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Another possible irrational explanation is that some humans may have
the ability to see the future.
In competitive sports some players just seem to know what their
opponents will do. Maybe the same is true of some successful traders.
They can't explain it rationally, but they "just know it"
Reef
PS
Unfortunately, I don't have this trait.
--- In amibroker@xxxxxxxxxxxxxxx, "brian_z111" <brian_z111@xxx> wrote:
>
> 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@>
> 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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> >
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> >
> >
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>
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