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I wholeheartedly agree with Roy on Super's generosity.
--- In equismetastock@xxxxxxxxxxxxxxx, "Roy Larsen" <rlarsen@xxxx> wrote:
> Hi Andy
>
> You mean your grandmother hasn't subscribed yet :-)
>
> As for Super's "sense-of-humour bypass", I've had the good fortune
to meet many generous people on this and other MetaStock lists,
including your good self, and in my opinion Super is at the top of the
"generosity" list by a country mile. His obvious support of MSTT is
merely the tip of the iceberg, and I'm sure there are a number of
others out there that would say much the same thing. I don't always
agree with him, but I still have a huge respect for him as a trader
and as a person.
>
> Kind regards
>
> Roy
>
> ----- Original Message -----
> From: Andy
> To: equismetastock@xxxxxxxxxxxxxxx
> Sent: Wednesday, September 07, 2005 3:53 AM
> Subject: RE: [EquisMetaStock Group] Trading ain't gambling, is it?
>
>
> MG, did you know that Super had a sense-of-humour bypass a few
months back? It was about the same time that he ran out of useful
things to say and so fell back on his "I've tested everything and read
every book, so listen to me" routine. Oh that and that we should all
get our grandmothers to subscribe to Roy's newsletter (or something
like that).
>
>
>
> Sorry Super, I don't wish to get too personal here, but the plain
fact is that you are misleading people with statistics and semantics.
And you seem lately, through no fault of your own I'm sure, to have
the acquired the aspect of some emminent being who must not go
unchallenged. Sorry.I've always been a heretic by nature, so I'll
challenge the almighty Word of the Super-being!!
>
>
>
> Trading = gambling. Yeah, really? For a start, I think that you mean
Speculating = Gambling (if we're going to be pedantic, then let's do
it properly). But to get to the concept, are you really saying that
buying a share is similar to throwing a dice and betting that a six
will come up?
>
>
>
> It seems to me that you are confusing "risk" with "hope". *Pure*
gambling (I'll deal with the pros in a minute) is all about making a
bet and "hoping" that you win. If a trader did nothing more than stick
a pin in the Wall Street Journal financial pages and bought that stock
then he/she would be gambling in the same way. But I think most of us
are beyond that level. We have tools at our disposal to put the odds
in our favour. A *pure* gambler has to cheat to get the same advantage
- he has to get the dealer to throw weighted dice, or he has to
card-count. Sure he/she can employ good money management to try to get
the probabilities in his favour over the long run - but this is a
method that we also get to use. And yes, there is another parallel
too.the gambler can "study form" if, for example, he is betting on the
horses. But that's the same as studying market fundamentals isn't it?
>
>
>
> So, all-in-all, technical analysis means that trading *can be* and
*should be* much better than simply doing what the horse tipsters do,
no matter how good their form book is. When we use charts properly we
give ourselves the opportunity to change our bets in the middle of the
race, depending on how it's panning out. We can cut our losses if the
horse starts off facing the wrong way. A gambler is stuck with his
$1000 bet at 125-1 after the starting gun goes off. We can sell out
and maybe get $900 back.
>
>
>
> It's a bad analogy. And it misleads people into thinking that they
have little chance.
>
>
>
> Trading is also not the same as poker as you suggest. A professional
poker player achieves his greatness not through the cards he is dealt,
but by the way he copes with the situation and out-psyches his
opponents. If a trader, good/bad/indifferent, tried to 'bluff' the
market then the market would not give a damn. In poker there are six
or so players. The market is a little bigger than that.
>
>
>
> I would suggest that, if you're going to draw a parallel then it
should be that: Trading = Business. Approach trading like you would
approach running any other successful business and you stand a chance.
Gambling is for mugs, there is only a minimal chance of controlling
the outcome - most success lies in pure luck and the rest in deception
of the house or your opponent. Trading is a business: we *have control
over our market risk*
>
>
>
> Also, I've read this "95% of traders fail" line a few times now like
it's some kind of unique thing to trading. OK, you didn't mention it
in your last post.but you certainly have before and now people are
quoting you to boot. The plain fact is that if you look at ANY
business at all over a decent period of time then most of them fail !
A very hefty percentage of them (I don't know what that number might
be, but it should be pretty high) fail in the first year, but if you
look at the Dow Jones now compared to the same index 20 years ago then
how many of those old companies are still there? Even the successful
business eventually go under it seems!! Why? Is it something to do
with the fact that they are run by human beings and that those
businessmen don't adapt very well to changing market conditions? Sound
familiar?? Is there perhaps some commonality between why human beings
as businessmen fail to adapt and why human beings as traders fail in
the same way. And why people like gambling so much??
>
>
>
> The "drop out rate" in poker is about the same as that for trading
because the "drop out rate" in just about every money-making fad is
the same. It's the psychological make-up of the people that take part
that is the common link, not the games/businesses (call them what you
like) themselves. There are just as many bad businessmen out there as
there are bad gamblers, as there are bad traders.
>
>
>
> Ø Basically I make highly educated, well thought out, good
probability
> guesses.
>
>
>
> Well I'm 'guessing' that Bill Gates probably did the same when he
set up Microsoft. Good for you. But that is *not* the same as what a
successful poker player does.
>
>
>
> So that means that the rest of us might as well all give up and work
for Walmart, eh? We're doomed.DOOMED I say!!!
>
>
>
> Oh, come on.it's not that bad. Just remember that success lies
within.keep an open mind and never fail to adapt.
>
>
>
> And that 89.346% of all statistics are made up on the spot.
>
>
>
>
>
>
>
>
>
--------------------------------------------------------------------------------
>
> From: equismetastock@xxxxxxxxxxxxxxx
[mailto:equismetastock@xxxxxxxxxxxxxxx] On Behalf Of rdb104
> Sent: Tuesday, September 06, 2005 10:12 AM
> To: equismetastock@xxxxxxxxxxxxxxx
> Subject: Re: [EquisMetaStock Group] Trading ain't gambling, is it?
>
>
>
> I haven't done your Freeburg research but from experience I agree
totally.
>
> There is always uncertainty..and most of these guys think you can
'find' the grail when dealing
>
> with randomness most of the time. I don't know why anyone thinks
that fear and greed driven by emotion
>
> can fit neatly into some mathematical formula(s).
>
> ----- Original Message -----
>
> From: superfragalist
>
> To: equismetastock@xxxxxxxxxxxxxxx
>
> Sent: Monday, September 05, 2005 8:58 PM
>
> Subject: [EquisMetaStock Group] Trading ain't gambling, is it?
>
>
>
> Well, I guess we have somewhat different opinions MG.
>
> I've got a pile of research that I'm going through right now from
> Nelson Freeburg. I think he would disagree with some of your points.
> He's done many thousands of tests over the last 13 years. He has
> trading systems that have traded only 9 or 10 times over 20 years but
> have beaten buy and hold by a few percentage points. Some of those
> systems have winning trade percentages as high as 80%. There's nothing
> academic about them.
>
> A system making only 9 trades in 20 years says nothing about how long
> a trade lasts. It says nothing about the cost of margin, or the amount
> of money someone can make. Some of Freeburg's systems have benefited
> from margin and some haven't.
>
> He also has several systems that have been backtested for periods of
> 20 to 50 years. During that time, they showed consistent performance
> but in the late 90's the systems started to drop off sharply in
> performance, and some failed completely.
>
> I'm not going to speculate on whether gambling is a sin, but many
> types of gambling such as poker have the elements of luck, skill and
> probabilities as their components. In the hands of a truly skilled
> player, which there are very few, the odds are on the side of the
> player. Based on my perspective, and not yours, trading is exactly the
> same thing. You have to be lucky, skilled and have probabilities on
> your side.
>
> If you look at the top poker players over the last 20 years, none of
> them made money consistently every year, but over the 20 years they
> did very well. They also had some losing years and some big winning
> years.
>
> Trading got popular when it was advertised and talked about all over
> television. Poker is now popular for the same reasons. Every
> once-in-a-while someone without truly good skills can get lucky and
> win big. That's why a lot of people take up trading who don't have a
> clue as to what it takes to be consistently good at it, and it's the
> same reason people start playing internet poker and then throw down
> $10,000 to play in a tournament. It's takes about $500,000 in front
> money to play most of the world poker tour. How many players make more
> than it cost them to play? How many traders make more than it costs
> them to play? The drop out rate is about the same.
>
> I use some of the same systems that Freeburg has been working with as
> part of my market conditions barometer, which improves my winning
> percentages as I've written about before. I'm hoping that some of the
> improvements I've come up with to these systems will increase the
> returns that Freeburg has shown over long periods of time. I don't
> know yet. The couple that I have worked on so far have had very good
> test results.
>
> In my trading I stay keenly aware that on any day, I may not win. I've
> educated myself to as high a level as possible regarding the game I
> play. I've tested and retested everything I do so I know the
> probabilities. I've practiced and practiced and practiced many
> thousands of times before stepping up to table to play with real
> money. Now I've played it live for several years, and I know pretty
> well what I can expect to earn. However, I also know that when I'm
> lucky, I make more money than when I'm not. I know the market is
> unpredictable and may not deal me the cards I need, even when the
> probabilities are 99 to 1.
>
> Basically I make highly educated, well thought out, good probability
> guesses. Well, now I'm guessing that if that's not gambling, it's
> really really close.
>
>
>
>
>
>
>
>
>
>
>
> --- In equismetastock@xxxxxxxxxxxxxxx, mgf_za_1999 <no_reply@xxxx>
wrote:
> > If your system trades 9 times in 20 years, either give the money to
> > some index manager, or put it in the bank. You are not trading, you
> > are buying and holding or investing. If you add any conceivable
> > gearing then either you will run out of margin, or pay through your
> > ears in carry over the 20 years with just 9 trades.
> >
> > Anyhow, 9 trades in 20 years sounds academic to me - 30 trades plus
> > degrees of freedom sounds practical to me.
> >
> > I do use such long term, 9-trades-in-20-years systems to extract the
> > long term trend from a ticker. But I do not use that as a trading
> > decision - just as part of the input.
> >
> > Yes I agree with you, trading is not investing. But I certainly
don't
> > think trading is gambling. It is gambling if you don't know
what you
> > are doing, probably with much worse odds than you'd get in a
gambling
> > house. Trading is buying and selling of financial instruments
with a
> > view to making a speculative profit while gambling is
statistical and,
> > given the odds, a sin!
> >
> > Regards
> > MG Ferreira
> > TsaTsa EOD Programmer and trading model builder
> > http://www.ferra4models.com
> > http://fun.ferra4models.com
> >
> > --- In equismetastock@xxxxxxxxxxxxxxx, superfragalist
<no_reply@xxxx>
> > wrote:
> > > Your premise is from a purely mathematical view, specifically
> > > statistical. However, the market doesn't always supply data in a
> > > complete packages ready for statistical testing and inference.
> > >
> > > Suppose we have a market timing system that has made only 9
trades in
> > > the last 20 years and all of the trades have been highly
profitable.
> > > Do we use the system or not? There are not enough trades to
validate
> > > the results.
> > >
> > > We can wait another 40 years or so and we'll probably have
enough data
> > > and enough trades to make statistically meaningful inferences.
> > >
> > > None of this is neat, precise or absolute. And there are no
hard and
> > > fast rules for how many trades a system needs to give good test
> > > results. There are approaches which are better than others
like this
> > > one by MG, but there is no one correct answer to the question.
> > >
> > > After many millions of systems tests and a lot of trading
years in the
> > > markets, no one has come with a trading system, a timing
system or any
> > > other system that works consistently over long periods of market
> > history.
> > >
> > > Trading is not investing, it's gambling with an edge to the
player if
> > > the player is an expert at that game. However, the house is always
> > > changing a little something here or there that changes the
> > > probabilities of events just enough to change the game. It's the
> > > players job to stay up with these changes and adapt well enough to
> > > keep the edge on the house.
> > >
> > > Newbie's just don't get how long it takes and how hard it is
to get
> > > the edge consistently and over long periods of time. A newbie
thinks
> > > if they make money one year, they're going to be a successful
trader
> > > every year. Call me in twenty years with your track record and
if it
> > > measures up, I'll send you your certificate of validation.
> > >
> > >
> > >
> > >
> > >
> > >
> > >
> > >
> > > --- In equismetastock@xxxxxxxxxxxxxxx, mgf_za_1999 <no_reply@xxxx>
> > wrote:
> > > > The 30 trades is based on the central limit theorem - after
about 30
> > > > observations things settle down if the mean of random samples
> follows
> > > > a normal distribution. There are several assumptions in this
> > > > approach, but it should give a good idea. I'd push it up a
bit, say
> > > > to 35 or 40. Also, you need to adjust for degrees of
freedom if you
> > > > do any optimisation. Suppose your system is driven by 1
parameter,
> > > > then you must add this to the 30. Suppose you have a big system
> that
> > > > uses say 10 parametrs - then you need at least 40 trades.
> Especially
> > > > if the system gets bigger, it needs more trades to give any
> > > > confidence, and I will feel better if such a system produced
good
> > > > results in 50 or more trades.
> > > >
> > > > Another, excellent way to test is to use a hold out sample.
> Build the
> > > > system on a portion of the data, say an 80% sample. Then
test it on
> > > > the rest and you can see if you have a winner or fools gold.
The
> > > > *proper* way to do this is to segment the sample in say 10
> blocks (of
> > > > 10% of the data each). Now you choose randomly any 8 blocks,
> optimise
> > > > the parameters of the system on it, and test it on the
remaining 2.
> > > > Then you choose another 8 blocks randomly, optimise the
system, test
> > > > it on the remaining 2 and so on. After you've done this say 100
> > > > times, you test the results.
> > > >
> > > > For this you need special software - one good example can be
> found at
> > > >
> > > > http://weka.sf.net
> > > >
> > > > In practise, just chop off the most recent 20% and you'd get
a good
> > > > idea if the system will work or not.
> > > >
> > > > Regards
> > > > MG Ferreira
> > > > TsaTsa EOD Programmer and trading model builder
> > > > http://www.ferra4models.com
> > > > http://fun.ferra4models.com
> > > >
> > > >
> > > > --- In equismetastock@xxxxxxxxxxxxxxx, "rvalue1" <rvalue1@xxxx>
> wrote:
> > > > > I would contend that if you generated >30 trades in the up
> > direction
> > > > > for a sufficiently long period 2 years or so, you would have
> > > > > confidence that the system does well in the up direction. Same
> for
> > > > > down and catch the sideways as it transitions. Very
unusual to
> > find
> > > > > a great system up, down and sideways!! If you have one,
let me
> > know.
> > > > >
> > > > > If you are waiting for 1000 trades, you must trade very often.
> > > > >
> > > > > --- In equismetastock@xxxxxxxxxxxxxxx, "Ed Hoopes"
> > > > > <reefbreak_sd@xxxx> wrote:
> > > > > > I recently attended a lecture by Keith Fitchen, the
author of
> > > > > several
> > > > > > successful trading systems most notably Aberration. He says
> that
> > > > > > statistics on more than 1000 trades must be compiled
before the
> > > > > > results can be considered valid.
> > > > > >
> > > > > > Ed Hoopes
> > > > > >
> > > > > > --- In equismetastock@xxxxxxxxxxxxxxx, chichungchoi
> > <no_reply@xxxx>
> > > > > wrote:
> > > > > > > Does anyone know how many trades the evaluation needs
to be
> > sound
> > > > > > > statistically?
> > > > > > > Thank you in advance
> > > > > > > Eric
>
>
>
>
>
>
>
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>
>
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