OTOH, I disagree with Dustin that being short on 2-27 is pure luck. Any number of systems which would have done fine on the way up would have also put you short on 2-27. Staying short, at least into the close, was about as obvious as not folding with a royal flush.
No method trades everyday and is 100% accurate. In that sense, you were “lucky” if your method had you short on such an outlier day. It happens, but it’s nothing to brag about, anymore than being dealt a royal flush is.
> No method trades everyday and is 100% accurate.
Of course not. Did I say the market is as predictable as a
sunrise? It’s more like weather prediction than astrology.
> In that sense, you were “lucky” if your method had you short on such an outlier day.
I guess. But the point is a variety of systems that have been around
20-30-40+ years were short that open.
> It happens, but it’s nothing to brag about, anymore than being dealt a royal flush is.
Right, but whose bragging?
Getting short given this circumstance wasn’t a 1:649,750 shot
(royal flush odds). It’s something these systems would do most of the time (again given the breakdown, breadth, range contraction, volume non-confirmation, etc). Not secret stuff or rocket science or luck. These types of systems are tried and true, but they are counter intuitive. Most folks think “buy low, sell high”. Most folks lose. These systems sold low and bought lower (or are still short).
"It’s something these systems would do most of the time (again given the breakdown, breadth, range contraction, volume non-confirmation, etc).
I agree with your associating it with weather forecasting, but I consider it far less accurate.
It is obvious a few systems outperform over time, and some were likely short based on their system indicators. But I find it extremely doubtful anyone “knew” this would be a big one, like Mr. Six Sigma, who “knew things would get interesting soon.” Not even bothering to give a direction or approx time, he proved nothing.
To me, systems that were short for 2/27 is just noise. Once proves nothing. It remains luck to me unless proved otherwise. It is also possible some flagged long due to some short term indication right before the market went down. Does that make them better or worse?
Markets aren’t “predicted.” They have some semi-reliable tendencies which happen more than 50% of the time, which by using appropriate money management, some skilled traders/sys-vendors can outperform. The Tankh (Old Testament) gave an interesting test of a prophet - his prophecies had to be 100% or else he was to be ignored or perhaps stoned. Predictions usually come true. Following the market is not true predictions.
I am still chuckling at the guy who was using the monthly tendency of the market (seasonality) to rise from the last few days of a month through first few days of next (a theory he read about and believed in). I told him twice that he should use money management; he often had an outsized gain and refused to lock in some profit “because his testing showed better performance when no profit targets/stops were used”. Suddenly after losing all his yearlong gains rapidly, he has promised to use stops. DUH
I only give a system its due if it is usually on the right side of the market when big ones hit. Like: 2/27/07, last mid-May plunge, 10/19/87, 9/11/01, and other big up/down days/periods.
Like the big lottery winner. To her, it is good luck. To everyone, it is probability.
> I agree with your associating it with weather forecasting, but I consider it far less accurate.
Well imagine if there was a NWS board where 2000+ folks from various backgrounds tried to predict the weather…
Lets look at a specific analogy. Say you are looking at the radar and
a heavy spiral is heading your way. The barometer is at 900 MB and
dropping. Think it might be a good bet that your in for bad weather?
Now lets say the Declines are 10:1 over the Advances and rising. The
chart shows you the market just took out 20 days worth of stops and 20 more days worth are just below. Think it might be a good bet that your in for bad weather?
These things don’t happen every day, but seeing them for what they are
DOES offer opportunity and/or a means to avoid risk. It is not magic, and it is not luck, and it’s not a prediction. It is just understanding probabilities. This is the same reason why the same group of poker players win the vast majority of the time.
> To me, systems that were short for 2/27 is just noise. Once proves nothing. It remains luck to me unless proved otherwise.
Skepticism is one thing, but sometimes your cynicism is over the top.
I think it clouds your judgment as an impartial observer. The methods
I’ve mentioned wouldn’t just catch this kind of rare move. They would also have been mostly long on the way up. And they were short in May.
Moreover, 20-30 years of CTA rankings show there are guys using these same or similar methods that are still making money.
I have to ask: if there is no valid method for making money in the markets, why have you (seemingly) devoted your life to the markets?
"if there is no valid method for making money in the markets, why have you (seemingly) devoted your life to the markets? "
Not what I said. From above:
"It is obvious a few systems outperform over time, and some were likely short based on their system indicators.
"Markets aren’t “predicted.” They have some semi-reliable tendencies which happen more than 50% of the time, which by using appropriate money management, some skilled traders/sys-vendors can outperform"
Most CTA rankings I have seen were rather unimpressive, albeit they tend to be short-term; A 20-30 year decent record would be interesting, but I am more of a system trader. I never let others trade my money. But there are always a few that seem to do realtively well.
But I think C2 and other places demonstrate the fact that it is very hard to have a good outperforming system. They come and disappear. Too many people confuse systems that do well out of luck (out of 100 active systems, a few will appear to do well). Or they confuse those who leverage a rising market.
My true measure of a system, besides a few obvious stats (PF, APD, Sharpe), is one that consistently makes money against the prevailing trend of the market. THEN I am impressed…
But I find the good systems - outperforming, over a multiyear period, in different markets to be exceptionally few. (And I avoid scalpers). Several sites (such as Striker & Attain brokers) are system-focused. They track the big systems (Aberration, and others). But the performance after release tends to be much worse than pre-release, and most of them have done little for years.
"Markets aren’t "predicted."
I stipulated as much on my first post.
> A 20-30 year decent record would be interesting, but I am more of a system trader.
They are system traders too. Most guys that have peppered the top
of the CTA lists over multiple decades have some variation of channel
breakouts. Even shorter term traders like Crabel uses a variation
of the breakout theme. He made good money with variations on his
published method over a 10 year period. Consider though, his idea
is trading the “opening range breakout”. In 2007, what is the opening
range? 12AM? 9:30AM? Things change, even great ideas may not
work forever.
> makes money against the prevailing trend of the market.
Or better yet, has a means to understand when the trend has changed.
The way I see the markets is this.
1: 80% of currencey volume is excecuted by 10 major banks.
2: If you’re the chief strategist for one of these banks (i.e. overseeing 250 billion turnover per day) do you really think you don’t know what the ‘economic news’ will be or when interest rates will go up.
Is this guy really going to be ‘suprised’ by the Fed?
3: The banks can see where your stops are anyway.
To me that’s the only really important point to be made in currencey trading. i.e. It’s a stacked deck.
Whether you’re ‘predicintg’, ‘expecting’ or ‘speculating’ it’s all semantics really.
yes, psychology is important but we’re all grown men/women here
so bottom line as far as that’s concerened is to ‘keep my shit together’ (so to speak!)
Also there’s people making a lot of money writing books explaining the difference between ‘expecting’ ‘predicting’ ‘speculating ’ playing the probabilities’ etc. etc.
I don’t give them my money!
>Also there’s people making a lot of money writing books explaining the difference between ‘expecting’ ‘predicting’ ‘speculating ’ playing the probabilities’ etc. etc.
> I don’t give them my money!
If you are referring to Crabel’s book is out of print since 1990 or so. He became a profitable CTA for 10 or so years and had several billion$
under management…so you can’t give him money for his
book, but he was accepting accounts, I think the minimum was
$5,000,000 last I looked…not sure.
Anyway, if you bought his book when it came out you would have
made an excellent trade. It now sells on Amazon for $1000+. That’s
a better long term return than most systems.
True
That sounds good Sam.
The only point I’m making is that everyone quotes Warren Buffet
or whoever, usualy combined with repeats of some ‘how to trade’ book or internet site.
I agree there’s great value in reading Market Wizards and other classics. The book you mentioned sounds good as well.
It’s all easier said than done though.
There comes a point where either someone knows what they’re doing or they don’t.
It’s that simple really.
That’s why I don’t usualy post on forums.
I posted on T2W a month ago and it only took a day for someone to start hurling abuse. So what’s the point in posting?
Why would a professional trader bother?
So this really is my last post on an internet forum (thank God!)
(and I mean that nicely!)
Firstly I do work for a professional consultancy firm and secondly
if you think the smartest people in the financial institutions didn’t ‘predict’ 9/11 to the day or don’t know that the US stock market is massively over valued you are very naive.
It’s a fact that any economy that quadruples it’s money supply in 6 years is in trouble.
The only ‘model’ that the vast majority professionals trade is information. The rest is mostly BS is to take the public’s money in one form or another.
But anyhow thanks for all the nasty replies. If you knew what you were talking about you wouldn’t need to be so aggresive.
Anyone with half a brain (under the sun) knows that.
Firstly I do work for a professional consultancy firm and secondly
if you think the smartest people in the financial institutions didn’t ‘predict’ 9/11 to the day or don’t know that the US stock market is massively over valued you are very naive.
It’s a fact that any economy that quadruples it’s money supply in 6 years is in trouble.
The only ‘model’ that the vast majority professionals trade is information. The rest is mostly BS is to take the public’s money in one form or another.
But anyhow thanks for all the nasty replies. If you knew what you were talking about you wouldn’t need to be so aggresive.
Anyone with half a brain (under the sun) knows that.
