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[amibroker] Re: 'Rule Based' versus 'Discretionary' trading...



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Here is my definition:

We are all rule based traders.

Mechanical Traders are a specialist group who have programmed 
computers to autotrade their rules OR automatically announce their 
rules via computer communications (audio, email, chart prompts, 
spoken text etc).

I am prepared to continue the discussion with any seers, inituitives 
etc, who come forward, and adjust my definition to meet anything new 
that comes out of that.

In advance I admit to the possibility of exceptions to the rule.

brian_z


--- In amibroker@xxxxxxxxxxxxxxx, "brian_z111" <brian_z111@xxx> wrote:
>
> >Descretionary traders make decisions that are based on personal 
> >knowledge and circumstances, perhaps using many factors unknown to 
> >themselves. Like which journal they read the night before. 
> 
> This is the nub of the question for sure, and the point that I am 
> investigating.
> 
> I suspect that when they (self-nominated DT's) think they are 
making 
> discretionary decisions they are in fact making rule based 
decisions.
> 
> That is why I asked for specific examples of 'discretionary' 
decision 
> making e.g. I haven't seen Bilbo's chart yet but I consider it 
highly 
> unlikely that the decision about whether a trend is in place is a 
> discretionary decision - I can define a trend in several different 
> ways - all of them can readily be written as a rule (in words or 
with 
> code) - I don't care if the definitions are 'correct' or not as 
long as 
> the system that they are part of works i.e. my rules for a trend 
depend 
> on the context.
> 
> As Dennis said, our rules might be difficult to program, causing us 
not 
> to automate the trade, but mentally we are still running the rules 
and 
> if we are honest with ourselves we do know what the rules are.
> 
> 
> >For a novice traders to try and mimic the techniques (of 
Discretionary 
> >Traders) without 
> >having similar backgrounds merits caution.
> 
> What I am suggesting is that, over time, the sub-conscious mind 
will 
> automate what was intially habitual conscious behaviour, and even 
make 
> some improvements on it, so that 'we' can skip the conscious part 
for 
> some 'tasks' e.g. driving the car becomes second nature.
> 
> That won't happen for new traders, in a short time, so they do need 
to 
> persevere, be patient and not try to mimic people who have been 
around 
> for years.
> 
> IMO formal (written) rules based trading/backtesting/optimization 
is 
> the best place to start - it grinds the basic lessons in very well.
> 
> If anyone can look at a chart, and without recourse to any rules, 
know 
> which way the price is going to move and trade successfully  (long 
> term) on that basis then that is something else altogether.
> 
> If it is at all possible to do that then it definitely can't be 
taught.
> 
> That is why I asked, "Anyone doing it?".
> 
> It is just like >100%PA returns - anything is possible but once 
someone 
> confirms that they have done it then it moves from the realm of 
> possibility into reality.
> 
> In the meantime I will stick to my guns by saying that "except for 
> people who KNOW what the price is going to do everyone else is a 
rule 
> based trader and categorizing traders, as DT's or MT's, is 
arbitrary".
> 
> brian_z
>



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