Which one is the Best?

vince · #41 26th May 2007, 01:07 PM

Quote:

Originally Posted by beginner_av

First, with all your insights, you have conveniently forgotten to reply to the questions that I asked. Second, it is not about timeframes. In the same chart of yours that you consider noise, I have shown price movements in one
direction for more than two bars (whether you callit trend or not is up to you, I call it profit making opportunity).

now coming to your insights, sorry sir, the basic assumption about price and time is incorrect here. do you really mean "once a trend has been identified and it can be done very early on in the trend". congratulations for then you have found the holy grail!!! or instead of a magical indicator, a magical price forecaster. show me one chart today and tell me that you have identified a trend that will continue tomorrow and day after with 100% reliability! Surely you will in 5 seconds. Surely you may be correct, for there is 50% probability. Show me 1000 charts for the day, will you now? all small breakouts that you may consider as noise may turn into big trends. for nobody can say for sure that this is the beginning of a trend or end of a trend. then the turtles wouldn't have gone out of business. and ALL trend traders will be billionaires. No counter trend or reactions ever.

how can you identify trends early and say this is a trend that will continue for X amount of price and Y amount of
time? If you are then all you are doing is predicting the market in your mind. else you are just attaching
probabilities, which brings us back to the reason of the discussion.

Everybody is not a trend trader. What do you consider a trend? Higher highs and higher lows for past 5 bars? 10 bars? 20 bars? crossing of trendlines? and then what is noise? check your own graph that you consider as noise, for trends in the same time frame that you have shown. You consider trading a trend because you have entered into a trend after X bar observation? One may also enter after higher highs of two bars or a MACD > 2 or 4 or 8 or ADX rising and above 25..you name it.

And what is this one time wrong and many times wrong. Whichever way you enter, once in a trade, you can be wrong ONLY ONCE. Not MULTIPLE TIMES. If you are wrong again, then you are in a new trade, trend or otherwise. My basic premise is that I take profit after a variety of conditions and don't wait to see if my trend engine is rolling. And if I am wrong, immediately my money management gets me out.

Gambling? Ah! you make me laugh. Gambling is the creation of risk, whose outcome is not known. So is speculation.

Only difference is that in gambling, much like the options trade held till expiry, its all or nothing. But in
speculation you can select your stop losses. its nice to know that you are not a gambler like us and you are 100%
sure about the outcome of your trading. Someday you may write it all in a book and lesser mortals like us will know
about your be-sure-100% outcome technique. If you are not 100% sure you are also a gambler much like the blackjack player who attaches very high probability when half a deck remains with high value cards than two decks.

And what is this thing about random entry.a person who believes in random entry system doesn't enter trades with his eyes closed. Considering the markets random gives me an edge. Who cares whether it is actually random or not. The following lines from Stridsman is the essence of my trading (Till the day I fall into the category of the fortunate ones who will know FOR SURE that the next trades will be winners):

"One way is to assume that the markets are as close to random as possibly can be. Therefore, a strategy that works in a close-to-random environment needs to be robust enough to maximize the potential of any non-random market behavior when it appears, while still keeping you in the game when the market is random.[........]Hence, most trades signaled by a system, whether they turn out to be winners or losers, are because of random market moves, only a few trades, scattered among all the signaled trades, are actually because of the type of non-randomness the system tries to catch. The trick is to make most of the latter category of trades while breaking even or just barely producing a profit (my addition - or a small loss) on all other trades. Unfortunately however there is no way to distinguish between one tupe of trade from the other beforehand."

Thomas Stridsman, Trading Systems and Money Management, McGrawHill, pp 287

Since I incorporated this into my system, my returns has gone up considerably. It may not work for anyone else at all.

All, and let me emphasize, all indicators are magical, if you know how it is constructed and what it is supposed to show. The same way you wont see a trend in one bar or two bars, a MACD user wont see till MACD > 0 or ADX user wont see till ADX> 25 and rising and so on. Volatility bands give me the best signals in volti breakout. And if you believe that these indicators are not useful, so then are your price and volume as eventually as you said the indicators come from price and volume only. Indicators often filter out the noise, even if there may be a lag in a few.

I am sorry if I have offended you with my style of writing. I am not in a debating society here, nor will I keep on arguing. I just wanted to clear a few points that I see repeatedly raised here and there.

Regards

Yes , I still maintain a trend can be identified earlier on. If you cannot do it it does not mean it cannot be done.

100% reliability, holy grail: Your words. I have never claimed any such thing.

The plethora of indicators you have mentioned , if they help you trade better why not.? All I have said is that I have no need for them.

Never have I said anywhere I am strictly a trend trader. But I would certainly pick trending chart over a ranging one if I had a choice.

If you do not understand what being wrong once in a trend means , you should go back to basics my friend.

Yes , I am not a gambler . I have a well formulated trading plan and I follow it.. That’s business not gambling.

Write a book. What do you know? May be I will. Then you can quote me.

Since you bring up indicators once again , I still maintain I have no need for them.

If your remarks about “holy grail , 100% “ etc are an effort at sarcasm , let me assure you its an absoloutely wasted one.

marcus · #42 26th May 2007, 03:35 PM

Quote:

Originally Posted by hari09omkar

And who knows,may be Montecarlo and martingles(or anti) are waiting alongwith the idea of 'flawed methods' but 'proper money management' to start........

slow poisioning is what I call it.
Joy,you will do well to start with the SAINT thread - "Teach a man to fish and......" in the subforum called 'Trading on technicals'......then start with a software to practise theories......then go on with your studies ranging from Larrys to Nisons to Tharps to Demarks to Guppys to Ehlers...then learning to programm the formulas of innovative ideas and backtesting them.....this is the surest path to earning from stock market.....go to this thread now...... http://www.traderji.com/trading-tech...-man-fish.html and be aware of the 'flawed' ideas...

second that saints method is the best so far

joy433 · #43 26th May 2007, 03:47 PM

Ok,
I agree with both of you…(Beginner av & vince)

In short:
According to Beginner av all indicators are important, there is no best or worst, every indicator has it own significance…

&
According to Vince, once you identify a proper trend you can enter early.
No need of indicator, just price & volume...

I respect both of your words,
Because it is based on your personal study, analyse & experience.

Thanks friends.

kkseal · #44 26th May 2007, 04:29 PM

Quote:

Originally Posted by uasish

What we are emphasizing ,'Random' hence even with a flawed system one can stay afloat with vigilant Money Mgmt.
Yes fully accepted.

I think this is exactly what BAV meant. I'm sure he wasn't advocating RE as the best way to trade.

The crux of Trading/Investing (or any form of speculation for that matter) lies in gauging probability. RE doesn't tell us anything about probabilities. So we use a system to gauge what's high probability and what's not. And since you cannot gauge it correctly 100% of the time risk management becomes important (& there are areas of speculation - like say in real estate - where one does not have the benefit of SL).

Quote:

Now the overemphasizing part := We do not learn/waste time on indicators or learning TA ,becoz we are equiped with
Robust Money & Risk mgmt.
Why do i say overemphasizing becoz the poor fellow joy433 will now go to Trade mgmnt. part before making a
S Y S T E M. To make a system ,he has to grasp the Subject 1st.Now one may say joy dose'nt need to find the best
indicator to make a system for that matter any indicator will do.OK any will do ,but still he need AN INDICATOR.
See how we are missing the Horse before the cart.
Now the neo-classical approach :=
Any stock randomly chossen from ET ,entered in any time frame ,will give a win/loss similar to coin toss outcome,
or
today's price does not implicate any thing for tomorrow.
OK accepted.
Only becoz of this Random outcome of our performance we need to further
1) FINE tune our Indicators( Noise,Time series Hurst etc etc enters);
2) System have to be fully backtested (with CLEAR picture of Drawdown & the Best to be retained);
3) Right Money mgmt( as per the stress free Trading capital);
4)Strict Risk mgmnt (as per the style & profile of the trader);
Can we do without point no1.? then why we are not advising joy433 to study the basics 1st.
Plz let us put the horse where it belongs at the front of the cart.

Let's face it Asish, a system doesn't have to be based on indicators. Joy, like Vince, can do well using Price-Vol or patterns or whatever else suits him.
And as he learns more he will himself realize the limitations of certain juvenile 'systems' and find out what suits him best.

Regards,
Kalyan.

beginner_av · #45 26th May 2007, 06:26 PM

Quote:

Originally Posted by uasish

This is the query :=

What we are emphasizing ,'Random' hence even with a flawed system one can stay afloat with vigilant Money Mgmt.
Yes fully accepted.

kk has already answered it pretty well. let me just put it in perspective where this flawed system et al came into play. Amarnath had replied somewhere in this post that most systems here were flawed. Mine was just a reply to that. Neither do I promote flawed system, (as a very intelligent being *[edited for mean reversion] earlier thought and started talking crap), nor do I say random entry is the best form of trading. RE, I have already explained, and kk has summarized it very well. If you consider random entry and build a system around it, you will reap the benefit of non random movements.

I also said that if you have a flawed system, you may START off very well...this is just an example of "fooled by randomness". To be successful you have to have to have an edge, and to reap its benefits, it has to be repeatable, so that law of large numbers are satisfied. Its the same thing as tossing a coin 5 times, 20 times and 10000 times.
[/quote]

Quote:

Now the overemphasizing part := We do not learn/waste time on indicators or learning TA ,becoz we are equiped with
Robust Money & Risk mgmt.
Why do i say overemphasizing becoz the poor fellow joy433 will now go to Trade mgmnt. part before making a
S Y S T E M. To make a system ,he has to grasp the Subject 1st.Now one may say joy dose'nt need to find the best
indicator to make a system for that matter any indicator will do.OK any will do ,but still he need AN INDICATOR.
See how we are missing the Horse before the cart.

See, if you want to learn to trade successfully, you have to learn to use everything that is there, BUT DO NOT ACTUALLY USE IT. 1. It gives an idea about what competition is using. 2. It gives an idea of where yo may go wrong.
Just because Vince doesn't need indicators, doesn't mean someone else should not even know about it. Too bad we dont have program trading here, if you trade the US markets you will see, as soon as a breakout happens, how Pros jump in and try to fade it. Why beacuse they know that at certain points lot of indicators, price patterns etc will signal the dreamy-eyed noobs (I was and sometimes still am a part of it) to jump in. Of course market makers can see your stops in the books too,

Quote:

Now the neo-classical approach :=
Any stock randomly chossen from ET ,entered in any time frame ,will give a win/loss similar to coin toss outcome,
or
today's price does not implicate any thing for tomorrow.
OK accepted.
Only becoz of this Random outcome of our performance we need to further
1) FINE tune our Indicators( Noise,Time series Hurst etc etc enters);
2) System have to be fully backtested (with CLEAR picture of Drawdown & the Best to be retained);
3) Right Money mgmt( as per the stress free Trading capital);
4)Strict Risk mgmnt (as per the style & profile of the trader);
Can we do without point no1.? then why we are not advising joy433 to study the basics 1st.
Plz let us put the horse where it belongs at the front of the cart.

Again I say what I had said somewhere else. It is like a jigsaw. Unless all parts come together, it will not work.

beginner_av · #46 26th May 2007, 06:51 PM

Quote:

Originally Posted by vince

Yes , I still maintain a trend can be identified earlier on. If you cannot do it it does not mean it cannot be done.

100% reliability, holy grail: Your words. I have never claimed any such thing.

Hi Vince, lets go back to the point where it all started. You had replied.

Quote:

1. Exactly the point I am trying to make Ratan. If you are uncertain about a chart to begin with why bother trading it.
2.No there is no question of 100% probability. Which one would you pick , a trending chart where the direction is evident or one that's just noise? Or do you have a random entry method?

My answer remains the same, it depends on what kind of trader you are. You only talk about not to bother trading uncertain chart. That means you are finding certainty somewhere. Certainty implies 100% probability, or else there's no certainty. When you talk about trends being identified with certainty, you are trying to find the holy grail. If you are saying that certain trends can be given higher probabilities, thats perfectly fine, then there's no need for this discussion.

Quote:

The plethora of indicators you have mentioned , if they help you trade better why not.? All I have said is that I have no need for them.

Thats perfectly fine. But deciding that others have no need for them is not. If thats not what you meant, my apologies.

Quote:

Never have I said anywhere I am strictly a trend trader. But I would certainly pick trending chart over a ranging one if I had a choice.

absolutely fine!

Quote:

If you do not understand what being wrong once in a trend means , you should go back to basics my friend.

the problem is, you can be wrong once in a trade, whether you are a trend trader or not. So you can be wrong in a trade just ONCE, not MULTIPLE times.

Quote:

Yes , I am not a gambler . I have a well formulated trading plan and I follow it.. That’s business not gambling.

Here you need to go back to the basics my friend. Where did you get the idea that a trading plan is the thing that differentiates a gambler from a trader. A successful gambler has a far superior trading plan that you can ever think of, cos the statistics are fixed there as opposed to trading, where price movements are not fixed.

Quote:

Write a book. What do you know? May be I will. Then you can quote me.

Will do, if its worth it...not another covel like trend following mumbo jumbo!

Quote:

Since you bring up indicators once again , I still maintain I have no need for them.

Thats perfectly fine

Quote:

If your remarks about “holy grail , 100% “ etc are an effort at sarcasm , let me assure you its an absoloutely wasted one.

Its not sarcasm, either you say that you are talking about probabilities (where all this discussion started), or you imply 100% thats that.

and yes, you still have not replied to the questions that I had asked with charts now1 and now2, instead of replying back and forth. I can also claim that I can see Jupiter's surface from my terrace, but unless I substantiate, it really is a WASTED ONE.

Finally very happy that these sort of discussions are coming up...along with Oxy's price movement, Elliott Wave, Saint's posts etc, cos I thought that the board was dying.

Bullet · #47 26th May 2007, 07:23 PM

Just want to say one best quote everyone should remember:

The trend is your friend except at the end when it bends.

Read this article:http://www.seykota.com/tribe/TSP/Trends/index.htm

Bullet · #48 26th May 2007, 08:22 PM

Quote:

Originally Posted by joy433

Hi Experts,

Which is the Best Indicator to apply on price & volume?

I am new in this forum, Want to start studying t.a ..

Tell me which one i first study

Thanks in Advance.

Hi Joy433,

I suggest you to start learning Moving Averages first.

If you want i will post a trading system related with trend follow.....in this thread.

As my view is same as the beginner, to know a trend , indicator is a must.

Best of Luck

beginner_av · #49 26th May 2007, 09:16 PM

does a random entry really work? or is it just fool's luck? just check this out and decide for yourself:

http://www.elitetrader.com/vb/showth...&threadid=8734

beginner_av · #50 26th May 2007, 09:38 PM

Seeing the illustration, will you trade this system when the blue line crosses over the red line (a short EMA crossing the long EMA)?