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In reply to your well thought out responses:
Allan Kaminsky wrote:
*... I would argue that the major problems with Gambler Indicators
include not
only excessive lag, but also the non-existence of discriminatory
information that reveals whether the predictive state is high or low...*
And later wrote:
*... I've stated before and will restate now that I have no doubt that
there are
extremely successful discretionary traders. You may be one of them. All
of
the successful discretionary traders that I know admit that when they
use
indicators, they discriminate as to when the indicator is valid and when
it
is not...*
I would argue that the successful trader's ability to discriminate as to
when his
indicator is valid is nothing more than his utilization of independant
variables.
He may or may not have made an effort to quantify his good judgement and
may
or may not be able to state just how he comes to his decisions. In the
past this
was called having a feel for the market. Today, we should be able to
identify,
quantify and systemitize the utilization of all the information a trader
used in
making his *discretionary* trades.
Bob Fulks wrote:
*... It has been proven that markets have at least short-term memory so
that you
can, in fact, predict future price from price alone.
Perhaps you can get a better prediction by using more variables. I would
expect that longer term predictions would be much better if they are
based
upon more fundamental factors such as interest rates, earnings, etc.*
This short-term memory, perhaps we should call it a form of momentum, is
the
primarary reason that indicators work at all. However, the challange is
to find
the independant variables. Especially, those which apply in the short,
as well
as the long term.
Tim Morge wrote:
*... I'll end this long post by revealing that I don't use indicators in
my
trading--I haven't found any that I 'trust.' That doesn't mean I don't
look at
them as others show me how they use them. Nor does it mean I doubt that
others
make money using indicators. I keep refining my own techniques, adding a
bit
here and there. One man's random walk may be another man's indicator.
They are
only tools--and if you gave a wrench to a cave man, I doubt he would use
it as
you do now.*
I suggest that Tim's successful techniques could be labeled as
utilization of
independent variables.
Can we all agree that one or more naked indicators, based solely on
price, is not sufficient
to *reliably* predict future prices? Something more is needed. And it is
that
*something more* which, when properly implemented, allows one to be a
successful
trader.
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