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Very interesting thoughts....
Robert Hodge wrote:
> i've just been thinking about "noise" and in particular signal-to-noise
> ratio with respect to discretionary trading, and in particular the signal
> processing unit between your ears.
>
> what prompted this was another attempt by myself to grapple with
>
> Neural, Novel & Hybrid Algorithms for Time Series Prediction
>
> i began thinking that the same motivation which drives a neural net model
> builder to pre-process inputs and to eliminate as much extraneous data as
> possible from the neural net could be applied to a discrectionary trader...
>
> so, letting your brain take the role of the neural network:
>
> - you'd want to make sure you didn't overload it with too many indicators or
> too many of the same type of indicators.
yep it is called anaylsis paralysis....
> - you'd want to make sure that it did NOT receive any inputs other than the
> specific few you have trained it to work on as this would simply dilute the
> signal even more.
human nature....discipline cures this.....confidnece..stops people second
guessing
> - you'd want to make sure that its processing of each input was commensurate
> with each inputs' importance in predicting the output.
why predict.....just react.... why step around a pot hole that is not in the
pavement..?
> - you'd want to understand how it behaves under extreme market conditions so
> that you could take it offline or subsume it within a prudent money
> management framework if it starts to breakdown.
honest assessment of ones own performance...again comes down to pyschology
> - futher to that you'd monitor its performance and note those occasions
> where it failed to trigger an appropriate response to the market. over time
> patterns of behavour might emerge that could be usefully embedded in the
> "system".
receptive feedback.....
> - you wouldn't want it to treat entering or exiting the market differently
> (in that it would have no underlying protective or aggressive biases).
nor should it be..
> - you'd want its signals to be easy to follow and execute...as in the
> signals would have some visibility prior to triggering and they would be
> concrete - buy now/sell now, not "maybe now is a good time to buy".
a good simple robust system...
what is concrete in the market....
> - you'd want it to be on all the time and not switch off unless you
> deliberately switch it off.
No..every one needs a rest...no scarecity in the markets... no one
will miss a feed....
> the outcome of thinking about this is that even if you can't achieve a total
> zen-style mindset then you can at least do some things to LOWER THE NOISE
> LEVEL in your head:
If people cannot switchoff to the noise and head screams.....
maybe they should find another career.....
If one is not up to the task get out of the way of those who are.....
> - are you sure you really need to look at ohlc bars, why not look at
> something simpler (ie less data points to confuse you) like line-on-close
> charts, p&f charts, market profile etc
market profile is simple and ohlc is not......hmmmmmm???
what works for the individual
> - do any of the "indicators" you look at predominate disproportionately on
> your screen or in your concentration? why is this? is your attention
> attracted by the fast moving volatile indicator more than the apparently
> less volatile indicator. Have you scaled your visual cues appropriately?
has the individual got a handle on their system and themselves??
> - if you feel particulary tense around the times when you enter or exit the
> market then perhaps it is worth considering adopting a stance of always
> being in the market..
If one feels tense stay in the markets and save having to face reality
of ones self....what ever happend to responsibility.......
how deep is ones pockets...............
>so that there is a less of an adrenalin rush when putting-on or taking-off risk
to distract you >and more focus on just
get ones adrenalin rush from some other activity.......bunge jumping or long
drives... or what ever.. but not from the markets....
> executing flawlessly.
yes with Iron clad disicipline...
> - how many markets/instrunments do you feel comfortable watching and
> gleaning information from at any one time? if you feel stretched and/or
> confused by all the different things you watch then get rid of as many as
> possible until you're brain is happy.
again get simple not complex....what happened to "not so common sense"
how many people would actually listen to their brain to see if they are really
happy??
and face the things they need to face?
> - how do you concentrate? are you a short intermittent bursts type person,
> or do you just sit there happily watching and absorbing the market for hours
> without being distracted? what timeframe might be better suited to your
> concentration style? would/does the company of other traders help, hinder or
> otherwise modify your concentration pattern?
know thy self.......easy said.. hard to do...... it takes brutal honesty and
effort..
> - do you get bored trading sometimes and miss opportunites because you have
> unconciously switched off? maybe you need a higher timeframe where you can
> manage the market's concentration requirements of you better.
have system that suits the individual...
what is missing out?? again the old sacrecity mentality raises it's head....
most people fail to see an opportunity even if it kicks them in the ass... casue
they need to get their shit toghether......lol....
> - if you know that sometimes you trade when you don't feel up to it, or put
> on trades you know you shouldn't or sometimes chase the market to make back
> losses from earlier in the day/yesterday...what practical steps could you
> take to prevent this happening?
STOP trading.. take a rest,, play some golf......
GET DISCIPLINED.....
>maybe you need to talk to another trader or
> another person you can trust and tell them when it happens you need their
> help to take you offline before you do damage to yourself and your account.
> - what other ways can you avoid contaminating the signal processing element
> of your trading?
IF one needs help to go "offline" one SHOULD NOT be trading.....
again we come back to the individual and pyschology......
what don't people understand??
Phew....
"Gentle" Ox....
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