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Mich,
>" Maybe it is time to come back with the main subject of the topic : RW "
I've a better idea...let's just ditch the thread entirely and move on!
Let me explain why...
>" all behaviour of the stock can be in fact just illusion and can be
made with random walk model. "
Is that so?
I'm sure anyone with any real trading experience and/or who is as bored
as I am with this RW...erm, business...has simply ignored that
particular comment. However, in case there are any novice traders out
there who might be in danger of being mislead by such sweeping
statements I've attached a chart of my own to argue for something a
little more positive (i.e. the idea that there *are* repeatable patterns
out there, they are just difficult to find). No labels this time...so no
clues :-)
One is real chart data and one is a composite of four regular cycles
plus a bit of random noise...as shown in the second attached chart. But
can you tell me which is which?? If not, then what does that tell you?
That "all behaviour of stocks" can be modelled with cycles? Not at
all...the simple fact is that neither argument can be proven by showing
a fancy chart or two.
To the ancient civilisations the world *appeared* to be flat and it
*looked like* we were at the centre of the universe. Observations on the
movement of the stars at night 'proved' that, surely? However, when they
decided to throw out the old ideas and bring in new ones it was because
a better set of ideas came along which were based on solid logic and
*backed up with repeatable experimentation*...i.e. a good scientific
approach was used.
Be careful that you are not, provebially speaking, throwing away the old
flat-earth theory only to replace it, based on a few dodgy obsevations,
with a new idea that the Earth is cubic and revolves around Uranus. :-)
Ouch!
RW theory, whilst sounding convincing, does not offer a scientific
answer because it does not explain real-world observations/experiments
sufficiently. Most importantly, it does not and cannot explain why a
significant number of real people make a significant amount of real
money on a consistently *repeatable* basis.
So, with that in mind, PLEASE let's drop this dead-end of a negative
thread and move on...I've already violated my own personal version of
Pareto's Law today.
Andy
Tom Tom wrote:
>
> Hi,
>
> Maybe it is time to come back with the main subject of the topic : RW.
>
> I just posted a AFL script so you can plot Price VS Random walk in the
> ame
> scale and fix the random number for investigation :
> http://www.amibroker.com/library/detail.php?id=777
> <http://www.amibroker.com/library/detail.php?id=777>
>
> For intraday i think it is good to filter EOD gap because they are to
> much
> strong volatility there.
>
> Price seems to follow damn good this RW...
>
> I think every new people here should look at this just to be aware that
> cycles, trend ... all behaviour of the stock can be in fact just illusion
> and can be made with random walk model.
> Monte Carlo simulation are system tested with drifted RW ? Risk/portfolio
> managment is the only thing we can act to control the trading... if there
> are not based on price RW so :
> - based on volatility ?
> - based on fondamental analysis : choose stock by differencing geography,
> ....
> - based on the drift wich is positive, but it is for long time position
> hold...
>
> You see, on the RW you can even trace some support/resistance... but
> what do
> they mean !?
>
> Cheers,
> Mich
>
> __________________________________________________________
> Découvrez le blog Eragon sur Windows Live Spaces!
> http://eragon-heroic-fantasy.spaces.live.com/
> <http://eragon-heroic-fantasy.spaces.live.com/>
>
>
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