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>>So far you haven't posted any strong arguments against 'rule based
trading' .... are you holding back?<<
I am not sure what you are looking for here. There are many ways to
trade. Each trader has to choose what works best for himself. There are
some people who are not good candidates for discretionary trading
because their emotions (fear and greed) get the best of them. In the
face of adversity, they display herd behavior which is exactly what the
floor wants you to do so they can take your money.
Definition of discretionary:
1. Based on individual judgment or discretion: subjective
2. Not compulsory or automatic: elective
>>so far not one discretionary trader has given us a PRECISE example of
a trading decision that they make freely<<
Attached are 2 charts I marked up today for someone. They show 5 trades
(the horiz lines indicate S/R).
4 of the 5 are pullbacks to S/R in a trend, the last crude trade is a
fade of the trend after a significant move.
The discretionary part is determining the trend, determining when the
pullback is over, determining when the trend is over (or at least due
for a sizable correction), and finally whether or not to take the trade.
As an example, look carefully at the last crude trade. What you see
there is a classic example of the Market Makers moving prices hard into
Resistance and overshooting, they take out stops and cause false
breakouts to the long side and then they take the market down.
Discretionary trading is recognizing what is happening in real time and
taking advantage of it.
WRT your MD comments, nobody 'knows' what the market is going to do.
There is always some uncertainty. Trading is about probabilities,
trading when the odds favor success.
Real time trading is like playing a combination of video games and poker.
Bill
brian_z111 wrote:
>
> Sidhartha,
>
> Perhaps we can learn a bit more if we do some dissection:
>
> > Over recent years I have migrated away from rule based trading back
> >to
> > discretionary, and find myself developing some quite strong opinions
> > about rule based trading
>
> So far you haven't posted any strong arguments against 'rule based
> trading' .... are you holding back?
>
> More importantly.....
>
> my mini dictionary defines discretionary as "freedom to decide
> something" but so far not one discretionary trader has given us a
> PRECISE example of a trading decision that they make freely .....
> free of what? ... if you are using an indicator, as a visual cue, and
> making a decision based on that visual input, is that a 'freedom of
> choice' decision OR did you just use the human computer (brain) to
> run a few lines of 'code'...... perhaps a level of consciousness that
> is present in the subconcsious mind (that is to say that most of us
> are not consciously aware of OR can interact with) can manage fuzzy
> logic, or similar, with ease ... dare I say even super-rationality?
>
> ~(left side - right side)~
>
> Mark Douglas claims to experience a "transcendental state of
> consciousness where he is at one with the market and KNOWS what it is
> going to do" (my paraphrasing) ...... if any one in the forum can do
> that then I might consider that to be the ultimate in discretionary
> trading (no point in explaining it in too much detail if no one is
> actually doing it).
>
> brian_z
>
> --- In amibroker@xxxxxxxxxxxxxxx <mailto:amibroker%40yahoogroups.com>,
> "sidhartha70" <sidhartha70@xxx>
> wrote:
> >
> > Thought I'd try and start a discussion on this very important
> topic...
> >
> > Over the years I seem to have come full circle... back in 1994
> > starting as a largely discretionary trader, I moved into 'rule
> based'
> > systems while working for Merrill Lynch back in 1997. I spent about
> 7
> > years trading various types of rule based system. All variations on
> > statistical arbitrage themes.
> >
> > Over recent years I have migrated away from rule based trading back
> to
> > discretionary, and find myself developing some quite strong opinions
> > about rule based trading (opinions which I happy to have
> changed!!!).
> >
> > One thing that strikes me about this forum is the focus on 'rule
> > based' trading and backtesting/optimization of systems. Perhaps this
> > relates to the grounding of the product. I have been an owner of
> > AmiBroker for about 5 months now I guess... and it seems to me it's
> > strengths lie in backtesting & optimization (if only I had a product
> > like this back in 1997 my life would have been an absolute joy).
> > However, it's weaknesses seem to lie in it's charting (as has been
> > commented on a couple of reviews on Elite Trader) and particualrly
> the
> > openness & adaptability of it's charting framework.
> >
> > Anyway, I'd love to start an open discussion on 'rule based' versus
> > 'discretionary'... Pros, cons, differences, potential returns from
> > each route, does one route lead to the other etc..etc...
> >
> > I'm very much wanting to learn from opening this subject up.
> >
>
>
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