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TRADEZILLA

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Posts posted by TRADEZILLA


  1. @TRADEZILLA Glad to see you back on track :) My question though wasn't a change of subject all. The thread is titled "How do you know the markets aren't random?". The exact reason we want to know the answer is so that we can design models that have a chance of making a sustained profit. Then SIUYA comes along and suggests he doesn't care whether a market is random or not, and that a profitable model can be made even if markets are random. So my question was how?

     

    I think we're on the same page on that one for sure.. I don't believe that is possible and the burden of proof falls upon anyone claiming otherwise. I have never heard of it done before and I don't even think a good sensible theory is possible. I would love for someone to prove me otherwise, and if they make such a claim, they need to make a good argument for it and not just say it is so..


  2. @TRADEZILLA I think you have come in half way through this thread, or the tail end actually, and missed most of the point that was being discussed. I NEVER said markets were random. Please go back and start reading from just before you started posting again. We are not talking a different premise. I am talking from exactly the point of view that I explain if my words are read. I was responding to a post made by SIUYA and offered a scenario of assuming markets were 100% random, and how would people profit. Then you came along and now clearly started a discussion which has been completed pointless as you never understood what transpired right before you posted. It is important one read the posts before posting.

     

    Also you misunderstood my reference to academics. You seem to miss the point that this whole discussion is discussing a theoretical scernario, and I was just giving an example of someone doing research and not finding anything. It could have been anyone. So once again TRADEZILLA, please familiarise yourself with the thread BEFORE starting a line of conversation which turns out to be completely misinterpreted.

     

    My question, following on my SIUYAs post, is how does one go about creating a profitable model if the markets are in fact 100% random, and random in every sense of the word i.e. no study is able to find a bias of any kind. SIUYA believes it is possible. Do others? On what basis?

     

    You're right that I didn't read the threads in the middle, I only answered the original/1'st post and that was my intention and my post is consistent with both the intent and the subject of the thread so I am familar with the topic of the thread.. IT is you who has changed the subject but that's fine and I don't find it inappropriate.

     

    IMHO from your question, I believe you cannot in a meaningful way if you cannot increase your odds without just random luck. The reason I believe that is because have you ever seen a consistently profitable gambler that has no edge? I think the answer to that one is easy..


  3. "The financail markets are no different. An academic will write a paper saying he could not see any pattern in the test he did, so therefore markets are random. Just because a person cannot see the non-randomness does not mean it doesn't exist. It merely comes down to how you analyse price behaviour. "

     

    Also, do not overestimate the academics when it comes to trading. Almost always, they know less than you believe they do. Not every thesis is absolute just because they have a PHD. Often for every academic argument that sounds good, there is an opposing argument equally convincing especially when it comes to something as obscure as trading.


  4. @TRADEZILLA I feel you are confusing your own description. To a non-counter the cards fall in a random fashion. So he will go away and say the game is random and cannot be beaten. Then the counter comes along and says the cards fall in a manner that allows him to make a profit by counting cards. Therefore, to him, the cards do NOT fall in a random fashion. When the count is high we are more like to see TEN value cards fall. So this is NOT random.

     

    The financail markets are no different. An academic will write a paper saying he could not see any pattern in the test he did, so therefore markets are random. Just because a person cannot see the non-randomness does not mean it doesn't exist. It merely comes down to how you analyse price behaviour.

     

    So what you are describing is changing what is appears intrinsically to be a random process to one person, into a non-random process to another due to the way they look at the market.

     

    Therefore, if he can do that then the market by definition is NOT random. Otherwise he would have ZERO chance of making a sustained positive return. This has been proven time and again mathematically. I don't know if that is any clearer TRADEZILLA?

     

    I think we have a different premise. You assume the market is 100% random and I assume the market is less than 100% random. If the market is 100% random, it will not be possible for 5% of traders to be consistently profitable because they should not experience a different outcome than others over the long run, and yet, 5% of traders beat the odds repeatedly and I know for certain they exist. If your assumption is correct, how did they get an edge to be consistently profitable? In addition, you can even be profitable with a 50% success rate if your wins are bigger than your losses, but that also requires an edge. There are consistently profitable traders from both scalping and buy and hold methods so an edge does exist in the market in more ways than one.


  5. @TRADEZILLA What you are describing isn't randomness. By counting the cards, you are changing the odds from being random to not being random. That is why card counters can win. They know that a batch of big cardds is more likely when the count is very positive. And even if your wins are < 50%, you get a higher payoff for blackjacks. It would be like saying a biased (55H/45T) coin toss is random, when in fact it isn't. We know with certainty that the probaiblity of a Head falling will move towards 55%. Even though we have no clue what will fall next. If we get an even money payoff betting heads, then as long as we do not wager more than twice the size of our advatange, we will win in the long run.

     

    So my question still remains. How does one profit in a market if we asume it has totally random price moves?

     

    By getting an edge inside the random movements like a gambler counting cards to change the odds. Though this is difficult to put together when starting out like someone lost in a jungle for the 1'st time trying to figure out how to survive and many just as lost trying to help out, it is possible.. the market has both a random and non-random aspect to it and it is possible to distinguish the 2 with a greater than 50% probability. Even a 3-5% edge can make a big difference in the total results.. For example, casinos have a very small edge, yet they are incredibly profitable with that small edge. Trading is abit more complicated than that but if you can get an equivalent edge of 3-5%, the rest is up to you(psychology/discipline) to give your edge a chance to kick in.


  6. Following on from "The Question of Randomness" thread. How do people know the markets aren't random? I'm up for creating some random data to see if someone can show me how they know it's random or not - just for fun... DM

     

    Even if it is random, it doesn't mean you can't capitalize from it. When you play blackjack, your wins and losses are random.. as a matter of fact, a little worse than random, but what happens if you learn how to count cards? You have put the random outcome in your favor. The same concept can be applied to the market. If you can manage to get an edge even a small one and trade in a way that allows your edge to kick in, the randomness of the market will favor your outcome, and though this is very possible, its much easier said than done because many aspects have to come together for this to happen; discipline, risk management and etc... and given that your edge is solid in various market conditions.


  7. I said repeatedly that the method works in most all futures markets most all of the time and I was asked if it worked on days like 11/30/11 when the Dow went up several hundred points. The answer is yes. See posts. SP...... to start the move and DI... to end the move. The SP 30 min chart shows yellow support for the first swing and green support for the next. The red line is resistance. The real time buy signal came on just below yellow support and the real time sell arrow came on just above red resistance. Both circled. Then the market broke red resistance and then the 3 rd trade. The third circle is the buy for the 400 point + Dow rally. In other words the method works in most all futures markets most all of the time just fine and that is why I filter the trading with the major markets. That way I never have a losing day, including 11/30/11. The 3 trades here illustrate 3 of many profitable trades the method makes each day. It also shows start of move and end of move for the day. Both tick accurate. No it did not show the exact bottom tick to start the day, but, it was nearly to the tick on the close for both the ES and YM.120.39 was not broken.

     

    I have yet to see an automated/mechanical method based on pattern set ups (including market delta) without a macro thesis, that is effective as more than a scalping technique. The reason holding is so hard for many is because they need to have a reason to hold other than just hoping for the trade to keep rolling to the next level.


  8. DAVT,

    I have only seen one trader in my lifetime that did not have a losing day in a 2-3 month period, but far from not having a losing trade and def far from to the tick.

     

    In my own trading experience, I find S/R to be a zone rather than an exact line. In addition, price responds to S/R differently in different types market conditions.

     

    Since your method is so precise, can you give us a general thesis or premise of your method? It does not have to be detailed but I want to know the basic theory behind it. Do you rely on marketdelta for "tick accuracy" what's your risk parameter and how do you determine profit target? Do you enter 1 tick above below your S/R and etc?


  9. My apologies, I got it after reading more.. actually I think that method will probably perform as well as any out there and probably better than many due to the locations chosen to initiate when it comes to forex. I think my edge is bigger on ES but never had a good handle on forex.. wish I did..

     

    All I see is levels. How do you know which side of the level have the better odds? I have not read through every post but from the earlier posts, it appears that the thesis is that there are many simple ways to get your levels to trade off, but which side should I be trading from? Is that discretional?

  10. All I see is levels. How do you know which side of the level have the better odds? I have not read through every post but from the earlier posts, it appears that the thesis is that there are many simple ways to get your levels to trade off, but which side should I be trading from? Is that discretional?

     

    That IS the definable edge.

  11. Anyone that has an edge that is real, the more you play the better your odds given that you're trading the way you're supposed to.

     

    The best theory that applies to the market is game theory because this is ultimately gambling. A gambler that counts cards at the blackjack table, the more he plays, the more his edge kicks in. If he keeps losing, its because he's not counting the cards right. The same applies to trading. If you're doing everything right and you're not consistently profitable on a weekly/monthly basis, then your edge is not real but imagined, or you're not adhering to the way you're supposed to trade.

     

    The macro thesis of your method needs to be sound, then you just need a way to capture the edge that your thesis assumes in the micro details on how you're supposed to trade.


  12. BTW-I know the exact TF scalping method as it was revealed to me in detail and can readily use it if I choose, but its not how I prefer to trade and does not resonate with me as much as my own method though its a proven method in my eyes. I will not share it out of respect for the trader that shared it with me, but its possible that he can choose to do so down the road..


  13. David,

    Although your claim is highly improbable (to the tick), I'm willing to give you the benefit of the doubt. The reason is because I actually know a trader that has a scalping method on the TF that is profitable every single day (no joke) without a losing day and I saw everything firsthand including PNL. I've also heard of a method using footprints that can scalp to a few ticks accurate. In addition, I've seen some incredible methods that allows a trader to hold for longer runs with very good probability.

     

    Currently, I trade a method that tells me when to hold for bigger runs and when to aim smaller and thus far, I have not met another trader that can match my performance size for size aside from that scalper, which never has a losing day. I cannot claim the same but my stats are that I will lose 1day/week on average. I know how to scalp and see all the set ups but will pass it up 99% of the time. I imagine that if I took them, my performance will be even better, but its not how I trade currently, its how I traded in the past.

     

    I'm also looking for a few profitable traders to trade with and interact with during the market as I've put up a previous post. I do not reveal my method but if you can match my performance in real time, I'm willing to exchange methodology. I'm willing to give away my methodology that is consistently profitable if you can match or beat my performance in real time, not previous PNL. I trade the ES and will call out all my trades in advance both entries and exits. If you're willing to do the same, let's have some healthy competition.. My method has no indicators at all but the method is very clear.

     

    Anyone game? PM me if you are.

     

    TZ

     

     

     

    Doesn't any intelligent trader have an opinion on what might constitute a HG and weather you think this method may qualify? I had no intention of creating a HG. I only wanted a method that adjusted to the market real time and never lost money on a daily basis, (I succeeded) but after looking at a multitude of for sale products on the net, (none of which even come close to this method) I was wondering if I actually did. Thanks for all your interest and genuine support.

  14. yep agree, we must read the market and act accordingly, it's that easy. but the risk is great just like a mis-funded casino.

     

    I don't think its easy by any means because there are many variables that have to come together..

     

    First, you have to have a "real" edge that puts you on the right side of the trade...

    Then you have to have a good sense of levels to put you into a trade..

    Then you have to survive the stop loss fluctuation before your anticipated move materialize, which is the most dangerous part of the trade.. This fluctuation has a 2 pt random aspect to it that will mess with your head..

    Then when you miss the trade because you're either too slow or wanted a better entry location, you risk the temptation to counter trade the other direction against your better judgement...

     

    Its not easy at all.. In addition, the market will always give you reasons to trade both sides..

     

    Today was a good day for me but it could have easily gone the other way even when you get the bias right...


  15. I think Siuya has it right in that my method is not systematic but more of a "weighing process" though there are some rules around it.. I can explain it simply but the application will require multiple charts and they come in many combinations.. I'll admit the method has its weaknesses by allowing a subjective/psychological component to enter but I believe it will be there regardless.. Its the method I've settled into to chase the odds for better or for worse..

     

    I see the odds as being dynamic and real time and never absolute. That's why I don't believe in a systematic approach. The reason I believe that is because if there is a systematic method that exists that can capture the market inefficiencies consistently, to profit consistently, that's what the big institutions will focus their considerable resources on. Yet, their most profitable automated trading comes from front running big orders to scalp 1-2 ticks by computer speed rather than high science methodology.. This tells me that if they can't do it, I doubt you and I will be the genius to that road... However, I do know there are consistently profitable traders out there.. They can't be more disciplined than a computer.. so although discipline will prevent you from blowing out, its not likely to be the secret of their consistent trading profits.. I think its because they found a way to gain the odds from themselves, which means there has to be some subjective analysis that exists.. Its not the magic methodology, which is only a roadmap, its likely to be their experience that's giving them the edge.. In other words, its how they can put it all together that's giving them the edge.. so that's the path I seek.. I don't use indicators because I believe it will handicap a trader's goal to grow in that experience.. I play the odds by combining data..

     

    Also, I've come to a late realization that a trade is not worth taking unless it has potential range. The reason I believe that is because every time you place a trade, you risk your stop. My stop is 2 pts and that range can often be random unless you timed it perfectly with both location and confirmation.. I believe a 2 pt stop for a 2pt profit potential won't turn you into a consistently profitable trader.. The old adage that you have to cut your losses early and let your profits ride is repeated by all the good traders for a reason and I'm finally a firm believer and looking at my data is the best way I've found to do it for me, which is reading the market.. I'm not saying I'm a master at it but that's the direction I look to grow and my quest for the holy grail.. If there is a magic indicator or a perfect method out there, believe me, it can be automated.. Yet, there are so many traders out there that think "they" are amongst the few elite traders that have a closely guarded methodology that always put the odds in their favor.. I just don't buy that..

     

    The reason I don't believe that is because casinos only have a 2-3% edge, yet they clean up.. Why can't we with our great methodology have more than 2-3% edge.. The reason is because what you think is an edge at all times is only an edge in certain conditions.. I believe the key is to recognize the conditions and it comes from reading price and reading the market.. Its how you put it together..

     

    Now I don't want to come across as a better trader than I am.. I make plenty of mistake and show many of the same weaknesses of not holding and reading it wrong and etc.. but my results improved after I moved away from a systematic method..

     

    BTW-I'm getting a lot of interest in the skype room now and you all sound great.. I'll just need to talk to my friend and we might re-consider the idea..


  16. There are basically two types of traders- anticipatory and reactionary. It is important to understand which type you are to avoid the sins of prediction. The meaning of anticipation, prediction and forecasting may seem just overlapping but understanding each approach can save you a LOT of time and effort.

     

    In Prediction the probabilities are absolute. You cannot predict something with probability 0.98. You predict it correctly or not, that is. Prediction is for fortune tellers, psychics and tarot readers. Prediction is NOT for traders. So if someone claims about predicting top/bottom you know that he is inflating ego to compensate for the lack of trading skills. Stay away from such people, which include many trading gurus.

    Forecasting is more of a scientific term. An error and probability is always associated with forecasting. There are lots of trading systems which base their trades entirely on forecasting future price moves. They may work or may not work, similar to a group of traders who may or may not make money.

     

    Now let’s come back to the basic two categories- anticipatory and reactionary trading. A reactionary trader is someone who identifies a price behavior rule, letting price confirm his thesis and playing the move after it has taken place, hoping for follow through. An anticipatory trader is someone who uses a premise to identify potential moves ahead of time and take a position before the price confirms this move.

     

    In reactionary trading you simply ride the NOW wave, while in anticipatory you bet on future price movements. A good example of reactionary trading is daytraders who trade on price discrepancies (scalpers). Someone trading with Elliott waves will is an example of the latter type. Similarly trend following systems are an example of reactionary trading while trend-exhaustion based systems are example of anticipatory trading.

     

    Some people hold that all type of trading is anticipatory, others that it is reactionary, and still others who say that it all depends on the way a strategy is defined.

     

    Trading systems which are built using data mining or machine learning are by default reactionary. They tend to fail horribly at outliers (unusual market events).

     

    There are some factors which determine your trading style:

    • Your temperament
    • Right brained vs left brained (arts vs mathematics background)
    • Experience level

     

    People who venture into trading first must learn just what style fits them the best, and follow it. Jumping from one form to another at initial learning stages can waste a lot of effort. It's important to understand your time frames and take a real assessment of just how much risk/time you will have to devote to your trading.

     

    Lets take the example of AAPL on daily time frame. It showed a distinct trading range compression a month ago.

     

     

    attachment.php?attachmentid=25638&stc=1&d=1312645551

     

    Reactionary trading: The trader will watch the setup develop and wait every day *patiently* for a breakout. Each day place a stop-buy order at a level on which a breakout will be confirmed. A beginner reactionary trader would have very likely shorted at downside breakout in mid-June, and then reversed trade at end of June.

     

    Anticipatory trading: The trader will anticipate the direction of breakout during the consolidation phase itself. The trade will be initiated during the consolidation phase; buy near the bottom range of channel or short near the upper range of the channel. If the initial trade is a loser the trader will not reverse trade because doing so involves a ‘reaction’.

    Combination approach: The traders buys (shorts) in small quantity in anticipation of the direction of breakout during the consolidation phase. Then add to existing position if the breakout is in favorable direction or take a new position if the breakout comes in opposite direction of initial trade. This approach requires more skill and experience.

     

     

    Posting a comment will only take you 2 minutes, but it will be the strongest motivation for me to share something better.

     

    DOD,

    I believe a good trader will have to have a combination method, both anticipatory and reactionary to be flexible because there is no absolute in the market. For example, if we expect a level to hold and it doesn't, good traders are often open to the idea to reverse directions.. When the market reaches a level I deem significant, I will read price, and not have a order sitting there assuming the level will hold.. It has to show me.. I see the market as in a constant state of decision and indecision and I don't pretend to know I'm certain about the final decision though I do have my bias, but in short, I try to trade in the direction of the final decision, whichever side it comes out of.. This is both anticipatory and reactionary..

    TZ


  17. WRB,

    Although I don't mind sharing at all, it was never meant to be a class.... I think trading with others does give energy and focus to the market which is good.. but I don't want to type and I don't want to read when I trade.. The value is not in the opinion of other traders though I do believe trading with other good traders will sharpen your own skills by default... I believe good traders will not let others sway them from what they see... I trade with another trader that is very good.. we always trade what we see, not what the other person see unless we see what the other sees and agree..


  18. Hi,

     

    One key element of running a successful free chat room is to be a good moderator. In fact, the chat room will fail if you're a poor mderator but a great trader. Thus, when someone becomes a distraction or ask a ton of questions especially while you're in the middle of trades, interrupts others or seems argumentive, ask too many questions instead of waiting to ask them at a designated time period for Q & A...

     

    You got to give the person a warning to stop. If it continues...you remove the person from the room (skype chat). Thus, being a nice guy is one thing but when your Skype chat begins to become a distraction to your own trading (such can be very costly as in losses or missed trade opportunities)...you need to remove the distraction (moderate), close your Skype room or don't trade. That's the only 3 options available and it's obvious getting rid of the distraction is the best solution. Thus, you need to be a moderator just like one would be at a discussion forum like Traderslaboratory.

     

    As for your "simple method" that you seem to keep saying it cannot be explained in simple answers, you need to get a free blog...post as much details about your simple method with chart examples. Next, make sure all your Skype participants knows the link to your free blog. Those that forget and ask questions while you're in the middle of a trade...don't respond until you've completed your trade and then give them the link to your free blog.

     

    My point is that if you want a good quality Skype chat...you also need to be prepare to be a good moderator and good manager of your Skype chat besides being a trader. The other participants will be greatly appreciative except for those that are a distraction to you and to others. For example, you mention that one of the participants trades differently and that's fine. Yet, oddly you complain about that same member asking endless questions the entire trading day. Obviously having a member that trades differently is not fine...a member that's not like minded.

     

    Once again, I highly advise you properly screen those prior to allowing them to join your Skype chat to ensure they understand your simple method, rules of the chat and that they are using similar trading method prior to allowing them to enter the chat.

     

    Last of all, your brief explanation of your simple method is in my opinion a very poor explanation. Its too abstract and there are no chart examples that show trade examples to correlate with your abstract explanation. Thus, if you can't explain your simple method properly when at a discussion forum...you will not be able to do it in real-time during the trading day.

     

    WRB,

    I hear you, but this is not meant to be a major production.. I think my method is simple, but others may disagree.. It doesn't come from a chart alone, it comes from the relationship of the data and price action, and then there is also a time element and this can come in many dif combinations.. There is no exact formula.. Its a "weighing" of the "micro" set up in combination with the macro theme.. I form my own R/R probability by looking at a combination of data,.. Its not going to be perfect though.. For example: today, I got mixed data so I couldn't hold my trades.. believe it or not, I shorted the opening, bot near the bottom at 28, and shorted 38 from the same data and yet couldn't hold from the same data.. All I look to do is to do is put myself in a position to get lucky...


  19. "trading is nothing more than GAMBLING"

     

    That's only true to the extent a trader is clueless about whether or not he has an edge.

     

    I disagree.. even with an edge, trading is ultimately still gambling.. The dif is, you can put the odds in your favor, that's all.. The edge is ocfourse never absolute.. what gives an edge in one setting will not give an edge in another setting.. identifying the setting is also part of the edge, but there are many dif ways to do it.. A good method needs to be versatile enough to survive dif market conditions.. Took a few trades in the morning and not trading till after the FOMC now...


  20. WRB,

    That's the intent but our conclusion is that this is easier said than done thru this channel.. Its only working now because the other trader and I understand each other.. The screening process may become exhausting and potentially costly.. and I include the time trading together as part of the screening process... For example, one of the participants trades VP, as do and yet we trade very differntly, which is fine...and I don't doubt he is a proficient trader, YET, he asked me an endless amount of questions the entire trading day from the very opening to the last 20 minutes of the trading day on my market read..

     

    Reading the market cannot be explained in a "bottom line" answer because its dynamic.. Reading price is not just reading the price chart, its the integration of all data you deem relevant, meaning its how you put it together in real time that helps you form your probabilities of each set up the market presents, and this is not easily explained not that I didn't try so the conversation just went on and on.. he said he didn't ask me to give him detailed answers and yet, the follow up questions never stopped and this became very exhausting...

     

    I'll do my best to tell you how I trade. I basically

     

    - form a bias

    - look for levels to lean on

    - read price

     

    I believe those are the only HIGH RELEVANCE factors that will put the odds on my side and allow me to manage risk. After all, trading is nothing more than GAMBLING but we all do our best to put the odds in our favor.. I like VP/ACD but I'm not a purist.. along with other data such as the dollar index/tick/add/vold/volume and etc.. and additional data if the settings warrants...

     

    The way I trade is not top secret.. I don't believe a holy grail methodolgy exists and that's why I don't believe in automated trading or a "scientific method" in trading, which the other trader believed in... I think he's a great guy, we just disagree.. I believe the closest thing to the holy grail you'll ever get is how you put the data together and that is not easily explained in a KISS way.. We all want KISS and my method is the closest thing I've been able to accomplish it.. However, if a holy grail does exist, it can only come with reading price in context with reading the market with your methodology ONLY AS A ROAD MAP, and its not going to be perfect, just probabilities.... Its like playing any sport where your decisions are dynamic in real time, the manual does not exist except at the very basic level... In summary, that was my conversation today and it was long and exhausting.. Agree to disagree........


  21. Just an update, we decided not to continue with the audio skype room with other traders since we all trade different methodologies and there will inevitably be many methodology questions that can become very distracting. This experience turned out to be very exhausting for me.. I basically spent the entire day in dialogue answering a bombardment of questions about my methodology and how I formed my market bias, which I understand.. However, although my methodology is very simple, how I integrate the data is not easily explained in simple one sentence answers.. This experience confirms what I have heard before that audio rooms can become more of a distraction and generally only add value when you trade with other traders that share a similar approach, otherwise it only has a social value and may be a hinderance to better trading..


  22. Predictor,

    $50k/yr is VERY possible trading no more than 2-3 contracts on each set up with a 2pt stop, so a $10k account can accomplish this on ES, though $5k may be bit slim with potential drawdowns... However, I've yet to see an automated sytem accomplish this and def no vendors looking to make $$ from you advertising this..

     

    PM me as I trade with a small skype group and you will see this done live and for free.. I'd like to see you perform this live as well.. Generally, I'm not a scalper though that's how I traded in the past, but will often exit my trades early when I see something that warrants an early exit, which turns some trades into scalps.. BTW-what's the fixation with that vendor with big claims? Many vendors have similar claims..

    TZ

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