|
PureBytes Links
Trading Reference Links
|
List,
I'm sort of sorry I started this, but it's fun.
There is a big difference between what we do (trading) than just flipping a
coin or spinning a roulette wheel, or other games of chance. Just like in
Blackjack, where you can count cards, you are able to bend the odds slightly
in your favor. What we (that's the collective traders on the list here) do
is to develop systems that bend the odds slightly in our favor. For years,
I've tried to emphasize that our indicators are based upon overbought or
oversold and other contrarian type indicators.
Our system is similar to the pattern recognition systems used by others,
except we don't chart anything (not trusting these old eyes). We have a
group of indicators that we evaluate and weight. Our signals are determined
by the reoccurrence of specific patterns. We know that if the SP39
indicator (which is comprised of 6 component indicators) is greater than or
equal to 4, depending upon our 'contrary', determines whether or not we go
short. The converse is also true. If our SP39 <= -4 and we have a valid
'contrary', we go long. There are a lot of ways that our SP39 can be => 4
or <= -4, so it's really not that simple (remember all of the different,
weighted components).
We strictly trade probabilities. Again, we know that with a certain
weighted calculation, we have an 80% chance of something happening. At the
same time, we have absolutely no ability to forecast how far the market will
move in our direction. So while we're pretty confident in what direction
the market will go, the size, length or duration of the move comes as a
complete surprise to us. :)
We usually average anywhere from 22 to 27 trades a year.
Guy
-----Original Message-----
From: owner-metastock@xxxxxxxxxxxxx [mailto:owner-metastock@xxxxxxxxxxxxx]On
Behalf Of ug@xxxxxxxxxxxx
Sent: Thursday, April 13, 2000 2:21 PM
To: metastock@xxxxxxxxxxxxx
Subject: RE: Money Management Stops
Michel Amelinckx writes:
> Same thing with roulette, they hate me in the casinos because if I
> play roulette I play on red and black. I wait till red (black)past 3
> or 4 times in a row and then play on the other colour. And the
> longer you wait, like 5 or 6 times on red (black) the higher the
> probability the next will be the other colour. Although 6 times the
> same colour is very rare. And this they don't like in casinos.
If a coin tossed comes up heads 4 times in a row, what's the chance it
will be tails next time?
If a system is 50% wins, and you lose 4 in a row, what't the chance of
a winning trade next time?
Given that each trade is independent of the others, which I THINK you
are in agreement with, the above 2 are the same situation, so why
would you say one is 50% and one is 99?
|