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A Relic Trading On Feeling

  1. Hello.

    Kind of tired reading of all the quant/AI/ML/coding hype everywhere :vomit: and that if you're not doing it, you'll be out competed. I'm an old fashioned brain and eyes (along with bits of guts and groins) trader. So just putting it out there and let's see in a couple of years time if I get eaten up by the machines and codes.

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    I'll post this year's results after it's updated for the close of this week.

    Quick summary because most TLDR
    - predominantly in futures & FOPs (ES & FX 6's with bits of GC, CL)
    - day trading preferred
    - favorite character gregor the mountain
    - mostly chart reading
     
  2. Good stats. Why do they end in November of 2016?
     
  3. You gotta have some pretty good discipline.
    The holy grail...
     
  4. Discipline, like alot of so-called 'Golden Trading rules', can be a double-edged sword though, o_O

    I would say The Holy Grail...is more of being open-minded, and kind of constantly applying a hybrid or dynamic approach or viewpoint,
    Because each day, or trade/chart, is truly unique in its own right -- kind of like human personalities and DNA,
     
  5. Legend in the making ...
     
  6. that makes the two us
    i cannot stand these quant,algo,hft or whatever they call themselves these days.
    i personally don't believe that they will take over the trading world
    i am a day trader, price action specialist and profitable.
     
  7. Funny about all these quant guys, they NEVER tell you anything about what they do . Just vague , generalized, buy low sell high bs.

    I say......99% of them made/make money the old fashioned way. They cheat.
     
  8. Thanks. I switched focus from indices to 6's because of volatility & life/time changes(in the end it didn't do much lol I'm still addicted whenever major markets are open). Different account, here it is. You can see the quiet transitional period.
     
  9. My problem with all this artificial intelligence hype is that just because a few large funds use it really well with their army of highly qualified engineers along with hundreds of millions $ in resources, that the retail plumber dad think they can replicate that by doing some coding on the weekend in between kid's football games on a retail software on a intel i5 laptop..

    You are not moving billions worth of trades, you do not need all that data crunching. All you have to do is choose one buy and sell point that is better the averaged in buy/sell prices of the funds to beat them (at least, the average of them, perhaps not the outliers).

    That being said, like all forms of analysis, I think there are few who do gain advantage of it..It is neither better or worse than reading charts or balance sheets.

    I guess it's the rage these days because it's easy to market and sells books, courses, seminars on it as it's so prevalent in the news, that the the mass will simply follow the fad.
     
  10. What are the "6's"? I am guessing you are referring to the CME's currency futures, such as 6E, 6B, 6J?

    Do you care to elaborate on your trading approach/methodology?
     
  11. I successfully use "feel" in my trading and I operate a ML system. Unless AI only trading came in, there will always be crumbs for competent human as the AI's knock lumps out of each other. I expect that even in the largest firms they would have heavily capitalized bots who interfere with each other, different development teams competing for evolutionary dominance, swings and roundabouts of liquidity & order entry efficiency. Probably safe to keep calm and carry on for now?

    The current generation who will just focus mostly on ML could be losers as they just won't spent years developing "feel" skills that will continue to present opportunity.
     
  12. Yes. Very good comment.

    The connection one can have with their inner guidance system is everything. Feelings offer the instant feedback of what we have our attention upon.

    Feel Good -> towards everything you want.
    Feel Bad -> the thoughts currently being thought is creating movement away from everything you want.

    The above are both necessary for contrast, which is the birth of expansion for ourselves as creators of our own experience.

    When I shifted to think about feelings and thoughts as vibrations, many insights, transfigurations and transformations began.

    The universe can shift from a paranoia viewpoint to a Pronoia one,... one mood, attitude, thought at a time.
     
  13. Kind of tired reading of all the quant/AI/ML/coding hype everywhere :vomit:


    They are like bugs attracted to an electric bug zapper.

    Well stated! Every noob that believes their computer will put them on same playing field as the big fish with hundred of millions in infrastructure, R&D and regulatory bribes. Many of these self titled algo/quants/ML/AI will learn programming - and that's about all they will get out of trading. There is nothing new about this - it has been done since the 80's by the Princeton geeks with poor results.

    They live in their backtesting/SIM fantasy world, dreaming of being that one geek to crack matrix. I will take a casino or horse race gambler any day over a gaggle of quant/algo/ML/AI geeks - you cant factor in the brawn & guts of trading into some stupid backtest. 20 years ago we used to get high and laughed hysterically at the many inverted ski slop looking backtests we could so easily create - nothing but fools gold.
     
  14. haha
    I had to log in and give that one a like. :D
     
  15. Yes the currency futures.

    I found my approach when I stopped doing these 2 things:

    1. Indicators (formula based).When I took those junk off was when the real learning started. No maths derivative of price will help you predict price. Watched how longer time frame levels affected shorter time frame prices. I am blind watching a intraday chart if I do not have them marked.

    2. Entering on break outs. Most chart patterns triggers an entry on break outs (eg. buying on break out trading above neckline of bullish H&S/long when swing high is broken). Did that and lost most of the time. On the occasional wins the R:R is mostly trash, very rarely do you capture a sustained trend that makes it worth it. When I did the reverse things worked out much better. You win more and make more on wins. I never know for sure if a break out is going to continue - so it is better to buy closer to the swing low rather than buying at the swing high, in the case it is not a valid break out oftentimes you can capture something from near the swing low entry to the high of the swing. You can't do that if you buy highs. Your stop is also tighter for better R:R.

    I always hold a low conviction of where price is going - but I participate in it buying as near the low as I can so:
    - if it turns out to only be a rally up to upper range consolidation I will still make profit
    - if it's a true break out above the highs I will make a lot
    - if it's a small retrace up for a lower move down I will lose a little bit or nothing if it retraced enough for stop to be moved up
    - if it's not the low and keeps going lower I will lose a bit. I'm buying what I think is near the lows, stop can be tight.

    Everything reversed for shorts.
     
  16. I totally agree with everything that's being said. You have to log hundreds and hundreds of hours watching price action to get the muscle memory and quick decision making skills. In Alders book he talks about the human influence in the markets. Yes it was written many years ago but he has updated it for modern times. I still believe the markets are made up of human beings and that's never going to change.

    I do not believe any amount of fancy computers can replace the skills you gain by watching charts for many many hours during live market action.

    I'll compare fully automatic trading to the idea that we will have robot cars driving us around. I just don't see that being widely adopted.
     
  17. Sounds like mean reversion trading. Works for me, too. Unlike you, I do it the modern way, fully automated.
     
  18. True and skills develop at an exponential rate when one begins to manually annotate & log the market's sequential Order Of Events.
     
  19. I think you agree with me. I just saw a recent article about how algo such are doing poorly.
     
  20. People are inherently better at complex pattern recognition than computers (why AI is hype). Even for Chess playing that is seemingly pure mathematical searching the best young players are better than computer Chess programs.

    The Financial Times Chess columist Leonard Barton wrote this in the Dec. 30, 2016 issue:

    "The US champion and world No. 2 [Fabiano Caruana] unleashed a brilliant opening novelty, which incidentally showed the limitations of the most powerful computers."
     
  21. Best chess programs have long surpassed best human players. Top chess engines (Komodo, StockFish) have a rating of 3400. The top human player (Carlsen) has a rating of 2800. He does not stand a chance against the computer. In fact, he is known to say that he does not play against computers anymore, as he loses every single time.
     
  22. No question intuitive function improves peak performance and charting by hand, trading manually speeds up the process but given time intuitive function can be developed whether one is using automated trading, AI, quantitative or whatever....
     
  23. Most people find "true religion" and go on professing that that's the only way forward, be it some technical indicator or high frequency trading.

    I flew to Asia recently and the dude sitting next to me was some sort of professional fighter (don't ask who he was since I have no idea, but people were asking him for autographs, so he must be OK at what he does). We chatted for a while and he said something interesting - "I learned judo as a kid and got good at it. But it teaches you to learn other things. You need to learn everything. If you wanna win, you have to kick, punch and grapple. You gonna be better at something, but you need to learn it all."

    It sounded to me like a true recipe for success. In finance, you can get good at something specific (quant, fundamental etc), but you have to know that other ways exist and try to internalize/learn as much as you can. Eventually, you will come up with your own unique way that includes bits of everything. It struck me that very few people in any field are willing to adopt this synthetic approach since it pushes them out of their comfort zone.

    How exactly do you think "quant guys" cheat?

    There is a good reason why everyone is so tight lipped about their methods (btw that covers most market players, including fundamental long short or macro trades). The only real edge in the market is doing something that others aren't and the best way to ensure that is to keep information from spreading around. If you see someone giving away gold, either it's not real gold anymore or they are somehow trying to swindle you.
     
  24. A very good comment. the part though about giving away gold is inaccurate. The open source software development community is that. Other non-profit social benefit organizations would also be a part of this movement. There are philanthropies, private clubs, religious organizations doing the same.

    A refugee's gold is very different than the 1%.

    What if one were to engage with an open mind, like a traveler in a foreign land learning the culture and language just as you suggest. Collecting a diversity of viewpoints, values and lifestyles is a bit more productive than superficial judgment.

    If what you say were true, the internet would have never come into being.

    Google is gold for me. Anytime I have a question, I have a buffet of possible answers.
     
  25. I remember a time when the local library was the way to find answers.
    Dewey decimals and card catalogs. Oh such times we now live in where ruffians can say "google" to old ladies and get away with it! My name is Fred. I am a cataloger. I design, build and sell catalogs.
     
  26. If interesting in delving into feel/impulse vs, considered action, Daniel Kahneman (Nobel prize winner) has several talks online about his life's work on systems of thinking. He wrote "Thinking fast and slow". He frames understanding of "feel" in practical application very well.

    Of the many, I like this older one for bang for buck (time).

     
  27. Nice results, and thanks for sharing the graphs.

    I wonder if you could make a comment about your stats. I realize that since you trade different instruments this might vary, but generally speaking, can you comment about your win rate and average win and loss? There have been so many discussions and arguments on the board about what is necessary and possible, and so I wonder if you would be able to provide a data point from your live trading experience. I'm mostly curious about ES, but if you also have numbers for GC and CL, that would be interesting.
     
  28. Are you saying FT and London Guardian chess columnist Leonard Barton is wrong. Kasperov just published a book explaining the psychological reasons he lost to Deep Blue in 1996. Title is "Deep thinking Where Machine Intelligence Ends and Human Creativity Begins." Basically, Kasperov was not playing against the Deep Blue computer. He was playing against a team of talented chess players (not world champion) and talented programmers who expressed their knowledge by writing a computer program. Kasperov says he was effected by the psychological tactics of the team.
     
  29. I am not sure if this thread is the right place to post this. My reason to say deep learning and neural networks are hype is that that those algorithms run into combinatorial explosion that human thinking does not. AI was first falsified in 1972 by Cambridge professor James Lighthill (search for "The Lighthill Report"). I have written a paper that shows Lighthill's computing limited by combinatorial explosion applies to current AI ("A Popperian Falsification of AI - Lighthill's Argument Defended" ArXiv:1704:08111).

    It takes some web searching to see why deep learning does not work for automated trading. In order to make neural network searching efficient enough to run on physical computers (avoid the combinatorial explosion), deep learning searching uses something called regimes. AI researchers are somewhat disingenuous in discussing regimes. I think they are just ways of pre assuming the probability distribution of what is learned. Try searching for meta learning and regimes. Deep learning works by assuming no black swans. It easy to design a sure fire option selling algorithm if say stock price distribution can only be Gaussian.

    The problems with deep learning and neural networks were understood in the 1950s by John von Neumann who invented neural network automata. Neumann wrote (quoted in "John von Neumann and the Origins of Modern Computing" by W. Aspray, p. 321):

    "The insight that a formal neuron network can do anything which you can describe in words a very important insight and simplifies matters enormously at low complication levels. It is by no means certain that it is a simplification on high complication levels. It is perfectly possible that on high complication levels the value of the theorem is in the reverse direction, namely, that you can express logics in terms of these efforts and the converse may not be true."
     
  30. What does Leonard Barton say?

    With regards to Kasparov vs Deep Blue, chess engines made tremendous gains since 1996 in their play quality. Humans made very marginal gains. Back in 1996, we could have a debate about whether humans are better chess players than machines. This debate is now over: there is simply no contest.

    These days, when grand masters play exhibition matches against the chess engines, they play with the handicap to "level the field". The engines start without a pawn or two, while humans have the entire 16 pieces on board.
     
  31. I beg to differ. I see it more like the blind leading the blind. Having read through many posts over at the Quantopian community, I couldn't help but chuckle at how clueless they were about market mechanics, microstructure, and execution.
     
  32. I agree, as it applies to trading.

    When it comes to developing software and working through different language semantics, there is nothing like receiving an workable answer to a troubleshooting question. I'll receive that gold every day.
     
  33. I can agree with that. Definitely some smart guys there.
     
  34. Could it be possible Kasperov was a sore loser making excuses?
     
  35. At the time perhaps he had a point, deep learning had limitations e.g. it largely regurgitated past chess games however https://www.wired.com/2016/01/in-a-...gles-ai-beats-a-top-player-at-the-game-of-go/ last year there was a big breakthrough.

    Deepmind trained against itself and hit new levels of proficiency. Apply this back to chess and Kasperov would not have a chance.
     
  36. Your post and comments are too technical and complex for me to understand. Are you saying AI cannot match the human mind in trading or are you saying the opposite?

    Thanks.
     
  37. What about in trading?
     
  38. In a rush out the door so I know this is unpolished.

    I am confident ML/AI can outperform humans in trading soon (the elusive issue of big-data derived "context" is cracked in 2017/18 probably) however trading is not a binary win/lose result like two player chess or go.

    Under these circumstances and accounting for the casino market rules (if they win every game, people stop playing etc.) I believe the upper echelon of human (mostly) retail will be fine, just a little squeezed but they will adapt.

    The CME and others will just change the rules to regulate the "Syndrome" effect. "When everyone is super, no one will be" etc.

    They need a healthy market, the perception of that anyway, "financial gas-lighting" to get retail and others to play will just get better. Some token humans will pied piper in the "liquidity providers" for years. Ok maybe a bit cynical there. ;)

    Slightly off my point but it applies to the <95% level retail traders also (who think they are being clever investing their own money), an interesting read. https://rpseawright.wordpress.com/2016/05/04/financial-gaslighting/
     
  39. What have you (and other successful traders) discovered in your travels that augment "feeling" as it applies to being on the right side of the market?
     
  40. I am saying that people need to be an integral part of trading systems using judgement and superior pattern recognition of the human brain. I think Linda Raschke has been saying this for quite a long time. Obviously back testing (data mining) makes sense. My criticism is aganst people who claim that new AI methods will improve to the point of eliminating people from trading. This is more technical but the AI hype algorithms such as neural networks (superceding human brain neurons say) are no better and less efficient than Monte Carlo simulations.

    I also think probability (not trying to find statistical significance that is good) is no better than computer brute force enumeration searching. Argument is that the P=NP problem is just an artifact of the wrong Turing Machine computation model. For the von Neumann MRAM (random access memory abstract machine with unit multiply) P is equal to NP or put another way there is no difference between determinstic enumeration programs and non deterministic probabilistic guessing programs, i.e. programs should use smart solution space searching using enumeration and MRAM RAM table look up something normal Turing Machines can not do. I have written a paper on this that I am trying to win the Clay Prize with "Philosophical Solution to P=?NP: P is equal to NP" (arXiv:1603:06018).
     
  41. I don't know the exact figures, and don't really care.

    They don't mean much to me as distribution is not balanced/random in intraday trading. For example, a coin flip is unbiased at the next toss. A trade is not to me. If I average 65% win rate trade in the long run, I certainly do not expect 65% on the next trade after a loss. Your emotion is depleted. You might have a wrong bias in the last trade that you try again. You might've flipped bias when you should've kept it. The long term 65% means nothing to me on the next trade.

    But if I had to guess I would put it around 60% and 1:1.6.
     
  42. Experience, no substitute for that.
     
  43. Excellent, thanks. I know what you mean that going forward there should be no expectation of what happened before, but I was just asking to get a feel for where your stops and target expectations. Sometimes people claim over an 80% win rate on something like a 1:3, which would be insane. Of course, some people even make money with a just a 20% win rate and hit it out of the park when they do win.
     
  44. I was pondering this when doing errands this afternoon. Hybridization and to what extent it has affected my trading. I maintain an advanced AI bot which largely runs unattended (took a year+ to laboriously correct errors) and I trade a few Futures e-minis discretionary (segregated accounts).

    I looked up how many times I have made certain queries, mostly what side of the market the AI recons it is on etc. Turns out I "peeked" into it about once every 6 days.

    There are two pretty savage drops caused by poor calls in the attached CL and ES combined equity curve, these coincide with:

    a. Me being ill (2)
    b. Me moving home (1)
    c. My bot being offline/updating for both.

    I have a pretty good second opinion and am effectively a hybrid AI/human trader already to some degree.

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  45. Final update for this account as this account is being closed and rolled into a new account as IB has set up new Australian entity.

    Following the establishment of Interactive Brokers Australia Pty Ltd (IB Australia), who holds an Australian Financial Services Licence, number 453554, Australian residents maintaining an account with Interactive Brokers LLC (IB LLC) will have their account transferred to IB Australia as IB LLC intends to cease business in Australia.

    Hopefully regulations are sorted out and we get to trade spot FX as well.

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    Took a hit 2 weeks ago that ended my 28th net positive week streak. Thankfully was able to recover it the week after with some big wins.
     
  46. I make 10% on my account a week, and also don't post a single live trade here.
    We must be related
     
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    Rest of year