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>I just had a long argument with a friend of mine who says that
>predicting the market is impossible. It is randomness. I counter with
>the fact that new theories of chaos say randomness is predictable. And
>randomness is predictable, my friend concedes, but that doesn't mean I
>can make money from it. I say some people make money in this profession,
>but my friend just said they are all snake-oil salesman. And the real
>traders that make money can't do it for very long. They just discover
>some random variation in the market and exploit it for a short time,
>then write books about it and sell systems.
>
>I started thinking too, that he might be right and that is one reason
>this is so stressful. Because your mind is telling you that it is not
>
>OK realtraders, convince me otherwise.
>
>Troy
>
>
There have been too many traders who consistantly returned high % over too
long a period of time for their results to be considered random. One must
also remember that they achieved these returns after their brokerage,
quote, incentive fees ect.
I think the Richard Dennis Turtle experiment puts a hole in the random walk
theory. I believe, I could be wrong, that Richard, William Eckhardt (his
partner), and at least three other Turtles are in the top 20 CTAs. Now
they obviously don't all use the exact system that Dennis taugt; however,
most of the PHILOSOPHIES remain the same. These people also don't make
money unless they are profitable traders. Top CTAs are paid on incentive
and do not sell books, seminars, systems etc. One has a hard time argueing
that John Henry is a snake oil salesman.
You make an interesting point about Rogers and Buffet. I would contend
that for whatever reason ANYONE makes for entering a market, from a five
wave move to a marco-economic change to a 20 day break out to a lunar
eclipse, all they are really doing is finding a long term trend and staying
with it. Most, not all, ultra successful traders (defined as >25% returns
over at least a 10-15 year period) define themselves as long term.
The best line I have heard on winning trading lately is from a 1990 book by
Ralph Vince. He says that winning trading is "favorable uncertainty".
Each individual event is uncertain, but collectively they are favorable.
Like my paying you 6-5 on heads in a coin flip. I have no idea if you are
going to win this toss, but I know you are going to win.
Congratulations on challenging your own beliefs.
sb
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