[FulcrumTrader]

Originally Posted by MidKnight »

UB,

So what if they get laughed out of the room. Quant trading isn't the only way to make money. Are you implying that it is?

With kind regards,
MK

No sir.....the "Smart Guys" or quants of the world lost BILLIONS in these past years due to fractured mentalities (that their MATH skills and trade systems were unable to overcome). In the end, regardless of the strategies developed many quant groups and institutional level players got KILLED by their mentalities. The second a human being or group of human beings think they are better than another group, they are on the universal path to self destruction. Thoughts of invincibility due to ego or perceived systems of perfection, leave the managers of such groups psychologically vacant from what could ultimately protect them from themselves.

Well developed trade systems or methodologies still need honorable and psychologically mature humans to operate those systems for continued potential profitability. Those who think they have the BEST, still need to THINK the best, to have any CHANCE at the best.....I have seen this all throughout my life in aviation and trading. Honorable and mature mentalities, very well aligned with the realities of their own capabilities, can frequently defeat the supposed "Smart Guys" in the room.....day after day.

[UrmaBlume]

Originally Posted by MidKnight »

UB,

So what if they get laughed out of the room. Quant trading isn't the only way to make money. Are you implying that it is?

With kind regards,
MK

I am not implying anything, I am stating that most traders here do not make money and that they trade and espouse methodologies that the people who do make most of the money from these markets laugh at.

[UrmaBlume]

Originally Posted by FulcrumTrader »

No sir.....the "Smart Guys" or quants of the world lost BILLIONS in these past years due to fractured mentalities (that their MATH skills and trade systems were unable to overcome). In the end, regardless of the strategies developed many quant groups and institutional level players got KILLED by their mentalities. The second a human being or group of human beings think they are better than another group, they are on the universal path to self destruction. Thoughts of invincibility due to ego or perceived systems of perfection, leave the managers of such groups psychologically vacant from what could ultimately protect them from themselves.Well developed trade systems or methodologies still need honorable and psychologically mature humans to operate those systems for continued potential profitability. Those who think they have the BEST, still need to THINK the best, to have any CHANCE at the best.....I have seen this all throughout my life in aviation and trading. Honorable and mature mentalities, very well aligned with the realities of their own capabilities, can frequently defeat the supposed "Smart Guys" in the room.....day after day.

Chris,

You are correct some quants lost a lot of money but not the ones at Goldman or Renaissance. More than 60% of all equity trading in the US is done by quant derived methodologies such as the stat arb of mean reversion pair trading which is the original topic of this thread.

It is the best of those that make the most of the money from these markets, they are the "Smart Guys" in the room. Some of them are members here and of those that are members here that I have talked to, none of them ever post and none of them use market delta or consider market delta or VSA, Wyckoff......

Some of those successful, highly educated quants that are members here and never post have joined me in creating and registering UrmaBlume T1, LLC which is a private hybrid cross of a prop shop and a hedge fund.

All due respect Chris as I know you are a great proponent of market delta and if it makes you money - right on.

We, however, operate on the principle that recent advances in intelligent data mining, data processing, data visualization and higher frequency automated systems have moved beyond such methods of trade decision support as candles, profiles, market delta, etc.

cheers

UB

[Cory2679]

Originally Posted by UrmaBlume »

We, however, operate on the principle that recent advances in intelligent data mining, data processing, data visualization and higher frequency automated systems have moved beyond such methods of trade decision support as candles, profiles, market delta, etc.

UB,

Just curious...would you classify support and resistance on a chart in the same category as "candles, profiles, market delta, etc."?

Cory

[UrmaBlume]

Originally Posted by Cory2679 »

UB,

Just curious...would you classify support and resistance on a chart in the same category as "candles, profiles, market delta, etc."?

Cory

Hi Cory - Yes I would.

cheers

UB

[FulcrumTrader]

Originally Posted by UrmaBlume »

Chris,

You are correct some quants lost a lot of money but not the ones at Goldman or Renaissance. More than 60% of all equity trading in the US is done by quant derived methodologies such as the stat arb of mean reversion pair trading which is the original topic of this thread.

It is the best of those that make the most of the money from these markets, they are the "Smart Guys" in the room. Some of them are members here and of those that are members here that I have talked to, none of them ever post and none of them use market delta or consider market delta or VSA, Wyckoff......

Some of those successful, highly educated quants that are members here and never post have joined me in creating and registering UrmaBlume T1, LLC which is a private hybrid cross of a prop shop and a hedge fund.

All due respect Chris as I know you are a great proponent of market delta and if it makes you money - right on.

We, however, operate on the principle that recent advances in intelligent data mining, data processing, data visualization and higher frequency automated systems have moved beyond such methods of trade decision support as candles, profiles, market delta, etc.

cheers

UB

Yes, I do agree with the level of capabilities that some of these groups have and how they use their developed abilities to create advantages for themselves in the markets each day. I also know how various equity member firms of the CME track order flow, volume distributions, and open interest in futures products for their trading desk ops. I think digging into the granular information within the traded order flow is a smart direction to go for developing trading systems (which I have done myself with fund systems data experts/fund systems programmers).

It is very interesting how Commercial trading entities, at the very sophisticated level, can track order flow precisely to the point as to measure when resting inventory in a specific area of price is about to be fully capitulated (and used as an exit for winning position covering order flow). It is also very fascinating to now see the visualization and complete difference of dramatic order flow acceleration from capitulation versus Commercials initiated trade activity. The difference in order flow rate frequencies can now be visualized through proper data flow analysis, to see the separate stories all being told simultaneously within even 1 second of order flow time.......yes, I agree this is all very good information to have.

All this micro level analysis is just fine for the potential when moment to enter a trade, but I still find there are additional very robust methods of analyzing traded order flow distributions to know higher probability where areas of price to look to enter trades. Blending the where locations of price to enter trades with the precise moment of when to initiate trade is the advantage in my opinion. But heck, all those smart quant guys think they are the only ones who are smart in the room.....and I love the fact they think that way.


Enjoy the Vegas weather and keep up the great work!

Christopher

[DugDug]

Urma -Dont forget - Goldmans is a market making firm according to Lloyd..... it might actually possibly loose money from its trading decisions as opposed to its market making???
additionally I think this (old) article is clearly wrong.....given the two people you mentioned.

Quakes In Quantitative Trading: Nothing New Under the Financial Sun -- Seeking Alpha

If I recall goldmans was bailed out....???? And it probably only missed worse by being better business managers and by being able to grab a chair and sit down just prior to the music stopping. Will we every really know?

However while there are lots of ways to make money..... I think any one particular group that laughs at another just shows arrogance.... never a particularly appealing trait.
Particularly when I think you would find that a lot of people from some quant/broking/trading houses actually loose money and become part of the 95% of losers when they branch out on their own. It makes you wonder how many people rely on the order flow, low transactions costs, leverage, free funding and other spreads offered by the larger firms. A lot of retail guys leave and go under due to poor capitalisation, loss of interest, lack of time, education etc. Surely as a quant you must be able to look at the 95% of traders quote and realise that its a lie, lie and dammn statistic to be able to draw conclusions from. Maybe you are one of the smartest around, thats fine - some of the best traders I have seen are not that smart, and thats probably their strength and they know it. These guys know that sometimes luck plays a part and that they dont know everything. You should be greatful there are people that make you look good.
Yes there are exceptions, however I just took exception to (and always have and always will) your comment. I think given the reaction a few others did also....Thats all. There are plenty of dogmatic views on these sites as well - the cult of some indicator, so I cant disagree with you there.
I am probably old school in that I believe that the most expensive words in the English language are "this time its different".

[james_gsx]

Originally Posted by DugDug »

If I recall goldmans was bailed out....???? And it probably only missed worse by being better business managers and by being able to grab a chair and sit down just prior to the music stopping. Will we every really know?

I think the term "bailed out" is slightly over used. In reality, almost every bank in the country was bailed out whether they needed the money or not. A lot of Goldman's potential landmines were CDS with AIG. Overall, from the slight (meaning don't take my word 100%) they did a much better job managing their toxic debt before everything blew up.

But nonetheless, Goldman continues to make money from their trading floor. Bailed out or not, they are obviously doing something right. And let's be honest, would you think twice if GS offered you a job and told you their trading was made up of VSA, candlestick analysis, and market profile? You'd probably walk out laughing too. Eventually, technical analysis will probably (if it already hasn't) become a thing of the past - much like pretending to gain a fundamental edge by reading the WSJ every morning. People still do that, which tells me retail traders will be studying technical analysis for many years to come and trying to find their edge (some definitely will find an edge).

As far as UB being condescending, I think that's just part of the business. It's not nice, but this business isn't nice. Let's face reality, in games like poker your objective is to win, and you do so by taking your opponents money - same thing with trading.

With all that said, I'm glad this is a civil forum and we can have meaningful conversations regardless of how different ones opinion may be. There are some very intelligent traders who have gained their edge through wyckoff, VSA, etc, and I hope they continue to share their knowledge with others. But at the same time, we should all face the reality that this game is rapidly changing (already has), and the more aware you are, the better prepared you will be regardless of your style of trading.