One black swan event like a flash crash or anything can mean disaster.
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Well, I just think an interesting question, if I can know Mr. Buffet’s buying (if I had a telescope or a computer hacking program or insider), then I buy what he buy, can I become a millionaire? (of course, billionaire is even better!) If it is the truth, then following a successful person can guarantee my success shall be a norm. But why the world the portion of successful people is still so small? Have a fun and good luck.
Try to be original. Only then you will succeed.
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The trend is your friend and currently it is down.
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Stop arguing about math and fighting and concentrate on learnign how to trade because trading is an empirical thing.
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Trading randomness is equivalent to gambling.But many gamblers in the markets make money, many more than systematic traders according to this analysis and provided it is correct.
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The charts are used to illustrate the point. If you are interested in backtesting results, maybe you should post some.This is called reversing the burden of proof:)
I see however that many are turning to trend trading maybe because it is hard to compete with robots in hft domain.
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Trading is math and statistics and a share of good luck. Any other approach is doomed to fail and 95% of traders will fail because they don't understand math and statistics.
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In the attached chart, we can see that rallies are expected once the indicator falls below -100, whereas declines are expected after the reading rises above +100.I would prefer some backtesting results. Charts can be misleading.
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Same here. It would be interesting to know.
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"It never was my trading that made me the big money. It was my waiting, sitting tight. It is no secret to be right on the market. Traders who can both be right and sit tight are rare."J. Livermore
This may not be the exact quote but is close enough.
So true. Knowing when to stay out is as important as knowing when to get in and maybe more.
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TA works many times because so many people use it , it tends to be self full-filling. Everyone is looking at the same head and shoulders , or double top or cup and handle , triangle etc..... Most sell/buy according to the people who wrote the so called "books" on these methods....Some people don't but some do ....and we all know that all it takes is a few traders with somewhat large orders to start freaking everyone out and there it goes........Day trading it tough , IMO due to the number of trades and emotional impact it has. I do not think patterns are very useful in charts shorter than 4hrs or so.....they might work sometimes but more often than not they don't .....I day trade and don't look for "patterns" I just look at PA to give me a clue as to what "MAY" happen. just regular candlesticks tell me more in day trading than any pattern.Good post with some very good insights.
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I think it doesn't matter what you look for the most but works better the most. The only way to find that out is through testing. Daniel at mechanicalforex.com recently created a program to look for patterns that satisfy some performance criteria based on the work by Michael Harris who has developed an algo that achieves this. This approach moves the trader to the next level away from visual identification and into quantitative analysis. Only then one can compete on a plain level field with hedge funds and other quants.
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Some studies have shown that a high percentage of chart patterns may be simply random lines on a piece of paper. Burton Malkiel in A Random Walk Down Wall Street cited an experiment his students participated in, constructing a hypothetical stock chart. Each day they flipped a coin, plotting heads as a 1/2-point gain and tails as a 1/2-point decline. The resulting chart from these random coin flips displayed all the classical patterns such as head and shoulder formations, flags, pennants, triangles, etc. There were even indications of cycles.The answer is that when these patterns are formed by a coin toss they are random but when they are formed by the market they may not be at times. I guess this is so hard to understand for some people who resort to these arguments to make money from books. There are ways to reduce the possibility of randomness. This is a good blog about getitng fooled by random results.
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The ONLY TRUE EDGE the retail trader has is THE LONG TERM TRENDMost systematic trend followers lost money in 2012 and we are talking about some serious professionals. How do you expect to win doing TF?
Intraday is dead because of bots and TF is dead because of volatility. The answer is swing trading. Someone else mentioned it. There are some good blogs to follow and learn from. Here is a short list from the many:
Quantifiable Edges This guy quantifies everything, literally.
Michael Arold Read about the axiom of small edge.
Price Action Lab Blog | Quantifying Market Price Action He also quantifies everything but in addition uses portfolio backtesting to analyze potential edges.Very dynamic method.
Quantitative Trading Ernie Chan often posts some good edges and he is very generous about that. A little harder to follow and you will have to search the blog.
If you decide to keep on trading, these are good for a new start.
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p-indicator by MIke Harris, hard to interpret at times. It works best when signs of the variables change from long to short or the other way around. -
No matter how disciplined one is, if he does not know when to buy and when to sell he will lose in a disciplined and maybe orderly way. It will be slow pain. Better to have no discipline and lose fast.
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Checking back on this post now your comment helped me find two very useful articles for pattern recognition. One uses an algorithm called the PXtract algorithm:PXTract Algo:
http://www.cse.ust.hk/~leichen/courses/comp630p/collection/reference-4-6.pdf
If somebody is interested to develop a pattern recognition system based on the pattern I described, then contact me. I now develop in a .NET-based Complex Event Processing (CEP) framework and software suite by Deltix. I prefer to work on systems in collaboration and besides, those articles are a bit much to digest because my math is a bit rusty these days. Hope to hear!
The first article talks about the accuracy of the identification algorithm but not about the pattern performance. Also the authors state something peculiar that "We have demonstrated how to automate the process of chart pattern extraction and recognition, which has not been discussed in previous studies." but such software is available for at least 15 years! Then they refer to Thomas Bulkowski as Thomas! "According to Thomas [14], there are totally 47 different chart patterns, which can be extracted from the time series data". This is very strange. I doubt their algorithm will work because they do not sound familiar with this subject. Bulkowski has done much more work than them long time ago for chart patterns and Harris has done the same for price patterns:
http://thepatternsite.com/chartpatterns.html
The Most Advanced Tool for Analyzing Price Action and Discovering Trading Systems
those two are all you need.
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Good points. I think simplicity and complexity have many levels. What was simple for Einstein was very complex for other people. These are relative concepts. I think these concepts are more qualitative than quantitative and of course relative to circumstances.
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Price Action Lab Blog | Quantifying Market Price Action lol?His system looks and sounds really on point but i'm sure theres an easier way to just use mental math
do you use his system ?
I follow price action lab daily. His blogs are very informative. By quantifying price action I think they mean a consistent framework - whatever that is - for modeling price action and evaluating probabilities. They do that via price patterns. Other people do in other ways, easier or more complicated. I think the key point is to know the probability of a setup and the expectancy before opening a trade.
Here is a specific example from the blog I have followed since it was published:
Australian S&P/ASX 200 Index Scan For Monday, August 27, 2012 | Price Action Lab Blog
The "quantificatiom" of price action in the aussie index gave a long signal for the open of 08/27 with 3% target and stop. The target price is 4,481.94 based on the open of 08/27. As of the close of today at 4,452.4, the target is about 30 points away. For the quantification of price action the blog uses price patterns, backtesting, single and portfolio. This is just one method. I like it but I also use other methods. Quantifying means calculating numbers for whatever you are looking for. Imo the price action lab approach is a bit elaborate for most people not familiar with backtesting.
Also, they do other stuff too with correlations for example. This is another way of quantifying price action:
DBC is Full of Oil | Price Action Lab Blog
Overall it is a good blog amongst several other good blogs but at the end of the day you have to do your own homework and risk your own money.
This is another blog I like:
He uses backtesting to find repeatable patterns and potential setups. Again, I do not agree with all of his claims but his quantification is very good. I never take anyone's work for granted, I do my own homework to validate the claims. I suggest everyone does the same.
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Successful traders have learned that the most valuable and difficult skill to develop is the ability to wait for the market to align with their trading strategies. This ability is developed by placing ourselves in a process empowering us to gain a more complete understanding for the work that needs to be done, why we are doing it, and how best to support our efforts every day. This is the level of commitment needed to become aware of the subtleties making the difference between success and failure.The process of a successful trader ensures they only participate in the market when they are certain of market state, confident in their strategy, and committed to waiting for market alignment. In other words they know precisely what they want to do, why they want to do it, and how they are going to do it. They are waiting for the market to tell them when they can do it. Deep connections to their trading activities at functional, psychological, and practical levels make this possible.
The first essential step required to build your process is to identify your core beliefs and detail why they best support your development and performance.
Trade well,
Ray Burchett
Good thinking. As Jim Rogers has put it one has to wait when there is "money in the corner, just waiting to be picked up."
Why Do Candlestick Patterns Work?
in The Candlestick Corner
Posted
If you know market pressures and context you do not need any indicators. The point in using indicators is that they are supposed to include all that and assist in generating automated systems.