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



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Brian,

I was just referring to the OT part.

This might have been better in its own thread.

Then I went and compounded the OTness of it... LOL

BR,
Dennis

On Aug 22, 2008, at 11:04 PM, brian_z111 wrote:

>> I know what you are saying, but should you be saying it on this
>> forum?
>
> I am not sure of what context you are making that comment in.
>
> If you mean am I restricted in what I can say, and where I can say
> it, because I am giving away sworn secrets.... No.
>
> All of the secrets are out.
>
> The libraries are full of unused truths.
>
> If you mean am I going too far off topic?
>
> Yes, I have gone far enough... sometimes a little too far perhaps (I
> am compelled to err on the side of truth).
>
> I don't want to stretch the patience of the forum any further (I dare
> say, however, that there is more than the ave quota of people in this
> forum who are on the cusp of higher levels of consciousness).
>
> BTW I forgot to mention that the reason I get tetchy about traders
> classifying themselves as Discretionary Traders is that it can seduce
> them into believing that they are above the rules.......which opens
> the gate to making irrational decisions..... for mine I would rather
> tell them they are rule based traders so they will stop and consider
> what their rules are, and if they are unwritten, or not etc
>
> From there it is a natural transition to sharpen up on them a bit,
> which is a good thing.
>
>
> "They shall know the truth and the truth shall set them free".
>
> brian_z
>
>
>
> --- In amibroker@xxxxxxxxxxxxxxx, Dennis Brown <see3d@xxx> wrote:
>>
>> Brian,
>>
>> I know what you are saying, but should you be saying it on this
> forum?
>>
>> However, since you have brought up the subject of getting random
>> results from flipping a coin, and much trading is based in the idea
> of
>> random noise being a big factor, I propose a test.
>>
>> Get a piece of graph paper, a pen or pencil, and a coin.
>>
>> Your goal will be to flip the coin and record the deviation from
> zero
>> on the graph paper to prove that it is NOT random.
>>
>> Find a very quite place with a rug where you won't be disturbed for
> a
>> half hour.  You should not have eaten recently.
>>
>> Put an X in the middle left box on the graph paper as the starting
>> mark.  When you flip the coin, you will be marking the next square
> to
>> the right of the last mark.  If you flip a Heads, you will be
> moving
>> up one square.  If it a tails, you will be moving down one
> square.
>> This would normally be an example of a random walk graph.
>>
>> Put your mind in the most focused level of consciousness that you
> can
>> for this test.  In other words concentrate!
>>
>> The next step is the most important of all:
>>
>> Summon up the greatest emotional desire you can for achieving a
>> singular result.  That result is your desire for the line you are
>> graphing to deviate from the starting point by as much as
> possible.
>> Feel it in the pit of your stomach.  That burning desire to
> influence
>> the flip of a coin!  Don't think, just desire!
>>
>> Flip the coin and let it land.  Record your mark.  Flip the coin.
>> Record your mark.  Feel the desire focusing your concentration
> ever
>> more.  Flip, Mark...
>>
>> When picking up the coin, do not return it to heads up, or tails
> up,
>> just use whatever it landed on last as the starting position.  Give
> it
>> a good flip.  Not just a few turns in the air, but spinning well.
>>
>> At some point, you will feel emotionally dry.  You will not be able
> to
>> keep up that emotional intensity forever (for me it is 20
> minutes).
>> Notice when that point happens and put a mark on the paper so you
> can
>> see that point.
>>
>> For some the results of this test will give you a new perspective
> on
>> yourself to think about.
>>
>> I devised this test 35 years ago and the results changed the
> direction
>> of how I perceived many things after that.
>>
>> Enjoy!
>> Dennis
>>
>> On Aug 22, 2008, at 8:58 PM, brian_z111 wrote:
>>
>>>> Another possible irrational explanation is that some humans may
> have
>>>> the ability to see the future.
>>>
>>>
>>> Ed,
>>>
>>> I feel I sold you short on this one so if you are interested in a
>>> more detailed answer read on.
>>>
>>> In my scheme of things there are no trader classifications, except
>>> perhaps good ones and not so good ones.
>>>
>>> If it helps us to understand our trading and/or become better
>>> traders, by naming classes, by all means lets do so but if and
> when
>>> we consider traders to be discretionary, we are, IMO deceiving
>>> ourselves i.e. it is probably the most useless classification of
> all.
>>>
>>> For the sake of the discussion - if there are otraders who
> can 'know'
>>> things using faculties that other traders don't have then I would
>>> call them XTraders (X == unclassified OR an unknown quantity).
>>>
>>> Our culturally accepted paradigm is that we are thinking
>>> (rationalising) and feeling creatures contained in a physical body
>>> (vessel).
>>>
>>> Culturally it is considered 'irrational' that anyone could
> function
>>> with a faculty other than thinking or feeling i.e. people
>>> who 'believe' this are sub-standard thinkers (perhaps they are
>>> unbalanced by their emotions?)
>>>
>>> In other cultures alternative 'levels of consciousness' are
>>> considered the norm (consciousness that is above and beyond
> rational
>>> thinking that is).
>>>
>>> Specialists in this field don't consider these X faculties as
>>> irrational - this term is reserved for a special class of sub-
>>> rational consciousness.
>>>
>>>
>>> As an analogy:
>>>
>>> Rationality can be symbolised by a clear blue cloudless sky and
> the
>>> sub-conscious mind as the clear deep green ocean.
>>>
>>> The irrational elements of our 'mind' are floating on the surface
> of
>>> the ocean, bobbing up and down like corks.
>>> Collectively the corks are always in motion.
>>> They are discrete and individual corks 'rotate' above and below
> the
>>> water line. Their upward motion creates pressure on our conscious
>>> mind and some leap out of the water, into consciousness, for brief
>>> periods.
>>>
>>> We call them irrational because they never come to full and
> complete
>>> expression in our rational mind - it is not possible for them to
>>> exist there autonomously because of the material that they are
>>> constructed of (speaking symbolically they are half-formed
> creatures
>>> from the deep).
>>>
>>> They act somewhat autonomously from our consious mind and
> controlling
>>> them is a devil of a job (the labours of Hercules).
>>>
>>> Specifically they are products of our environment (upbringing/past
>>> etc) that are exascerbated ny 'inherited' qualities (put two
> people
>>> in the same stressful environment and one can develop a mental
>>> pathology while the other person won't).
>>>
>>> They can affect our trading by popping up as irrational behavoiur
> in
>>> the heat of battle or by generally influencing our approach
>>> (fear/greed etc).
>>>
>>> The 'higher' level of consciousness (knowing) that I am personally
>>> familiar with is the Intuition which I consider to be the
> 4th/seven
>>> levels of consciousness attainable my Mankind.
>>>
>>> Note that in our culture the term is used in different ways in
>>> different cultures and that even amongst specialists in this field
>>> their is disagreement over the classifications of consciousness
> and
>>> the nomenclature.
>>>
>>> I don't know how Intuition works, nor have I experienced the full
>>> scope of it.
>>>
>>> For me it works in different ways at different times and it is
>>> dependent on how I manage it (if I am tired or don't pay full
>>> attention the quality of what I 'perceive' drops).
>>>
>>> It is not mind reading.
>>>
>>> I experience it as a kind of 'super-rationality' i.e. given the
> same
>>> facts that the rational mind possesses (yes I still have to read
> the
>>> help manual) I can sometimes connect the dots in amazing ways and
> do
>>> it instantaneously - I just consider I have done the rational
> anlysis
>>> at a speed that my conscious mind couldn't keep up with.
>>>
>>> According to the pundits other levels of consciousness are
> accessible
>>> in the supra-rational mind.
>>>
>>> The intuitive level of consiousness can be accessed via the
> abstract
>>> mind and this is what many of the leaders of our culture do - it
> is
>>> especially prevalent in those who are trained in/have a
> disposition
>>> towards use of the abstract languages e.g.
>>> maths,programming,philosophy, art, music etc where it is
> experienced
>>> as INSPIRATION.
>>>
>>> I haven't tried to be an Intuitive trader because I am quite
> happy to
>>> use all of the resources available to me in a balanced way
> (combining
>>> computer skills, rational thinking, inspiration and emotional
> control
>>> in a synthesized package and I am doing fine with that).
>>>
>>> Anyway, I can't seperate my learned experiences from my
> instinctive
>>> experiences so I couldn't perform an honest test (if I tried to
> make
>>> purely intuitive trading choices I could be biased by other more
>>> mundane factors).
>>>
>>>
>>>
>>> How does this apply to trading?
>>>
>>> We can make a truly unbiased decision if we flip a coin
> (technically
>>> speaking the decision is made by the coin at the moment it comes
> to
>>> rest).
>>>
>>> Coins don't have thoughts, feelings or X consciousness.
>>>
>>> We do.
>>>
>>> Whenever we make a decision it is almost impossible for us to
> measure
>>> the degree that it is influenced by feelings, thoughts or
> XFactors.
>>>
>>> Anything that influences our decision making places a condition on
>>> it, so in a round aout way it is a rule.
>>>
>>> That is why I claim that we are all rule based traders (unless we
>>> flip a coin to make our trading decisions).
>>>
>>> The differences come about because of the quality, number, format
> etc
>>> of our 'rules'.
>>>
>>> As a rule of thumb:
>>>
>>> Writing down our rules is one way to quality control them.
>>> Writing them in computer language is an even more definitive way
>>> force them to logicality.
>>>
>>> However we shouldn't assume that people who like to trade in a
> visual
>>> way e.g. chart trading, don't have written or programmed rules OR
>>> that people who haven't written down their rules are 'worse'
> traders
>>> than those who do.
>>>
>>> In all probability traders who haven't written down their rules
> are
>>> using much simpler 'systems' and/or have automatically joined
>>> together a few simple rules to make a set of easily 'remembered'
>>> mental rules.
>>>
>>> On that basis it is a bold asumption to say that they couldn't
> teach
>>> it to others.
>>>
>>> I dare say they can most likely teach it to a 15 year old a lot
> more
>>> readily than they could teach them to autotrade.
>>>
>>> It is a pretty fair bet that bad rules, unclear rules, or no
> rules at
>>> all, is the source of most trading trouble rather than unwritten
>>> rules or XFactor rules.
>>>
>>> As for XFactor traders (if there really are any out there):
>>>
>>> - they are still following a rules it just happens that they get
> them
>>> from the fairy perched on the top of their computer screen (I
> guess
>>> the proof of the pudding is in the eating).
>>>
>>> Personally, I haven't made a decision to buy/sell based on an
>>> intuitive signal AFAIK (if anyone is an intuitive trader then I
> would
>>> be a good candidate).
>>>
>>> However in real life I make intuitive decisions all of the time.
>>>
>>> One way I use the intuition is that I sense it like a stop light
> in
>>> the pit of my stomach - I can almost see it - red == stop/orange
> ==
>>> caution, green == go.
>>>
>>> Specfic examples:
>>>
>>> I go to a website - I take one look at it - I read the first
>>> paragraph of an article their - I get a red light - don't read
>>> anyfurther - it saves me research time - reason == the level of
>>> consciousness of the author is too low - they couldn't possibly
> write
>>> anything about trading worth reading (sorry but it isn't anything
>>> more romantic than that).
>>>
>>> In other cases I use the intuition in more advanced ways but that
> is
>>> a very long story.
>>>
>>> I hope that helps a few traders sort out their thoughts.
>>>
>>> "If we are saying it, we are thinking it.
>>> If we are thinking it, we are doing it".
>>>
>>> If we are sloppy with our trading nomenclature?
>>>
>>>
>>> brian_z  *:-)
>>>
>>> I am very sorry but I can't answer private emails to my public
> email
>>> addresses - many of them get lost amongst the spam anyway.
>>>
>>> Also I apologise deeply but I do not 'take' students.
>>>
>>> FTR I teach the 'middle way' (not in a sectarian way) and I do
> what I
>>> can publically.
>>>
>>>
>>> --- In amibroker@xxxxxxxxxxxxxxx, "Ed Hoopes" <reefbreak_sd@>
>>> wrote:
>>>>
>>>> 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@>
> 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
>>>>>>>>
>>>>>>>
>>>>>>
>>>>>>
>>>>>>
>>>>>> ------------------------------------
>>>>>>
>>>>>> Please note that this group is for discussion between users
>>> only.
>>>>>>
>>>>>> To get support from AmiBroker please send an e-mail directly
>>> to
>>>>>> SUPPORT {at} amibroker.com
>>>>>>
>>>>>> For NEW RELEASE ANNOUNCEMENTS and other news always check
>>> DEVLOG:
>>>>>> http://www.amibroker.com/devlog/
>>>>>>
>>>>>> For other support material please check also:
>>>>>> http://www.amibroker.com/support.html
>>>>>> Yahoo! Groups Links
>>>>>>
>>>>>>
>>>>>>
>>>>>>
>>>>>> No virus found in this incoming message.
>>>>>> Checked by AVG - http://www.avg.com
>>>>>> Version: 8.0.138 / Virus Database: 270.6.6/1623 - Release
>>> Date:
>>>>> 8/20/2008 8:12 AM
>>>>>>
>>>>>
>>>>
>>>
>>>
>>>
>>> ------------------------------------
>>>
>>> Please note that this group is for discussion between users only.
>>>
>>> To get support from AmiBroker please send an e-mail directly to
>>> SUPPORT {at} amibroker.com
>>>
>>> For NEW RELEASE ANNOUNCEMENTS and other news always check DEVLOG:
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>>>
>>> For other support material please check also:
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>>>
>>>
>>>
>>
>
>
>
> ------------------------------------
>
> Please note that this group is for discussion between users only.
>
> To get support from AmiBroker please send an e-mail directly to
> SUPPORT {at} amibroker.com
>
> For NEW RELEASE ANNOUNCEMENTS and other news always check DEVLOG:
> http://www.amibroker.com/devlog/
>
> For other support material please check also:
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>
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