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-----Original Message-----
From: Brian Massey [SMTP:bnm03@xxxxxxx]
Sent: Saturday, April 18, 1998 12:26 AM
To: 'Bill Vedder'
Subject: RE: Supreme Order in Markets ??
Bill,
Thanks for the feedback.
-----Original Message-----
From: Bill Vedder [SMTP:bved01@xxxxxxx]
Sent: Saturday, April 18, 1998 1:32 AM
To: bmassey@xxxxxxxxxx
Cc: 'CLIVFG'; njb@xxxxxxxxxx; kschr@xxxxxxxxxxx; omega-list@xxxxxxxxxx
Subject: Re: Supreme Order in Markets ??
Brian Massey wrote:
>
> Chuck,
>
> Your statements are interesting. I've read this several times (that
> markets behave more randomly than not) over the years but could never
fully
> validate it. For example, I would look at a chart and see the market
> stopping at specific points (support/resistance) time after time. I
mean,
> to the tick! How could you call this random behavior?
Brian, stopping at specific points may not be random but your statement is
irrelevent. Can you write a rule or describe a system that makes $$$ from,
what you
are calling, the non-random behavior of support/resistance points?
I disagree that this statement is irrelevant. You contradict yourself. On
one hand you agree with me that stopping at support/resistance point is non
random behavior then turn around in the next breath and call it an
irrelevant fact. Make up your mind. The fact is, this is NOT an
irrelevant statement because markets do stop at resistance/support more
times than they penetrate. This is non random behavior.
>From this and your other statements, you seem to think that market activity
is random if it can't be "CODED". You seem to be obsessed with the idea of
coding your trading system. No offesne, but I think this is where your
problem lies. There are many approaches out there that can't be coded (or
at least would take so many lines of code that you'd spend more time
writing and modifying code than actually studying charts to trade. Some of
the best traders in the world use methodologies that use a mix of systems,
etc...
I strongly believe that just because something can't be coded, that doesn't
make it irrelevant! Given our current technology, we cannot even begin to
model the thought proces of our minds. Does this mean we think randomly?
Hardly. Likewise, just because we can't model support/resistance (we can
but it's not worth the time) doesn't mean its irrelevant or random. This
example shows the irrelvancy of your statement and those who believe
markets are random.
To become more aquainted with this fact, I would politely suggest that you
spend more time studying charts and less time writing Easy Langugae code.
You're a trader not a coder!
> It didn't matter if
> the market was sideways or trending, real time or daily. Support and
> resistance points give me clear points to trade off of that more times
than
> not resulted in winning trades.
May or may not be true. Anyway, having more winning than losing trades
doesn't mean
you have a profit. On the contrary, many systems I've seen have more
winners than
losers but lose money.
Trust me it is true. Again, why do you make the assumption that if a
process can't be incorporated into a system, it can't make money? This has
nothing at all to do with whether or not markets are random (which was my
point here) but I'll comment on it anyway.
I've seen those systems too - the ones with more winners than loosers and
still can't make money. Those are the ones with $4,000/contract stop
losses and projected profit targets. The ones that let their loosers run,
have huge drawdowns, and cut their winners. This isn't trading, its
gambling! That's a big reason why I don't trade systems. I want to cut
my loosers and run with my winners. Add to winners on the close (if
conditions warrant - again, better just to learn when and not try to code
it) and scale in/out of trades.
Some of the best traders in the world trade methodlogies not just systems.
Broker statiscs will show that the most profitable accounts are the most
active ones. This doesn't mean jumping on an occasional trend and sticking
with it. This means, identifying points of support and resistance, and
exiting/entering position accordingly and frequently.
By the way, you seem to be a big proponet of systems. And I'm assuming
that by taking the opposite position of my argument, you believe markets
are random. Then if markets are as random as you say they are, why do so
many systems work? Because, markets have more than enough non random
beavhior, that someone can take something as dry and mechanical as a
computer program, apply the same rules over and over again, and predict the
marekt.
Markets are not random.
Only people who can't make sense of them say they are. So I guess in that
sense, markets are random. It's a differenet world for each individual.
> Trading these points tipped the odds in my
> favor becase more often than not the balance of buyers and sellers bec
omes
> skewed. Buyers are less willing to buy through resistance and sellers
are
> less likely to sell through support clearing the way for the other side
to
> take over. This is well known and gives the trader more than a 50/50
> chance. This kind of predictability
Prove it...
What? Do you want me to do all of the work for you? You prove it.
Ok, I'll say it again. If this were not true (ie had not been proven) then
support and resistance would not be concepts in technical analysis. Have
you ever heard of a low risk trade? Why do you think it's such low risk?
>flies in the face of the idea that
> markets behave randomly. If they did then support/resistance would fail
as
> much as it held and it would have no meaning in technical analysis. Yet,
> we know this is far from the case. Also, price patterns that resulted
in
> follow through more than 50% of the time would not exist. Yet we (I)
know
> they do.
>
> There are patterns in the market that have a high degree of
predictability
> because people are creatures of habit.
People are creatures of habit. I agree. But show me a pattern (anything)
that has a
"high degree of predictability". Again, prove it. Post some code.
I hate code! Price action, price action, price action. Look at ANY chart
and you'll see so many repeated price patterns it will boggle your mind.
Some can be coded (for convience) and some can't. CANDLESTICKS are a
perfect example An entire body of market study based entirely on repated
price patterms! Moreover, these are price patterns that were evident in
the japanese rice markets in 1600's and are still prevelent today!
Someone who spent all their time coding and not observing would not notice
price patterns.
People that sell system development laguages want you to believe that you
can't make money trading without systems. They perpetuate the myth in all
their marketing. This is far from true. For some it may be true, for
others it's not.
>Habitual creatures behave in
> predictable ways and will exploit markets in the same way as long as it
> works. This, in my mind, is far from random behavior.
>
> Also, the self-fufilling nature of markets tend to reduce the element of
> randomness too.
>
> Brian.
> ....
> big snip of prev msg
> Chuck LeBeau
Regards,
Bill Vedder
Thanks for the feedback,
Brian.
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