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> I am not saying that one type of trading is better than any
> other.
Hello Yuki,
Thank heavens the cavalry has arrived.
Everyone who added the above disclaimer, also staunchly defended the
categorization of traders into the two groups when logically that
position is not defendable - if the categorization of traders isn't
based on logic what is it based on? - obviously it suits the need to
feel that we have the right stuff and they don't (so convenient when
we can simplify life into them and us).
brian_z
--- In amibroker@xxxxxxxxxxxxxxx, Yuki Taga <yukitaga@xxx> wrote:
>
> Thursday, August 21, 2008, 3:13:18 PM, 'professor' wrote:
>
> psb> The problem with dicretionary trading is that everyone has bad
> psb> cycles where things go wrong. A discretionary trader needs to
> psb> have great discipline at all times, but expecially when things
are going bad.
>
> This is just as true of rule-based systems as it is of discretionary
> trading; there is no difference at all in this respect between the
> two types of trading. None. Zero. The system without drawdowns
has
> yet to be designed. And system traders don't also need discipline,
> and just as much, if not more? C'mon.
>
> psb> When you are a rule based trader and you have throughly tested
> psb> your rules, you can believe in your rules. This is much like my
> psb> gambling in the casino. I know that mathematically, I have an
> psb> edge on certain games. So even when things are going bad and I
> psb> am losing, I know that in the long run, I will be ahead. I have
> psb> math on my side plus now I have almost 12 years experience.
>
> I can't believe I'm reading this. You are going to sit there and
> type to the world that 'thoroughly tested ... rules' are equivalent
> to a mathematical edge? You have to be joking, right? Mathematical
> edges don't go on tilt and *stay* on tilt forever. Trading systems
> (which are NOT mathematical edges, but assumptions about what might
> prove to be edges -- and almost surely edges with expiration dates -
-
> based on historical research) do just that.
>
> (As an aside, the only game in the casino that I know of that can be
> tilted in favor of the player is Blackjack, and I sure wouldn't want
> to try and make a living at it for quite a few reasons that should
be
> obvious to the casual observer.)
>
> psb> I am not saying that one type of trading is better than any
> psb> other. It is just that some people are better suited for rules
than discretionary trading.
>
> When you lead with "the problem with discretionary trading is ... "
> it negates your disclaimer in the paragraph above. Certainly you
are
> saying that rules are superior, because you claim that discretionary
> traders will have bad 'cycles' (as if rule-based traders will not,
> certainly what you are implying). And you are entitled to that
> opinion. You're just not entitled to say that it isn't your opinion
> when you very clearly state what you have stated.
>
> Yuki
>
> psb> Tom
> psb> ----- Original Message -----
> psb> From: brian_z111
> psb> To: amibroker@xxxxxxxxxxxxxxx
> psb> Sent: Wednesday, August 20, 2008 9:30 PM
> psb> Subject: [amibroker] Re: 'Rule Based' versus 'Discretionary'
trading...
>
>
> psb> Hello Ed,
>
> psb> I would include that case under point a)
>
> psb> I agree that this is possible however that person wouldn't
be a
> psb> Discretionary Trader.
> psb> We would have to invent a new class, say XTraders.
>
> psb> The problem here is that we won't be able to reach an
agreement as to
> psb> what consitutes knowledge - even the experts (philosophers)
can't
> psb> agree.
>
> psb> http://en.wikipedia.org/wiki/Epistemology
>
> psb> Without going that deep we could attempt to prove the claims
of
> psb> Intuitive Traders by testing their trading performance in a
> psb> controlled environment.
>
> psb> This would be almost impossible to do because of the
difficulty of
> psb> finding an 'experienced' intuitive trader who is also not
tainted by
> psb> exposure to backtesting, trading rules (textbooks) i.e. they
are not
> psb> both an experienced Intuitive Trader and an experienced
Rules based
> psb> trader.
>
> psb> The ultimate test would be to submit (claimed/known) X
types, who
> psb> have never seen a stock chart, or traded before, to a
controlled
> psb> stock trading test.
>
> psb> I doubt if we have to go that far to disprove the idea that
anyone is
> psb> making discretionary decisions when they trade.
>
> psb> To qualify they only need to be free to make a choice, say
whether a
> psb> trend is up or upNOT (it could be any number or type of
choices - it
> psb> doesn't really matter).
>
> psb> If they are FREE to choose then they can do so INDEPENDENTLY
of any
> psb> other factor. If the choice is DEPENDENDENT on any other
factor then
> psb> they are not making a free choice.
>
> psb> An INDEPENDENT choice is a random choice, therefore they
will flip a
> psb> coin to decide if the trade is up or upNOt.
>
> psb> Any other method they used to make the choice would have
dependency
> psb> wouldn't it (I am trying to think of an exception but I
can't come up
> psb> with one so far)?
>
> psb> I guess that the people who like to argue about this type of
thing
> psb> (the Philosophers) would say that an XTrader is not making a
free
> psb> choice either since their choice is dependent on their
special X
> psb> factor knowledge i.e. they are still bound by dependency -
the have
> psb> merely used a different method to arrive at that point.
>
> psb> brian_z
>
> psb> --- In amibroker@xxxxxxxxxxxxxxx, "Ed Hoopes"
<reefbreak_sd@>
> psb> wrote:
> psb> >
> psb> > Another possible irrational explanation is that some
humans may have
> psb> > the ability to see the future.
> psb> >
> psb> > In competitive sports some players just seem to know what
their
> psb> > opponents will do. Maybe the same is true of some
successful
> psb> traders.
> psb> > They can't explain it rationally, but they "just know it"
> psb> >
> psb> > Reef
> psb> >
> psb> > PS
> psb> > Unfortunately, I don't have this trait.
> psb> >
> psb> >
> psb> > --- In amibroker@xxxxxxxxxxxxxxx, "brian_z111"
<brian_z111@> wrote:
> psb> > >
> psb> > > From the 2nd article:
> psb> > >
> psb> > > "Paul Taglia sees high-probability Window set-ups that
the rest
> psb> of us
> psb> > > don't. I've seen him do this for nearly two years. He
can't
> psb> explain
> psb> > > it...he simply says that he's looked at thousands and
thousands
> psb> of
> psb> > > charts over his career and some charts simply look
better to him
> psb> than
> psb> > > others. We once asked him to keep a journal to see if we
could
> psb> > > systematize what he saw. It was a useless exercise. He
sees it
> psb> but he
> psb> > > can't explain it."
> psb> > >
> psb> > >
> psb> > > According to Occams Law the simplest explanation is
usually the
> psb> best.
> psb> > >
> psb> > > http://en.wikipedia.org/wiki/Simplicity
> psb> > >
> psb> > > Possible explanations, of Paul Taglia's discretionary
style are:
> psb> > >
> psb> > > a) He can 'see', or sense, the future in the charts,
> psb> > > b) he has a set of rules that he learnt in the past
(based on
> psb> > > experience) and they have become second nature -
possibly he has
> psb> > > forgotten what they are or when he learnt them (or at
least some
> psb> of
> psb> > > them)
> psb> > > c) he has a set of rules, and he knows that, but this is
an
> psb> excellent
> psb> > > posture to take if his game plan is never to reveal them
to anyone
> psb> > > d) he has a set of rules but has a playful nature OR
likes to
> psb> take
> psb> > > the mickey out of his associates OR has a superiority
complex and
> psb> > > disdains the idiots who surround him
> psb> > > e) he has an inferiority complex and needs the boost
that comes
> psb> from
> psb> > > the adulation of others - this is an excellent strategy
to
> psb> establish
> psb> > > mystique as a trader and achieve legendary status
> psb> > > f) it is a great way to market ones employment value in
a
> psb> transient
> psb> > > workplace (its a resume that can't be questioned to any
extent
> psb> either)
> psb> > > g) some combination of a-f
> psb> > > h) he has a set of rules (some conscious, some sub-
conscious) but
> psb> he
> psb> > > can't be bothered explaining them (it is a form of
energy
> psb> > > conservation - an alternavtive version of this is that
he could
> psb> be a
> psb> > > very focused trader and has eliminated the non-
essentials, like
> psb> > > defining his style OR chatting about his style.
> psb> > >
> psb> > > BTW irrationality is the common name for the shadow (I
used the
> psb> > > symbolic name).
> psb> > >
> psb> > > There is no irrationality in maths, programming etc
which is
> psb> probably
> psb> > > why I quite like programmers etc.
> psb> > >
> psb> > > Trading myths are born out of, and perpetuated by
irrationality.
> psb> > >
> psb> > > brian_z
> psb> > >
> psb> > >
> psb> > >
> psb> > > --- In amibroker@xxxxxxxxxxxxxxx, "wavemechanic"
<timesarrow@>
> psb> > > wrote:
> psb> > > >
> psb> > > >
> psb> > >
> psb>
> psb>
http://www.tradingmarkets.com/.site/stocks/commentary/lcbattlep/082720
> psb> > > 04-39801.cfm
> psb> > > >
> psb> > > >
> psb> > >
> psb>
> psb>
http://www.tradingmarkets.com/.site/swingtrading/commentary/lcbattlep/
> psb> > > 09022004-39899.cfm
> psb> > > > ----- Original Message -----
> psb> > > > From: sidhartha70
> psb> > > > To: amibroker@xxxxxxxxxxxxxxx
> psb> > > > Sent: Wednesday, August 20, 2008 10:52 AM
> psb> > > > Subject: [amibroker] Re: 'Rule Based'
versus 'Discretionary'
> psb> > > trading...
> psb> > > >
> psb> > > >
> psb> > > > I think you're right Brian. We do all use rules of
some sort.
> psb> > > >
> psb> > > > But I guess discretionary traders don't use 'hard and
fast'
> psb> rules
> psb> > > and
> psb> > > > can't always define the same set of rules by which
they
> psb> choose to
> psb> > > > define an entry or exit.
> psb> > > >
> psb> > > > For example, as we all know, something as simple as
defining
> psb> a
> psb> > > trend
> psb> > > > programatically can be more problematic as you might
at first
> psb> > > think.
> psb> > > > However, a good trader can see very quickly what state
the
> psb> market
> psb> > > is
> psb> > > > in by looking at various time frame of chart.
> psb> > > >
> psb> > > > Likewise, divergences of various sorts can be easy to
see
> psb> with the
> psb> > > > naked eye but difficult to code in their entirety.
> psb> > > >
> psb> > > > Like driving a car, or a golf swing, you learn
the 'rules'
> psb> but
> psb> > > when
> psb> > > > you get really good you are no longer thinking
rules... you've
> psb> > > > effectively let go of the rules and are just 'doing'...
> psb> > > >
> psb> > > > --- In amibroker@xxxxxxxxxxxxxxx, "brian_z111"
<brian_z111@>
> psb> > > wrote:
> psb> > > > >
> psb> > > > > Here is my definition:
> psb> > > > >
> psb> > > > > We are all rule based traders.
> psb> > > > >
> psb> > > > > Mechanical Traders are a specialist group who have
> psb> programmed
> psb> > > > > computers to autotrade their rules OR automatically
> psb> announce
> psb> > > their
> psb> > > > > rules via computer communications (audio, email,
chart
> psb> prompts,
> psb> > > > > spoken text etc).
> psb> > > > >
> psb> > > > > I am prepared to continue the discussion with any
seers,
> psb> > > inituitives
> psb> > > > > etc, who come forward, and adjust my definition to
meet
> psb> > > anything new
> psb> > > > > that comes out of that.
> psb> > > > >
> psb> > > > > In advance I admit to the possibility of exceptions
to the
> psb> rule.
> psb> > > > >
> psb> > > > > brian_z
> psb> > > > >
> psb> > > > >
> psb> > > > > --- In amibroker@xxxxxxxxxxxxxxx, "brian_z111"
> psb> <brian_z111@>
> psb> > > wrote:
> psb> > > > > >
> psb> > > > > > >Descretionary traders make decisions that are
based on
> psb> > > personal
> psb> > > > > > >knowledge and circumstances, perhaps using many
factors
> psb> > > unknown to
> psb> > > > > > >themselves. Like which journal they read the
night
> psb> before.
> psb> > > > > >
> psb> > > > > > This is the nub of the question for sure, and the
point
> psb> that
> psb> > > I am
> psb> > > > > > investigating.
> psb> > > > > >
> psb> > > > > > I suspect that when they (self-nominated DT's)
think they
> psb> are
> psb> > > > > making
> psb> > > > > > discretionary decisions they are in fact making
rule
> psb> based
> psb> > > > > decisions.
> psb> > > > > >
> psb> > > > > > That is why I asked for specific examples
> psb> of 'discretionary'
> psb> > > > > decision
> psb> > > > > > making e.g. I haven't seen Bilbo's chart yet but I
> psb> consider
> psb> > > it
> psb> > > > > highly
> psb> > > > > > unlikely that the decision about whether a trend
is in
> psb> place
> psb> > > is a
> psb> > > > > > discretionary decision - I can define a trend in
several
> psb> > > different
> psb> > > > > > ways - all of them can readily be written as a
rule (in
> psb> words
> psb> > > or
> psb> > > > > with
> psb> > > > > > code) - I don't care if the definitions
are 'correct' or
> psb> not
> psb> > > as
> psb> > > > > long as
> psb> > > > > > the system that they are part of works i.e. my
rules for
> psb> a
> psb> > > trend
> psb> > > > > depend
> psb> > > > > > on the context.
> psb> > > > > >
> psb> > > > > > As Dennis said, our rules might be difficult to
program,
> psb> > > causing us
> psb> > > > > not
> psb> > > > > > to automate the trade, but mentally we are still
running
> psb> the
> psb> > > rules
> psb> > > > > and
> psb> > > > > > if we are honest with ourselves we do know what
the rules
> psb> are.
> psb> > > > > >
> psb> > > > > >
> psb> > > > > > >For a novice traders to try and mimic the
techniques (of
> psb> > > > > Discretionary
> psb> > > > > > >Traders) without
> psb> > > > > > >having similar backgrounds merits caution.
> psb> > > > > >
> psb> > > > > > What I am suggesting is that, over time, the sub-
> psb> conscious
> psb> > > mind
> psb> > > > > will
> psb> > > > > > automate what was intially habitual conscious
behaviour,
> psb> and
> psb> > > even
> psb> > > > > make
> psb> > > > > > some improvements on it, so that 'we' can skip the
> psb> conscious
> psb> > > part
> psb> > > > > for
> psb> > > > > > some 'tasks' e.g. driving the car becomes second
nature.
> psb> > > > > >
> psb> > > > > > That won't happen for new traders, in a short
time, so
> psb> they
> psb> > > do need
> psb> > > > > to
> psb> > > > > > persevere, be patient and not try to mimic people
who
> psb> have
> psb> > > been
> psb> > > > > around
> psb> > > > > > for years.
> psb> > > > > >
> psb> > > > > > IMO formal (written) rules based
> psb> > > trading/backtesting/optimization
> psb> > > > > is
> psb> > > > > > the best place to start - it grinds the basic
lessons in
> psb> very
> psb> > > well.
> psb> > > > > >
> psb> > > > > > If anyone can look at a chart, and without
recourse to
> psb> any
> psb> > > rules,
> psb> > > > > know
> psb> > > > > > which way the price is going to move and trade
> psb> successfully
> psb> > > (long
> psb> > > > > > term) on that basis then that is something else
> psb> altogether.
> psb> > > > > >
> psb> > > > > > If it is at all possible to do that then it
definitely
> psb> can't
> psb> > > be
> psb> > > > > taught.
> psb> > > > > >
> psb> > > > > > That is why I asked, "Anyone doing it?".
> psb> > > > > >
> psb> > > > > > It is just like >100%PA returns - anything is
possible
> psb> but
> psb> > > once
> psb> > > > > someone
> psb> > > > > > confirms that they have done it then it moves from
the
> psb> realm
> psb> > > of
> psb> > > > > > possibility into reality.
> psb> > > > > >
> psb> > > > > > In the meantime I will stick to my guns by saying
> psb> > > that "except for
> psb> > > > > > people who KNOW what the price is going to do
everyone
> psb> else
> psb> > > is a
> psb> > > > > rule
> psb> > > > > > based trader and categorizing traders, as DT's or
MT's,
> psb> is
> psb> > > > > arbitrary".
> psb> > > > > >
> psb> > > > > > brian_z
> psb> > > > > >
> psb> > > > >
> psb> > > >
> psb> > > >
> psb> > > >
> psb> > > > ------------------------------------
> psb> > > >
> psb> > > > Please note that this group is for discussion between
users
> psb> only.
> psb> > > >
> psb> > > > To get support from AmiBroker please send an e-mail
directly
> psb> to
> psb> > > > SUPPORT {at} amibroker.com
> psb> > > >
> psb> > > > For NEW RELEASE ANNOUNCEMENTS and other news always
check
> psb> DEVLOG:
> psb> > > > http://www.amibroker.com/devlog/
> psb> > > >
> psb> > > > For other support material please check also:
> psb> > > > http://www.amibroker.com/support.html
> psb> > > > Yahoo! Groups Links
> psb> > > >
> psb> > > >
> psb> > > >
> psb> > > >
> psb> > > > No virus found in this incoming message.
> psb> > > > Checked by AVG - http://www.avg.com
> psb> > > > Version: 8.0.138 / Virus Database: 270.6.6/1623 -
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> psb> Date:
> psb> > > 8/20/2008 8:12 AM
> psb> > > >
> psb> > >
> psb> >
>
>
>
> psb>
>
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