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>From the 2nd article:
"Paul Taglia sees high-probability Window set-ups that the rest of us
don't. I've seen him do this for nearly two years. He can't explain
it...he simply says that he's looked at thousands and thousands of
charts over his career and some charts simply look better to him than
others. We once asked him to keep a journal to see if we could
systematize what he saw. It was a useless exercise. He sees it but he
can't explain it."
According to Occams Law the simplest explanation is usually the best.
http://en.wikipedia.org/wiki/Simplicity
Possible explanations, of Paul Taglia's discretionary style are:
a) He can 'see', or sense, the future in the charts,
b) he has a set of rules that he learnt in the past (based on
experience) and they have become second nature - possibly he has
forgotten what they are or when he learnt them (or at least some of
them)
c) he has a set of rules, and he knows that, but this is an excellent
posture to take if his game plan is never to reveal them to anyone
d) he has a set of rules but has a playful nature OR likes to take
the mickey out of his associates OR has a superiority complex and
disdains the idiots who surround him
e) he has an inferiority complex and needs the boost that comes from
the adulation of others - this is an excellent strategy to establish
mystique as a trader and achieve legendary status
f) it is a great way to market ones employment value in a transient
workplace (its a resume that can't be questioned to any extent either)
g) some combination of a-f
h) he has a set of rules (some conscious, some sub-conscious) but he
can't be bothered explaining them (it is a form of energy
conservation - an alternavtive version of this is that he could be a
very focused trader and has eliminated the non-essentials, like
defining his style OR chatting about his style.
BTW irrationality is the common name for the shadow (I used the
symbolic name).
There is no irrationality in maths, programming etc which is probably
why I quite like programmers etc.
Trading myths are born out of, and perpetuated by irrationality.
brian_z
--- In amibroker@xxxxxxxxxxxxxxx, "wavemechanic" <timesarrow@xxx>
wrote:
>
>
http://www.tradingmarkets.com/.site/stocks/commentary/lcbattlep/082720
04-39801.cfm
>
>
http://www.tradingmarkets.com/.site/swingtrading/commentary/lcbattlep/
09022004-39899.cfm
> ----- Original Message -----
> From: sidhartha70
> To: amibroker@xxxxxxxxxxxxxxx
> 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@>
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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