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----- Original Message -----
Sent: Wednesday, August 20, 2008 10:52
AM
Subject: [amibroker] Re: 'Rule Based'
versus 'Discretionary' trading...
I think you're right Brian. We do all use rules of some
sort.
But I guess discretionary traders don't use 'hard and fast' rules
and
can't always define the same set of rules by which they choose
to
define an entry or exit.
For example, as we all know, something
as simple as defining a trend
programatically can be more problematic as
you might at first think.
However, a good trader can see very quickly what
state the market is
in by looking at various time frame of
chart.
Likewise, divergences of various sorts can be easy to see with
the
naked eye but difficult to code in their entirety.
Like driving
a car, or a golf swing, you learn the 'rules' but when
you get really good
you are no longer thinking rules... you've
effectively let go of the rules
and are just 'doing'...
--- In amibroker@xxxxxxxxxxxxxxx,
"brian_z111" <brian_z111@xxx> wrote:
>
> 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@> 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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