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A quick note on the below comments here:
Paul Tudor Jones, paired with DeMark and several large
institutions tried to do this years ago.
They failed miserably.
Walt Downs
CIS Trading
Gary Fritz wrote:
>
> Tim wrote:
> > If you read Gabe's statement above, I beleive he is saying that
> > given today's technology, someone with coding expertise could
> > investigate the tools I use to trade and replicate my trading
> > success and style. I am not willing to go down that road with what
> > I know about trading. By the same token, if you showed me, a
> > discretionary trader, exactly how a complex trading program or
> > indicator worked, I'm not willing to say that I could replicate the
> > system's or indicator's success. I don't know that either is easily
> > transfered from human discretionary trader to code on the one hand
> > or from code to human discretionary trader. I'm not willing to say
> > it's simply a matter of being able to 'identify, quantify and
> > systemize.'
>
> My 2 cents: I believe that most techniques used by discretionary
> traders COULD be "identified, quantified, and systematized." But
> just because it's *possible* doesn't mean it's *easy*.
>
> * Identifying is probably the hardest part. From my brief
> stint in AI and expert systems, I know that the hardest thing
> about writing an expert system is cracking open the expert's head
> and finding out HOW he solves problems. Very often the expert
> has no idea how he solves the problem -- it's not a conscious
> decision tree for him. He just encounters a problem, and the
> right answer pops out of the ether. That's hard to do, and
> it's virtually impossible to know whether you've collected
> the "full" set of rules that the expert draws on.
>
> * Quantifying, if I understand what you mean, is also a major
> undertaking. I don't believe most discretionary traders normally
> think quantitatively. They don't compute moving averages and
> RSI's in their heads. (They may make use of indicators like
> that, but that's a minor part of their process.) They just look
> at the charts and see patterns that "look" right. That sort
> of pattern recognition is very difficult to computerize.
>
> * Systematizing, i.e. programming the system you quantified in
> step 2, is a "simple matter of programming." Hah hah. :-)
> I believe you couldn't program 99% of such systems in
> TradeStation (at least not 4.0), because of its many limitations.
> But it can be done with suitable tools.
>
> So, I believe it would be possible to reproduce on a computer,
> reasonably accurately, the trading process of a successful
> discretionary trader. However, it's likely to be a HUGE project, one
> that could only be undertaken by a large trading house. And in fact
> I suspect quite a few of them have been doing so for some time.
>
> Gary
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