Quote from jack hershey: I front run the smart money on any fractal I trade. For stocks, it used to upset the SEC until they got better programmers who could differentiate front runners from insiders. It was a fun period. Jack, are you becoming to big to fail? I imagine the SEC has an entire division devoted to following your trades. Oh, and speaking of "using your stuff", what exactly is that stuff you've been using?
I guess I have always been a squeamer. It comes from the basic idea of helping to solve local problems. Trader power is needed. Who better than a rational person? I have met some of those traders who are experienced and who behave as you indicate. They do fold into their trading the cautions that come with fear of the early unknowns they had to deal with. Many doing the drawdown thing is a caution as well. I entered trading right out of grad school and put 50% of my salary into the markets to bolster the 300 dollars I began with. I did not have to pay any tuition it turned out. When I noticed my salary was less than my commissions I rethought the concept of working. Working wasn't in the cards for me. Working my way through college meant eating twice a day and having a few jobs running but I did get an extra course a term by juggling schedules; tuition was flat rate then. Heart-hardening is an idea I haven't considered. Basically, a person's job is to help others. TZ's experience and heritage is what draws him to detract from others. Specifically, he may have looked up my marriages in the NYT and checked the NYSR. I doubt it, though. There is a difference between him and me; we have little overlap in any way. I think he has worked all his life and in an occupation that requires keeping very current. I have just used the same old and tweaked it here and there as technology came into being. Keeping up with technology in the financial industry is easily done. As you point out the paradigm shift does have its own vocabulary. People do not shift easily from an up down orientation to a market left/right orientation. Being forced to create a paradigm based on science (deduction) was done from day one. Seeing the market's offer has always been the standard; there is no other, actually. Why TZ uses the CW measures is beyond most traders who have successful methods. I think in my case he is phishing 27.4798034 percent of the time (to use a Bwolinski misuse of significant figures expression). How long will it be before anyone follows his instructions to prove something to him? The evidence is in on who posts at public places to bild a track record. The years and years of posted third party results are in. I do not think thgis could be TZ's standard for whatever he says he needs proven. His miscues on the literature are classic. Some jokers tested 15,000 rules and felt rules do not work. TZ cites a test of 10 or 12 formations. In the data were two that were smashingly successful. They remained unseen by the authors for some reason. A head and shoulders represents 6 trading actions, the authors did not notice this either. And mostly everthing TZ quotes or refers to leaves out half the market variables. I regard this omission as one that eliminates any validity in research. Covel writes in his intro which follows a foreword by a guy who makes 20% a year: "This book is the result of an eight year hazardous journey for the truth about trend following." Covel, like TZ's references, does not list volume in his index. Covel like TZ finds my gift to him (the pattern) to be gibberish. For me, getting viceral has to do with meeting nature on nature's turf and handling the offer (gliding, sailing, blackdiamond skiing, shooting rapids, etc...) or doing trauma center work on weekends 2nd and 3rd shift. None of this makes person hard-hearted either. TZ's commentary has never gone an inch above chicken shit superficial crap. He knows nothing, roughly speaking, about taking the market's offer. There is nothing to even debate with TZ since his posts have zero informational content. Trader666 once got to the point of posting something technical. It was a disaster in statisitcal significance and apparently he did not know it. TZ would not have known either if he had replicated T666's folly into backtesting. We get to see this crap passing through on ET unmoderated since math and science is not moderated on ET. ET could use a couple of moderated places where serious dicussions could be held. The journals we supported had good moderation and the discussions were productive for the participants. Most academic publications have some sort of qualifying of articles. The financial industry does not. TA certainly doesn't anywhere either. TZ gets sucked in by what he deems to be authoitative. Again, it is a result of his heritage and then experience. Most traders do not make it past assessing and being beginners who learn repeated failure. By enlarge they do not get or listen to input. Of those who trade our paradigm, there are some common traits. Not many are beginners for long. All of them do put in a lot of work. A lot of reflection is found in the journals. spyder's name for the last one says it all: Iterative Refinement. As a five year effort, it paid off in spades. All in all, the detractors keep ET members interested in what can happen to a person who doesn't "get it" for any thread's topic or ideas. I regard all members as adults. Each person is at choice and each person gets the consequences of their choices. As indicated some people come here with a construtive attitude; others are detractors. Today, a detractor depicts me as the pied piper. He ID's himself quite clearly. I can hardly wait for the green curtain and the yellow brick road to show up. Both very good color choices as you see in my long term costuming. I better feed Toto.
My approach is to give away what I do not need. Anyone can fail; I certainly fit into that group. Humor is a great thing. Your imagination proves to be very helpful to all of us. I do not do anything new, roughly speaking. What I do, however, is very effective and efficient. Effective means my mind is differentiated and efficient means I take the markets offer since my mind is differentiated. There are a couple of "one pagers" that present the whole nine yards. Some details are found in the five journals we ran for five years plus. Your humor is delightful. Sorry you missed it all.
This is of course the key question. If it were possible to tell when a market trends and when it chops, making a killing would be plum easy. I would stay away from the choppy markets altogether and use a volatility-based trend indicator to trade with the trend. Works so well in a trending market it's sick! One thing I have noticed that I don't hear people talking about at all, is that trending markets always seem to alternate with chopping markets in a rather predictable rhythm. That is, if a market makes a good move, it is often followed by a period of choppy consolidating action before a new trending move emerges. This choppy action is signaled, for me, by the first whipsaw following a good trending move (that's of course all very discretionary, but I can't do better yet). I have noticed that whipsaws usually come in groups, especially after a long trending period. After your trend indicator of preference signals a reversal, if there is a quick whipsaw, most of the time there will be a few others--usually 3 in total, but sometimes as many as 6. Thus, when my trending indicator gives me a reversal, I take it, and if it turns out to be wrong, I wait out the next two signals. Also, I pile indicators--and yes, I know people make fun of this and object to it--to filter out all but the most clearly defined moves. The theory is that if a bunch of different types of indicators (volume, oscillators, moving averages, statistical analysis, etc.) are all saying the same thing despite being based on different criteria, that should indicate a higher probability trade, whether you think the market is trending or chopping. Earlier this week, I asked if anyone could find the formula for the Damiani Volatmeter, which indicates when the market has moved into trendable mode vs. when it is choppy and untradable. It's essentially a permission filter, allowing trades only when the market is most prone to trending. Unfortunately, I just got made fun of for asking about this indicator, which admittedly sounds an awful lot like a holy grail. Still, if you can get more info on this supposedly excellent indicator, that may be just what you (and the rest of us) are looking for. Steven
Several of stevenpaul's observations match mine, although not in all particulars (whoda thunkit). One thing I've noticed across a wide range of markets is that after a major trend in one direction, there's a period of time during which indicators of trends in the other direction are much less reliable - it's somewhat rare to see a chart with a major trend up followed immediately by a similar sized trend downward (or vice versa). This is true even if the setup looks golden in terms of volume and price action. I think a wide range of trend following systems that are break-even or small losers could be turned into winners by skipping those signals.
Apologies for lowjacking this thread into a dialogue with Mr. Hershey on trading philosophy. Just put us on ignore. Your reply to me was far wider ranging than I have the leisure fully to respond to, but do I want to comment briefly on your view of strategy testing. If I am following you correctly, you view it as the pinnacle of what you refer to as the conventional wisdom. And as pernicious encouragement by the trading services community to traders to suffer the self-flagellation of significant account drawdowns. In my opinion this ties into your oft-criticized admonition of "never a loss." I took that to be a slight exaggeration, meaning in truth "never a (big) loss," which I fully support with my practice of tight entry stops. But I do not think strategy testing is as worthless as you seem to imply. When I first started testing I was filled with the typical delusionary vision of the silver chalice. After following the seven steps of loss, in about as many years, I quit looking for what works and made a paradigm shift to rejoice at finding what doesn't work. Hardly a day goes by that I don't code up the algorithm for some new wild hair up my ass. And the unbroken string of failures in recent years convinced me, and keeps me convinced, that only an understanding of the intimate mechanics of the market provides the path to profits. Where I am going with this is that here and there I have found bits and pieces of what you write about to be instructive, if not always in the ways you intended them to be. Your application of inductive reasoning comes to mind, most notably in "What wasn't that?", although Alan Farley deserves a footnote for his "Hound of the Baskervilles." Also I have found an application for "pace", though not quite as you described it. So, to Mr. Zones, know thy enemy if you want to be a better critic. The ever-present danger, of course, being that you may become more like him.
You need to go back over the last couple of years, and realize the huge number of detractors that Jack Hershey has on ET. They outnumber his supporters by an order of magnitude or more.
Let me be clear that I am neither attacking nor advocating him. I am merely sharing my experience that at least some of his ideas have merit. My highly personal view is that he is insufficiently quantitative and excessively theoretical, verging on theological. But like it or not, there is much originality in his teachings. Certainly makes you think, even if in the end your head hurts. I try to read everything he posts. It helps if as Coleridge advised you willingly suspend disbelief. I speed read him, aiming for an unconscious gestalt. Some of it tends to make sense later, sometimes surfacing as my own idea. Regarding his detractors, their rabidity makes their rationality suspect. And how can you tell how many of them are posted under multiple user names? A lot of it seems to be cut-and-paste repetitive.