Random or Competition?

[kimo'sabby]

That very much depends on how close to "Straight up" you place your bet and the volatility of the instrument. Also of course on where your target is.

In the extreme, if you placed a long trade on say the DAX with a 1 tick stop loss and a tiny little 10 tick target, you'd get taken out most of the time.

On the one hand, you have the theoretical 90% loss rate but break even P&L that such a stop & target would yield. On the other hand the volatility would probably see you hit more that 90% of the time.

Add into that mix a little bit of hope and you would most certainly be looking at 100% losers.

Ok. Firstly, i asked you for a percentage outcome, rather than 50%, you answered with your own theoretical answer. You decided not to give a direct and absolute answer, instead you created an answer to suit your own particular view on one very random and unique set of circumstances. Do you think that your own theory would be applicable to all traders in every scenario?

Theoretical = monotonous

 

[kimo'sabby]

There is nothing to create.
Experience will provide results but results are not usually what one is looking for.....this is nothing more than a progress that leads to something. If one experience is not ideal, the next experience (with the same cause) will not create a different effect.....so we are going round and round and round. I wonder if there is a purpose behind experience and what exactly is it that we are looking for?....what is this "something?"

It is said that most fail. If this should be true, i would hazard a guess that the reason for this is due to the fact that most people are terrible at gambling, and not because of any random element.

The, 'something', that is searched for, is not actually the, 'something', that is required.

 

[Triggerfish]

As a retailer, starting out on your own, you have nothing. So how do you create something, from nothing?
The, 'something', that is searched for, is not actually the, 'something', that is required.

? Can you re-question?

It is said that most fail. If this should be true, i would hazard a guess that the reason for this is due to the fact that most people are terrible at gambling, and not because of any random element.

I don't think any reasonable person should doubt that most will fail.....to most, gambling is simply gambling since the outcome cannot be known in advance, like randomness.....but if someone can make it in gambling, then is it still a gamble? or non-random?

 

[DionysusToast]

Ok. Firstly, i asked you for a percentage outcome, rather than 50%, you answered with your own theoretical answer. You decided not to give a direct and absolute answer, instead you created an answer to suit your own particular view on one very random and unique set of circumstances. Do you think that your own theory would be applicable to all traders in every scenario?

Theoretical = monotonous

Well my apologies for backing up why your failure rate will be close to 100% if you place trades on the basis the market will go straight up as opposed to just up.

Trading is not pure math. So there will inevitably be human elements that sway the results of trading without allowing for normal volatility.

You seem to be looking for absolutes, trading isn't about absolutes. You full well know this or did you let a noob hack your account

 

[D70]

It is said that most fail. If this should be true, i would hazard a guess that the reason for this is due to the fact that most people are terrible at gambling, and not because of any random element.

The, 'something', that is searched for, is not actually the, 'something', that is required.

Do you believe that trading is like blackjack? That there is no edge for the average guy that sits down at the table? But for the card counter knowledgeable in bet size, he can win against the house? This is the essence of trading isnt it? Bet size and card counting (some people call card counting an "edge", others just call it probability).

 

[kimo'sabby]

Well my apologies for backing up why your failure rate will be close to 100% if you place trades on the basis the market will go straight up as opposed to just up.

Trading is not pure math. So there will inevitably be human elements that sway the results of trading without allowing for normal volatility.

You seem to be looking for absolutes, trading isn't about absolutes. You full well know this or did you let a noob hack your account

With regards to the hacking, i've suspected a drunken, foulmouthed, immature hacker for some time now. I should report it.

I also agree with your point about the market going straight up, and the point you made referring to absolutes. Could you do me a favour though, and re-read what i mentioned about my scribble/diagram?

You may have made the classic error of replying to my post out of the context that it was meant to be in, and replacing it with your own context.

 

[kimo'sabby]

Do you believe that trading is like blackjack? That there is no edge for the average guy that sits down at the table? But for the card counter knowledgeable in bet size, he can win against the house? This is the essence of trading isnt it? Bet size and card counting (some people call card counting an "edge", others just call it probability).

What is probable about this in reality?

 

[random12345]

Yes that is curve fitting.
Curve fitting and back testing are not the same thing.
Curve fitting is a blind arbitrary choice of parameter values (usually too many)
to give the desired result.
Basically its the abuse of backtesting.

Backtesting is purely an historical simulated execution test, nothing more.
Nothing replaces forwards testing.
The battle between optimization and curve-fitting

LV, do you really never curve-fit on purpose? All your systems are algo/auto right?

It is extremely important for algo trading in a certain context. :whistling

 

[kimo'sabby]

The arrival of orders is random.


The accumulation of orders (traded or not) at certain prices, do not comply with statement. (please, no homophobic reputation)

 

[Liquid validity]

LV, do you really never curve-fit on purpose? All your systems are algo/auto right?

It is extremely important for algo trading in a certain context. :whistling

No, I do optimise, along the lines of Seykota - hunt and peck.
Do you mean something along the lines of this post:
http://www.trade2win.com/boards/tra...ess-100-systematic-trading-2.html#post2128686

I've always seen curve fitting, deliberate or not as bad, but I'm open minded
to any suggestions you have about using it in a positive manner, even if its
just the dev phase.

 

[robster970]

The arrival of orders is random.


The accumulation of orders (traded or not) at certain prices, do not comply with statement. (please, no homophobic reputation)

Difference between the 'voting machine' where you cannot predict what the next vote is going to be vs the 'weighing machine' where the cumulative, aggregate votes can be summed to something that demonstrates a bias.

http://en.wikipedia.org/wiki/Benjamin_Graham

 

[kimo'sabby]

No, I do optimise


Is it possible to optimise in a random market?

 

[kimo'sabby]

Difference between the 'voting machine' where you cannot predict what the next vote is going to be vs the 'weighing machine' where the cumulative, aggregate votes can be summed to something that demonstrates a bias.

http://en.wikipedia.org/wiki/Benjamin_Graham

Would you agree that there are games played on the,ES?

 

[Liquid validity]

No, I do optimise


Is it possible to optimise in a random market?

Find the post where I said markets are completely random

 

[kimo'sabby]

Shakone, the, Kelly Criterion? Is this a, 'one size fits all', formula?

 

[kimo'sabby]

Find the post where I said markets are completely random

I'll take that as a, no.

 

[kimo'sabby]

Would you agree that there are games played on the,ES?

I'll explain. In order for a game to be played, the initiator of the game has to assume that the competition will, or can, interact. Therefore, there has to be a mutual understanding within the initial stages of the game.

Would you agree with this?

 

[DionysusToast]

I'll explain. In order for a game to be played, the initiator of the game has to assume that the competition will, or can, interact.

Correct

Therefore, there has to be a mutual understanding within the initial stages of the game.

Would you agree with this?

Absolutely not. When somebody 'games' somebody else, it is because of a lack of understanding on the part of the other person.

Game theory - Wikipedia, the free encyclopedia

Game theory is a study of strategic decision making. More formally, it is "the study of mathematical models of conflict and cooperation between intelligent rational decision-makers."[1] An alternative term suggested "as a more descriptive name for the discipline" is interactive decision theory.[2] Game theory is mainly used in economics, political science, and psychology, as well as logic and biology. The subject first addressed zero-sum games, such that one person's gains exactly equal net losses of the other participant(s). Today, however, game theory applies to a wide range of behavioral relations, and has developed into an umbrella term for the logical side of decision science, to include both human and non-humans, like computers.

This is what is being referred to when discussing by "gameplay" in the markets

 

[Shakone]

Shakone, the, Kelly Criterion? Is this a, 'one size fits all', formula?

kimo'sabby, please sort out your multi-quote as asked before, in this thread it is difficult to follow who is saying what.

No it's not a one size fits all formula. No formula is, is it?

You asked if it is possible to optimise in a random market. I believe so, but before going into it any further, can you define 'random' and 'optimisation'.

 

[robster970]

Would you agree that there are games played on the,ES?

Absolutely amigo but the game participants are enacting and the relative success of their strategy is also a function of the number of votes they are casting and therefore the weight they can assert.

So someone like you and I who trade small size rely upon directional strategies where one of two things can apply:

1) A likely direction can be ascertained when we see that nobody is voting at a certain price. We know enough about how price discovery works to take a high probability punt.

2) A likely direction can be ascertained when we see that the available liquidity shoots up for a heavily traded price, indicating that a large number of voters think this is a good price.

The more votes you have, the more say you get in what goes on - it is almost political in nature. A pecking order, hierarchy of different types and size of voters all providing different services for each other with profitability being determined by how successful we are at providing different services to other participants.