how do you predict the future?

[wekim]

That is my take on it. I think that people that are against using the word 'prediction' in trading are doing so because they associate it with certainty.

This is probably why Leopard is all off on his high horse. I could care less about semantics. The "profound" post by bbmac that Leopard thanked and his trivial response to you are both so basic that I assumed those concepts would have been already a given

 

[wekim]

Anyway, do you want my system or not? It will win over 90% of the time, which is as near to being able to predict the future as you're likely to get.

Sure. Trolling or not anythings worth a look

 

[wekim]

So when you take a trade, you have done no analysis to figure out the most likely future outcome of the scenario that gets you into the trade?

Usually not.

lol.

 

[The Leopard]

This is probably why Leopard is all off on his high horse. I could care less about semantics. The "profound" post by bbmac that Leopard thanked and his trivial response to you are both so basic that I assumed those concepts would have been already a given

I am not sure what this horse is or why you imagine I "all off" on one.

My response was not at all trivial. But if you are so far beyond the basic and trivial, why did you start a thread with the title "how do you predict the future?"?

That is possibly the stupidest title I have ever seen on T2W, and that really is saying something.

You also make thoroughly stupid statements such as:

But when you trading directionally, you are trying to predict the future.

You are saying, "I'm going long here because I think in the future, the buying pressure will overwhelm the selling pressure and price will rise."

You have received some good responses (all more or less saying the same basic thing, which you apparently have failed to grasp) and yet you respond with completely baffling petulance.

 

[The Leopard]

Sure. Trolling or not anythings worth a look

Very well. Here is my system to allow you to predict the future with greater than 90% accuracy.

Take a pair like EUR/USD, or whatever really.

Enter at random (or using any method you like, doesn't matter much) and set a 5 pip take profit and a 500 pip stop loss.

Congratulations! You can now predict the future direction of the forex markets almost infallibly!

 

[VielGeld]

lol.

Why laugh? Hare uses a system with random variables to make trades... and apparently it works.

You really don't need to be able to predict the future to make it.

 

[bbmac]

Just so we are clear : No body can predict the future - even those that think they can. There are no dissenters to this statement are there ? surely not ?

G/L

 

[counter_violent]

Just so we are clear : No body can predict the future - even those that think they can. There are no dissenters to this statement are there ? surely not ?

G/L

I predict price will be higher , lower or the same in the future...but not necessarily in that order

Morecambe & Wise - Grieg's Piano Concerto / I am playing all the right notes.... - YouTube

 

[Shakone]

I don't think it is semantics. Acting on an edge and predicting are 2 seperate things. When we act on our edge we are simply relying on the fact that in the 000's of times that edge has set-up in the past it achieved a winning outcome on x % of times When we act on our edge we know and accept that we do not know what will happen next - ie which times will produce winning or losing outcomes...we are not predicting what will happen - we cannot as has already been stated - we are simply playing the edge and if we optimise our money and risk management to the edge then we will make money over any given sample of times the edge sets-up. Prediction would be entering the market beacuse we think we know what the future direction will be. It's more than semantics - there is a difference.

G/L

Are you not simply predicting that your edge will play out over 100s trades? In other words this IS prediction, just not prediction of a single trade? It's semantics, and it nearly always is on these kind of things. Same as the gambling or not gambling type debate.

As DT said, weathermen might give a forecast of the weather. What they really have behind that is a statistical tool which shows that if a certain set of circumstances occur, then there is an x% chance of rain or whatever. Each day they go out and they make these forecasts. Some wrong, some right. Just because they get one wrong, doesn't mean they are attached to it. I don't think a weatherman who predicted sunny skies is going to go out into a tornado because he made a forecast. It doesn't mean it's not a prediction, and it doesn't mean they don't have an 'edge' with regard to forecasting the weather.

Just so we are clear : No body can predict the future - even those that think they can. There are no dissenters to this statement are there ? surely not ?

Nobody can know for certain the future. But people can predict it, and do so regularly.

"A prediction or forecast is a statement about the way things will happen in the future, often but not always based on experience or knowledge."

 

[wekim]

I will indulge one last time, I am not here to argue semantics yet thats all you want to do.

My response was not at all trivial
...
You have received some good responses (all more or less saying the same basic thing, which you apparently have failed to grasp)

You think that the statistics 101 concept of variance is profound? Obviously you do, because you go on and try to justify your post with some trivial winrate/roi comparison. With 1:1 risk reward your winrate needs to be > 50%. with 1:2 risk reward your winrate needs to be > 33%. This is 9th grade algebra that you are trying to pass off as non-trivial.

Wait maybe you dont think its all that profound, because then at the end you admit that it is 'basic' after all.

Earlier you wrote this brilliance:

But it is by no means always so - I enter many longs (and shorts) expecting to lose, because that is what happens more than 50% of the time.

If you are expecting to lose, then you need to refine your system. Expecting loss and Accepting loss are two very different things. If you 1:2 r/r system wins at 40% obviously you are +ev. So you will accept losing trades 60% of the time. But if you go into the trade expecting to lose, then you need to re-evaluate your trigger.

But the thing is, I know you know this already. I'm not telling you anything new. You're just sloppy with your language because you want to have an argument to show your knowledge instead of a discussion of the underlying topic.

why did you start a thread with the title "how do you predict the future?"?

That is possibly the stupidest title I have ever seen on T2W, and that really is saying something.

Stupid, perhaps yes, and thats probably why this thread quickly deteriorated. Only stupid because it riled up the trolls and prevented real discussion. I would rather describe it as 'sensationalized' since at its core the topic could be easily reworded as "how can you be sure of your edge?" But if I used that I probably wouldn't get many replies

Whether you want to argue over the word "prediction" or not, whatever your system is, you are saying that given your risk/reward parameters, you think that X will happen more often than not to give the system positive EV. Betting your money that something will happen more often than not, is a prediction. You are predicting that your model will provide success more than the 50%, 33%, whatever winrate required.

if you are using automated mechanical systems, presumable you've backtested these systems which gives you the confidence in your predictions. In this case, your answer to the topic could be as simple as "statistical historical analysis"

 

[wekim]

Why laugh? Hare uses a system with random variables to make trades... and apparently it works.

You really don't need to be able to predict the future to make it.

Why criticize me for laughing instead of trying to think it through and understand WHY I'm laughing?

If you think picking variables at random and picking stops and targets at random will "apparently work", then I've got a bridge in Brooklyn to sell you.

For him to state that he has done "usually no analysis to determine the most likely outcome" is just his attempt to try to sound profound with a blunt statement which cannot be true. Assuming he does win, and even if he uses random variables, he must have done some backtesting; that in of itself qualifies as analysis.

 

[new_trader]

Why criticize me for laughing instead of trying to think it through and understand WHY I'm laughing?

If you think picking variables at random and picking stops and targets at random will "apparently work", then I've got a bridge in Brooklyn to sell you.

For him to state that he has done "usually no analysis to determine the most likely outcome" is just his attempt to try to sound profound with a blunt statement which cannot be true. Assuming he does win, and even if he uses random variables, he must have done some backtesting; that in of itself qualifies as analysis.

I don't buy into the random system thing. I'd say it is systematic...either that or we need to redefine "random".

 

[new_trader]

Nobody can know for certain the future. But people can predict it, and do so regularly.

What the "You don’t need to know what is going to happen next to make money" crowd can't seem to understand is that "knowing" what happens next comes from recognising what is happening now.

I’d rather quote Jesse Livermore than Mark Douglas any day:

“I noticed that in advances as well as declines, stock prices were apt to show certain habits, so to speak. There was no end of parallel cases and these made precedents to guide me.”

Whether you "need" to know or not depends on how efficient a trader you want to be. You might make money being a haphazard trader...go for it then!

 

[VielGeld]

Why criticize me for laughing instead of trying to think it through and understand WHY I'm laughing?

Don't underestimate randomness in the market. This is not poker where the game is very well defined; trading can effectively be called infinite in its interpretation.

An easy example: price is only limited by the player's perception of it. If the majority of people with the majority amount of cash think a $10 stock is really worth $1000, then there's nothing to say it can't hit that price.

In effect, the market is only predictable to the extent that you understand participant behaviour in specific cases. If you don't understand it, would flipping a coin make any difference?

So yes, you can predict the market within specific variables (your "edge"), but you can't apply this edge to all forms of market unless you have the experience to back it up. In the end, the only thing to rely on is your experience with watching the market, and it is from these observations that you get an idea where price could go.

In any case, I'll let Hare expound on his (her?) system since I've no idea how that thing would work and running a random system wouldn't be my cup of tea either.

 

[bbmac]

It seems there is confusion about what is an edge and what is prediction.

fact: You cannot predict the market

fact: An edge does not predict the market

A prediction is working under the assumption that you can look into the future and see what wil happen next whether that be from a gut feeling, or some kind of tech, fundie, global macro, quant or other analysis.

An edge simply takes advantage of a set of repeating circumstances that over a historical sample has shown there is money to be made by acting on it with the right money and risk management. In acting on it when it sets-up you are not predicting that it will make money again you are relying on the fact that the edge will continue in the future as it has done in the past - this may or may not come to pass but whatever the case - it is not prediction.

To think that prediction is possible or exists in any shape or form, using any form of analysis is false. The difference is not one of semantics it is one of actual defintion.

G/L

 

[Shakone]

It seems there is confusion about what is an edhge and what is prediction.

fact: You cannot predict the market

fact: An edge does not predict the market

An edge simply takes advantage of a set of repeating circumstances that over a historical sample has shown there is money to be made by acting on it with the right money and risk management. In acting on it when it sets-up you are not predicting that it will make money again you are relying on the fact that the edge will continue in the future as it has done in the past - this may or may not come to pass but whatever the case - it is not prediction.

To think that prediction is possible or exists in any shape or form, using any form of analysis is false. The difference is not one of semantics it is one of actual defintion.

G/L

Those are not facts at all. Take a definition of prediction, I gave one. "a statement about the way things will happen in the future, often but not always based on experience or knowledge. "

Now here's a prediction. After I enter a trade, it will hit my stop or my target. This is a prediction, because it's a statement about what will happen in the future, and a very good prediction. Now if you want to assign other meanings to the word 'prediction' that are personal to you, then this is a case of semantics. Your'e welcome to do it, but foolish to argue it and impose your meanings on others.

Words mean different things to different people.

Here is what you should have written

FACT: bbmac believes You cannot predict the market

That's fine as a fact. The rest is just semantics.

 

[Shakone]

What the "You don’t need to know what is going to happen next to make money" crowd can't seem to understand is that "knowing" what happens next comes from recognising what is happening now.

I’d rather quote Jesse Livermore than Mark Douglas any day:

“I noticed that in advances as well as declines, stock prices were apt to show certain habits, so to speak. There was no end of parallel cases and these made precedents to guide me.”

Whether you "need" to know or not depends on how efficient a trader you want to be. You might make money being a haphazard trader...go for it then!

The word 'knowing' to me is probably going to cause a semantic argument again. KNowing to me means with 100% certainty, there will never be a case that contradicts this knowing. To me, if you truly knew, you wouldn't need a stop at all. But even the best traders still need a stop. In trading I've never experienced knwoing for sure, because there are too many factors that can ruin things. Myself, my computer, my connection and of course the market.

 

[bbmac]

.....Now here's a prediction. After I enter a trade, it will hit my stop or my target. This is a prediction, because it's a statement about what will happen in the future, and a very good prediction. .....

A prediction is not a statement about the inevitability that one or the other of 2 known outcomes occuring. If you had said After I enter a trade, it will hit my stop then that is a prediction because you are suggesting one thing may happen over the other of the 2 known outcomes. Ie a prediction is a statement that favours one or more outcome (s) over all known outcomes.

This may seem like semantics but the distinction is important to state.

G/L

 

[Shakone]

A prediction is not a statement about the inevitability that one or the other of 2 known outcomes occuring. If you had said After I enter a trade, it will hit my stop then that is a prediction because you are suggesting one thing may happen over the other of the 2 known outcomes. Ie a prediction is a statement that favours one or more outcome (s) over all known outcomes.

This may seem like semantics but the distinction is important to state.

G/L

To you....To you this is what a prediction is. Not to the dictionary, not to me, and not to many others. To you.

 

[wekim]

"The words of my book nothing, the drift of it everything."
Walt Whitman

This thread has been a waste up until this point, save the first two responses that tried to give an answer with the opinion that "when a trend is active it is likely to continue." Whether thats true or not, at least its an attempt at discussion. In the mix, we've also concluded that people try to predict the validity of their edges by backtesting over statistically relevant samples. What else? Can we try to proceed?