How To Think Correctly

[SOCRATES]

Thanks for that Charlton. Very well written post.

I'd invite you to the bonfire but it's already alight.

I'm still waiting for the punchline to this thread (there isn't one - remember Monty Python's world's funniest joke sketch)

We have seen much wondrous knowledge exhibited here, arcane and otherwise. How can this be applied on a practical level for the every day retail trader wanting to earn his crust who doesn't have a spare ten years to travel the yellow brick road to enlightenment.

I won't quote Alice again, although it is tempting. Perhaps Socs may find it more difficult to resist such an invitation?

Yesterday I was given a DVD of the Da Vinci Code movie saying it was one of the best films ever made!!

I'm skeptical about the film, the book and the dogma, but I'm gonna go and watch it anyway.....

Just before writing this I arrived at the end of Act 1 of Goethe's Faust.
The last line rather stuck in my mind....

MEPHISTOPHELES (hoisting Faust on his shoulders):
That's that. To burden oneself with fools, you see,
In the end does the devil injury.

You know why there isn't a punchline ?
It is very simple.
It is because it is not a series of graduated lessons.
Since you mention Alice, who is very close to my heart,:cheesy: , you will remember how in Chapter 9, The Mock Turtle's Story, Alice encounters several interesting creatures, including the Mock Turtle who explains why lessons are called lessons as such.
( less - ons..... and not..... more - ons....my interpretation of course )
In this thread there really aren't any lessons.
But there is discussion instead, and tacit and subtle recognition, which is enough to make it a pleasure.
Some of this discussion is very guarded, very tongue in cheek, between individuals who know and recognise exactly what it is that is being discussed, but then from a very prudent posture as the nature of the topic, at the highest levels of mastery, inexhorably demands

You like it ?

 

[SOCRATES]

It has been spotted.....

I am asked to relay to you the message:

...they like it...THEY LIKE IT !...:cheesy: ...and special greetings :cheesy:

 

[blackcab]

During the course of my readings, I came across a paragraph where P.O.P explained that it can be beneficial to look at charts in completely different time frames to what everyone else does - experiment and see what happens, was his advice.

I tried this, and decided to put my own little twist on it - I turned the chart 180 degrees counterclockwise, and started to examine the charts.

Now, we are not talking about anything out of the ordinary here, just a chart rotated. After a while I began to see something jumping out at me - as Socrates says - like a sore thumb.

I will not spoil it for you yet, as you must study the charts until it jumps out at you.

It does not matter what time frame you are in, for the detail I am talking about is well known by all, but many fail to see the significance of it for trading, and especially daytrading.

The rotation tends to show up the significance - well, for me at least.

It will be noted by someone, of that I am sure, but lets see how long it takes.

The answer will start a very good discussion indeed, a discussion which will be about a very profitable daytrading strategy.

I've got a rare few minutes so I've just rotated it 90 degrees counter-clockwise with Friday at the top and Wednesday at the bottom and am looking at it now. Here are my thoughts as I'm looking at it:

- The open/close ticks on the bars make it look like a family tree
- There's an obvious right-hand edge that's hit once each day
- There are roughly as many green as red bars
- The start of each day sees a lot of movement
- Green bars occur only in ones or twos
- Most of the movement is bracketed by the Wednesday 1430 and Friday 0930 bars

You said "the detail I am talking about is well known by all, but many fail to see the significance of it for trading" so now I'm looking for a pattern or shape that isn't something to do with trading.

- It's wide at the bottom and narrows as it goes up, then widens again
- It looks like a river meandering
- It looks like something you would rock-climb

My few minutes are up and I'm called for. Maybe I got something there or maybe not.

 

[starspacer]

...We have seen much wondrous knowledge exhibited here, arcane and otherwise. How can this be applied on a practical level for the every day retail trader wanting to earn his crust who doesn't have a spare ten years to travel the yellow brick road to enlightenment....

Enlightenment leads to a state of 'oneness'. All becomes clear. The markets become an amusing game, nothing more. Money becomes unimportant; it simply flows as a side-result of Mastery. The Master retreats to his inner-self. He just knows. Indeed, discussions on this thread become more important than the game itself. I hope you understand.

Truth is the path to Mastery, but the path to Truth is long and difficult - full of chimera and siren distractions. There are no shortcuts. One leads to the other. The Wise one knows that he knows nothing. But, by knowing nothing, he knows everything. This is the state of aesthetic trading. Its very success redeems us from our lack of knowledge. I hope you understand.

 

[CJIA]

re

We have to learn to unlearn.
Tao Of Trading.

CJIA

 

[blackcab]

An observation on the posts that talk of transcendental knowing, charts wafting away towards the right, distorting time at will, etc. I haven't yet spent thousands of hours looking at charts, either static ones in hindsight or live ones developing in real time. Dozens or a hundred perhaps, but not thousands. I have spent thousands of hours doing several other things, two of which are very common - A) interacting with close loved ones and B) driving a car. Some quick thoughts on both that may relate to this view of trading:

A)
The human brain is physically simple in the sense that it's constructed from homologous elements whose structure and communication is in principle knowable. I'm not a neurologist so that may be inaccurate, and we may know more or less about the elements than I think we do, but that's what I understand. The complexity we see in people's behaviour comes from its scale, the large number of these elements and the large number of relationships between them.

How then are we able to observe the behaviour of a close loved one in a situation and predict their behaviour? We don't measure their neural activity and apply a formula or consult a look-up table. I'd guess we use our relatively large memory of their past behaviour in similar and different situations under similar and different moods and constraints and make a probabilistic prediction. When our prediction agrees with what they actually do we say we 'know' them; when it doesn't we say we our knowledge of them in that particular respect was lacking or just wrong. Whether it's correct or not we store our view of their behaviour for when we next predict them.

I don't believe that we distort time or project ourselves into the future and see what they did, then return to the present to make a safe prediction.

So if we don't apply a physiologically deterministic model (counting their neurons) or perform a supernatural feat (seeing the future), what are we doing - making a behaviourally deterministic guess.

B)
Long ago I found myself predicting how other cars on the road would behave, and was rather good at it. Mostly it relates to predicting when certain, specific cars are going to change lane, the manner in which they're going to do it, and what other cars around them will do as a result. Often I've done it over and over again, having strings of 'winners' with almost no 'losers'. As above, I don't think I'm transcending the reality that constrains mortals and seeing into the future. I'd guess I'm making a probabilistic prediction based on observing a relatively large set of similar situations in the past, taking note of and matching details such as velocity and acceleration of the car I'm 'targeting', position relative to other vehicles and how that's changing, type of car, position within the lane, etc. (They're not using their flashing indicators either ;-) It's not just obvious cases, but situations like a line of 15 cars in lane 1 of a motorway, all behind a lorry. All 15 have the same speed and relative position, but one of them will suddenly 'pop out'. Why that one and not another, who knows, but I can usually "pin it with near certainty".

---
I expect that most people make these predictions and I have no special powers. I don't even know if I have taken an external view of these things and myself and been conscious as opposed to unconscious about them more than other people. I'm typing a post about them but maybe that's the only difference; I don't know.

So, my current view, which may change, is that the posters who are good at trading and who talk of enlightenment, mastery, truth, knowning, oneness, and all those mystical-sounding things are in fact doing the same as the above, but that they ascribe their prowess to different forms of mystical, spiritual, other-wordly factors for their own reasons, each different, but I would guess sharing a root of either or both of the following:

-- Lack of knowledge or appreciation of how complex, awesome and subtle the brain is, while at the same time remaining an ordinary physical object

-- A desire to believe in something higher or 'other' because it satisfies the need for comfort, or avoids confronting the stark physical, material nature of our existence. (Incidentally this is why many people believe that many other people believe in a Creator figure, so huge and real is this desire.)

P.S. I know my writing style is pompous, academic and fussy, and that I live in an ivory tower and have little experience of the 'real world', so take those criticisms as read.

 

[CYOF]

I cease to amaze you or I never cease to amaze you ? :cheesy:

OK...If time is not rigid....and it is understood now why it is not...it raises two questions...the first one being it cannot be forced and the second the opposite...

"Never" cease of course - apologies - another mere mortal mistake which becomes so much writing

 

[CYOF]

Enlightenment leads to a state of 'oneness'. All becomes clear. The markets become an amusing game, nothing more. Money becomes unimportant; it simply flows as a side-result of Mastery. The Master retreats to his inner-self. He just knows. Indeed, discussions on this thread become more important than the game itself. I hope you understand.

Truth is the path to Mastery, but the path to Truth is long and difficult - full of chimera and siren distractions. There are no shortcuts. One leads to the other. The Wise one knows that he knows nothing. But, by knowing nothing, he knows everything. This is the state of aesthetic trading. Its very success redeems us from our lack of knowledge. I hope you understand.

Before I reply to some of the other posts, I want to welcome your return starspacer, and your guidance, as always, is a pleasure to read.

I want to all to consider this dream, which I had on Saturday night, which I want to mention now in case it escapes my memory:

" I am walking down a lane and see a left turn up ahead. I reach the turn, follow through, and I am faced with another long lane, but to the right of the ditch is a wide open field. In the bottom of the field, which is a long distance away, I see two small figures. Suddenly, I see three cat like features scurrying off to the left of the 2 figures. They leap out through the ditch at the bottom of the long lane, and race up towards me at a frightening speed. I see them more clearly now and they are either mountain lions or a similar brown cat. I see an opening in the ditch. I jump through and pick up a handful of dead shrubbery on the way. Suddenly, as they leap through the opening at me, I throw the shrubbery to blind them and suddenly take off into the air. I fly down over the field, seeing all clearly as I do, and towards the two figures. When I get closer, I see that the 2 figures are standing on another ditch, which is very narrow indeed, that is surrounded by a very wide stream, which looks like a river. One of the figures is dressed in oriental type clothing, the other in our normal western type. The western figure gives instruction to the oriental figure (I am saying oriental based on the clothing as none of the faces were clear) and the oriental heads off in the same direction as the cats, but clings to the ditch as it is so narrow.

Suddenly, he slips as he tries to get across the ditch, and falls into the water. As soon as he falls in to the water, two very large killer whales (or black sharks - as I am not 100% I saw the white mark of the killer whale) attack him and he immediacy turns into a black devil like creature, with a long devil like tail, and he is devoured by the killer whales.

The western figure has disappeared, and that is all I remember.

Now, all of this was so real, it was as if it were true.

I am trying to decipher, and it is the first flying experience that I have had in a while now, maybe 2-3 months or so.

The reason I am noting this now, is that it may, or may not, signify anything, but if it does at a future date, I will have noted it for reference back to - so lets see what happens?

Slainte,

 

[Profitaker]

So the “secret” of successful trading is to rotate charts through 180 degrees and see what jumps out at you ? LOL. Oh boy, just when I thought it couldn’t get any better !

Could anybody give me my second big laugh of the day and tell me what exactly it is that jumps out ?

Blackcab

Because the car we drive is vaguely a reflection of our own personality, most would agree that a Ferrari driver would want to overtake a lorry before a Skoda driver would. Even the car colour would offer some clues; red being an aggressive colour associated with speed and excitement, while green is a calming colour, apparently. Predicting how cars behave (or should I say how drivers behave) on the road is probably not entirely down to special powers, just ask a police officer.

You could argue that the above type of psychology could be applied to the stock market, the only problem being that you cannot see the cars - which kind of makes things impossibly difficult.

I suggest that Eugene Fama has it right when he said that the markets are indeed efficient. That all the currently available information is contained in a stock price, and therefore future prices are unpredictable.

Just like I wouldn’t entirely dismiss the Da Vinci code as pure fantasy, I wouldn’t entirely dismiss the notion that somebody, somewhere, has found the holy grail of trading. But whether the trading grail could be written down articulately as a coherent strategy, never mind the grail finder wanting to attempt it anyway, is highly doubtful.

 

[CYOF]

So the “secret” of successful trading is to rotate charts through 180 degrees and see what jumps out at you ? LOL. Oh boy, just when I thought it couldn’t get any better !

Could anybody give me my second big laugh of the day and tell me what exactly it is that jumps out ?

Blackcab

Because the car we drive is vaguely a reflection of our own personality, most would agree that a Ferrari driver would want to overtake a lorry before a Skoda driver would. Even the car colour would offer some clues; red being an aggressive colour associated with speed and excitement, while green is a calming colour, apparently. Predicting how cars behave (or should I say how drivers behave) on the road is probably not entirely down to special powers, just ask a police officer.

You could argue that the above type of psychology could be applied to the stock market, the only problem being that you cannot see the cars - which kind of makes things impossibly difficult.

I suggest that Eugene Fama has it right when he said that the markets are indeed efficient. That all the currently available information is contained in a stock price, and therefore future prices are unpredictable.

Just like I wouldn’t entirely dismiss the Da Vinci code as pure fantasy, I wouldn’t entirely dismiss the notion that somebody, somewhere, has found the holy grail of trading. But whether the trading grail could be written down articulately as a coherent strategy, never mind the grail finder wanting to attempt it anyway, is highly doubtful.

It might be an Elephant

 

[Profitaker]

CYOF

Have you tried your hand at fiction writing ? Can be lucrative, with the right story of course - just ask Dan Brown

 

[dcraig1]

Enlightenment leads to a state of 'oneness'. All becomes clear. The markets become an amusing game, nothing more. Money becomes unimportant; it simply flows as a side-result of Mastery. The Master retreats to his inner-self. He just knows. Indeed, discussions on this thread become more important than the game itself. I hope you understand.

Truth is the path to Mastery, but the path to Truth is long and difficult - full of chimera and siren distractions. There are no shortcuts. One leads to the other. The Wise one knows that he knows nothing. But, by knowing nothing, he knows everything. This is the state of aesthetic trading. Its very success redeems us from our lack of knowledge. I hope you understand.

OK obi wan kenobi, may the force be with you. Aside from the fact that this waffle says nothing about how to achieve this state of enlightenment, it's also quite frankly silly The possessor of common sense knows the limits of their knowledge - otherwise how could they extend it ? They also have respect for what they know - again how otherwise could it be extended. They should also know that knowledge is limitless and there is no ultimate state of Enlightenment. I believe information theory suggests that complete knowledge of the universe is unattainable as it would require more energy than is in the universe.

Anyway, enough of this philosophical crap. The hard reality is that if you want to learn to trade the markets via technical or quant means you've gotta look at the data available and try to get an understanding of what is going on. I could enumerate the data sources here, but I wont because it should be obvious. It's really that simple - look at the data, rather than believing in a whole bunch of dubious so called trading strategies. Find (or create) the appropriate tools to do so. There is no state of Enlightenment, but there are degrees of knowledge.

 

[Profitaker]

There is no state of Enlightenment, but there are degrees of knowledge.

Absolutley agree.

But to the educationally challeneged posters here, the state of "enlightenment" is much easier to achieve. Bottle of scotch should do it

 

[CYOF]

OK obi wan kenobi, may the force be with you. Aside from the fact that this waffle says nothing about how to achieve this state of enlightenment, it's also quite frankly silly The possessor of common sense knows the limits of their knowledge - otherwise how could they extend it ? They also have respect for what they know - again how otherwise could it be extended. They should also know that knowledge is limitless and there is no ultimate state of Enlightenment. I believe information theory suggests that complete knowledge of the universe is unattainable as it would require more energy than is in the universe.

Anyway, enough of this philosophical crap. The hard reality is that if you want to learn to trade the markets via technical or quant means you've gotta look at the data available and try to get an understanding of what is going on. I could enumerate the data sources here, but I wont because it should be obvious. It's really that simple - look at the data, rather than believing in a whole bunch of dubious so called trading strategies. Find (or create) the appropriate tools to do so. There is no state of Enlightenment, but there are degrees of knowledge.

Now, this is interesting.

Have we not stated that this thread is not for learning about the required skills, that are of course a necessity for trading, in fact, I think we have mentioned it many times.

As for the mumbo jumbo - take your pick - there are as many as there are with trading, but some are of course, better than others, and that is, because, they are the TRUTH :idea:

http://www.nurs.or.jp/~vladimir/ind...ion_and_Spirituality/Opposing_Views/desc.html

It really is as simple as you say, yet, it really is so hard for many.

Why is this so DC?

 

[dcraig1]

Now, this is interesting.

Have we not stated that this thread is not for learning about the required skills, that are of course a necessity for trading, in fact, I think we have mentioned it many times.

It really is as simple as you say, yet, it really is so hard for many.

Why is this so DC?

You can't separate the required skills because they are part of the "correct way of thinking".

I didn't say it was easy, in fact I think it is damned difficult especially as the subject of trading is obsfucated by any amount of published material of dubious quality.

By simple, I mean basically apply the experimental scientific method. Observe, observe and observe. Form hypotheses, subject them to testing, modify them or discard them. Form models. This doesn't necessarily mean complex mathematical models. It might mean models based on visual tools such as charts or the price ladder representation of the DOM. Whatever works. Of course look at what others are saying, but especially in this game it is essential to be highly skeptical. I can't see any other way of going about it. You're not going to absorb it by osmosis.

Of course on this road you may well have to acquire some skills in maths or computing and you will have to learn the practicalities of trading - exchanges, margin requirements blah blah. But that is part of "thinking correctly".

 

[CYOF]

I have to agree with grantx, re: CYOFs statement that he knows nothing, yet feels comfortable to suggest some are not thinking correctly.
To suggets that someone is not looking at an issue with the right viewpoint implies a standpoint of knowing something that is right or wrong.
(sorry if grantx didnt actually say this, but was the gist, over the past few pages)

I am with grantx, in the sense that we are being pulled in a certain direction.

In the context of the pdf image, which we are to turn 90degrees, CYOF has suggested he will state what the "answer" is, if someone asks.
Can I categotically state, please provide the "answer" as to what we are to "see".

Also, I am not sure if I am thinking correctly, since there have been a couple of posts quoting Ouspensky, a philosopher that I made a remark about previously! Am I on the right track regarding time, and perception? Or were the Ouspensky quotes merely used to keep some people hooked?

http://home.cfl.rr.com/mpresley1/PDO.html

If anyone is interested in esoteric knowledge, of the "hermetic" variety, in the sense that the turning base-lead into gold of the old alchemists was, to the simple and uninitiated about acquiring wealth, but to the initiated an anology of purifying the mind to reach higher levels of understanding, (which is what seems to be happening here), I suggest reading the occultist books by Cornelius Agrippa.
( I wonder how long before quotes from that start to appear)

You have demostrated a very important fact trendie, and that is, thinking precedes all actions.

I am now glad that I do not have to post from the following any more, as people can now read and understand for themselves, thank you for that:

http://home.cfl.rr.com/mpresley1/PDO.html

in relation to the chart at 90% counterclockwise, I actually thought that I said I would post the answer for How To Think Correctly, and we would backwards for understanding how it works, which may in fact, be better?

For the charts, the rotation of 90Deg counterclockwise can be used for different trading techniques, but the overall visual "sore thumb" is the same.

It is not time to state the strategies as of yet, but it should become clear from these 2 images that there is a common attribute that is inherent in all charts - no matter what way you look at them. Some ways, will, however, make it more clearer to see this common attribute.

I will give another clue that should clench it - A ZODIAC SIGN.

Here are two examples of using 2 completely different charts for 2 completely different strategies, and I have taken the liberty to rotate them so that there is no confusion this time.

Both are for daytrading, but in each case, the objectives are different.

The objective for trading will determine the approach, as with any skill set, as you would not see a carpenter trying to cut a piece of timber with a hammer, although I have seen one trying to break a piece of timber with a hammer, and I can only presume that he was not trying to cut it

Slainte,

 

[Splitlink]

OK obi wan kenobi, may the force be with you. Aside from the fact that this waffle says nothing about how to achieve this state of enlightenment, it's also quite frankly silly The possessor of common sense knows the limits of their knowledge - otherwise how could they extend it ? They also have respect for what they know - again how otherwise could it be extended. They should also know that knowledge is limitless and there is no ultimate state of Enlightenment. I believe information theory suggests that complete knowledge of the universe is unattainable as it would require more energy than is in the universe.

Anyway, enough of this philosophical crap. The hard reality is that if you want to learn to trade the markets via technical or quant means you've gotta look at the data available and try to get an understanding of what is going on. I could enumerate the data sources here, but I wont because it should be obvious. It's really that simple - look at the data, rather than believing in a whole bunch of dubious so called trading strategies. Find (or create) the appropriate tools to do so. There is no state of Enlightenment, but there are degrees of knowledge.

What's the matter, mate, don't they have any of this stuff Down Under? You're missing out on the real nitty-gritty, you know

Split

 

[CYOF]

You can't separate the required skills because they are part of the "correct way of thinking".

I didn't say it was easy, in fact I think it is damned difficult especially as the subject of trading is obsfucated by any amount of published material of dubious quality.

By simple, I mean basically apply the experimental scientific method. Observe, observe and observe. Form hypotheses, subject them to testing, modify them or discard them. Form models. This doesn't necessarily mean complex mathematical models. It might mean models based on visual tools such as charts or the price ladder representation of the DOM. Whatever works. Of course look at what others are saying, but especially in this game it is essential to be highly skeptical. I can't see any other way of going about it. You're not going to absorb it by osmosis.

Of course on this road you may well have to acquire some skills in maths or computing and you will have to learn the practicalities of trading - exchanges, margin requirements blah blah. But that is part of "thinking correctly".

But you are forgetting one very important thing DC,

Do you not remember the essay by Montaigne:

"there is nothing like alluring the appetite and affections; otherwise you make nothing but so many asses laden with books; by dint of the lash, you give them their pocketful learning to keep; whereas, to do well, you should not only lodge it with them, but make them espouse it." I will post this 10 thousand times if I have to!


and how so called teachers actually know nothing about what the art of real teaching is all about - do we all want to become "so many asses laden with books", or de we want to discover what real thinking is all about.

In fact, I have stated previously, that a new comer to trading, with no experience what so ever, has a far greater chance of success if he/she does not read the massive mountain of rubbish that is presented as the "way to learn how to trade".

If one is wise enough, for this is where true wisdom is, one will question everything before they even start, and subject themselves to a "good talking", prior to making any irrational decision as to what is the best approach to take.

If one is lucky enough to come in contact with a successful trader, then, this will of course be a unique event, the same as we have many unique events in History, like that of the time of Socrtaes and Montaigne, but alas, we now all know why we think the way we do, it has been mentioned many times, and we have also introduced many supporting views, some of which are based on Scientific facts, but, what we must really do, is recognise that we do not know how to think correctly, and to serve in our own best interests, we must learn How To Think Correctly, and it has nothing to do with everything we have been taught to date, for that method of teaching is flawed - period.

Slainte,

 

[CYOF]

Yes, and the very skilled badmington player who plays at championship level does somethng more, doesn't he ?

He anticipates more accurately than is the norm for his peers.

His championship status hinges directly on his abilty to anticipate ( and take advantage of this faculty ) and his ability to act according to his expectancy ( correct execution ).

Yes, and more importantly, how is he "ABLE" to anticipate more accurately, might it have any little thing to do with the way he thinks?

Maybe, just maybe, unknown to him/herself (lets not forget the other species here) , he has shed to burden of the so called "SYSTEM" that has been imposed on him/her without any consent. Maybe, his/her "INTEREST" in what they are doing, has allowed to shed off this curse, and only when they are truly "OBSESSED" with their sport do they find themselves in the so called "ZONE" that so many athletes speak about entering.

It is all starting to make sense, NO?

 

[Profitaker]

...a far greater chance of success if he/she does not read the massive mountain of rubbish that is presented as the "way to learn how to trade".

You have to ask yourself why there is a massive mountain of rubbish published on trading? Not why it's massive, but why it's rubbish ? There is a massive amount of publishings on many other topics, such as physics, gardening, medicine, sailing and so on.....but I wouldn't say it's rubbish. Why not ? Why is there so much rubbish published about trading stock markets, more so than any other subject ?

If you know the answer, I well start to think you are "enlightened"