"inclined" to codification, no magna, i demand it as would any rational being. Personally, mine is a work in progress, but one worth striving for. What amazes me is not that most do not have their trading codified, but that they don't even see the need or the logical inconsistency when they reason it.
Intuition is usually based on experience. The recognizing, semi-consciuosly, of something that has happened before. If an inexperienced trader has seen a pattern happen only a few times before, he will get a "feeling" of what the next part of the pattern will be. This would be called intuition. As the traders experience increases, he will have seen the same pattern many, many times, so he will get more than a "feeling" about it. To him it will be "oh yeah, I've seen this happen before". He will have a good idea about what will happen next, and he'll know why. I don't think you'll hear many experienced traders talking about intuition.
Dottom, Now ,that's not fair ! The loser should pay the average daily profit of the winner to the winner. The more the winner makes the more the loser has to pay to the winner. Are you already expecting to lose .......?
If you guys really want to compete, why don't you compete in the market and then fax someone a copy of your December trading statement and let them declare the winner. Use % gain as score. They'd have to be willing to do it though. Maybe one of the senior members.
Rigal, I agree with you. But in place of this vague sense of pattern recognition, would it not be more fruitful to identify the specific variables that trigger these "feelings", ie that make up this market "intuition", and examine them for validity and utility? In this way, you would have an explicit understanding of what & why you were reacting to, discard those variables that contributed nothing but noise, expand upon those that did have predictive value...sharpening the signal:noise ratio. Simply put, know why the hell you're doing what you do when you do it! I feel almost silly having to defend this position of bringing more understanding to the trade..... My GAWD~~~isn't it SELF-EVIDENT!? FIREHAWK
dottom & sabena, It doesn't really matter what the outcome is to your little contest. Nothing will be proven. The argument stands on its own merit and is irrefutable~~~ MORE CLARITY [mechanistic approach] IS SUPERIOR to LESS CLARITY [touchy-feely intuitive approach]! It is a self-evident proposition, deduced, a priori. FIREHAWK
No I am not, but I am not here to flex my muscles or to gamble. If I went from $100k to $300k in 6 months you would owe $1600. Fine, let's go for a fixed amount. 1k even. But we must have predefined, verfiable way to monitor results in real-time, and rules for resolving any disputes.
The problem with this method is there is no way to verify the account statement represents actual trade results of the discretionary system Sabena is using vs. the particular mechanical method I will be using. For example, I have somelong-term options that I am holding til expiration as well as stocks that I am holding to qualify for long-term capital gains. I'm going to spend time going through line-by-line to explain 6 months worth of brokerage statements. % gain does not adequately characterize the risk parameters. There's also the requirement to normalize starting capital. If it's just % gain then open one account and bet it all on some agresive stocks, open a second account and bet it all on the opposite signal. A waste of time, yes, but if we're going to make a bet of it I want a fair one. But more important, using a third party like auditrack allows this entire group to benefit. We can analyze trades in real-time and discuss discipline/MM issues similar to how Hitman/STOCKBROKER have brought a lot of value here. I have no desire to compare how big my monitor is to Sabena's. 6 months worth of comparison proves nothing except maybe who is serious and who is not. I would only do this "challenege" because there is more value in sharing ideas as part of the process.
I think most discretionary traders have internalized trading rules that they have learned through experience/teaching/observations but are just unable to explicitly describe those rules. Some traders insist they need the squawk box to get a feel for trading mood/activity. This would require advanced computing to simulate, assuming the discretionary trader could describe that inputs they are responding to. Some traders require Level 2 quotes to read the tape, but cannot exactly describe what they are looking for and how that affects their decision to buy/sell/hold. Some traders look at several different stocks & indexes simultaneously and make a decision to buy/sell/hold based on some combination of behavior between them (e.g. sector leaders, laggards, etc.) What these things say to me is that it is very difficult to describe the processes involved in making a decision with the above (and additional) input, not that a mechanical trading system does not work. If you doubt the ability of a mechanical systems, I can give you numerous examples from the futures industry. [Maybe someone else can comment on stock-based systems- the successful system traders I know trade futures b/c if the system works futures offers better returns. There are numerous public systems profitably tested at <A HREF="http://www.wealth-lab.com" target="_blank">wealth-lab.com</A> and you can ask on the chat board there how they are trading it in real-time. I use modified version of two of these systems myself]. I've already mentioned John Ehlers as an example of systems that have been created many years ago but are still profitable today, with managed brokers who will trade the signals exactly as is signaled by the TradeStation module for you. You can lease the system on a per transaction basis from Ehlers or purchase the Tradestation module yourself. Ehler's has 9 participating brokers, with references and brokerage statements to backup the performance of each system. Ehler's has both intraday and EOD systems. <A HREF="http://www.trade-system.com/aberration.html" target="_blank">Aberration</A> is a well-known system that was released to the public in 1993. It is very simple based on a simple calculation. It has been profitable ever since it's release without changing any parameters. That is 8 years ago. The link above will show you results from 1980-2000. I don't have results for 1993-2000, but how about <A HREF="http://www.trade-system.com/realtime.shtml" target="_blankj">actual brokerage account statements for 13 months</A>. 13 months only gives you a glimpse and is not conclusively, but I am only offering bits of empirical data so you can make your own conclusion. The late Bruce Babcock developed many systems and traded strictly based on these systems. He also managed several funds. <A HREF="http://www.rb-trading.com/sysinfo.html" target="_blank">Real-time results</A> of three of this systems can be seen from 1991 to present, averaging 45% per year. There have been good & bad reviews regarding Babcock. I have never purchased any of his systems, but you have to respect the long-term, real-time brokerage statements that are available for verification. Vlad has been posting live signals of his <A HREF="http://www.spb.addr.com/index.html" target="_blank">intraday system</A> since October 2000 and has been under the scrutiny of misc.invest.futures on Usenet. His EOD system has been issuing live signals since March 2001. His intraday system with 12 months of live signals has made 627 S&P points, or over $31k profit with a single emini contract. That is over 380% annual return with 2x margin and no losing months. He uses a conservative rule for slippage by rounding down to the unfavorable integer. That is at least 0.50 per trade and as much as 1.50. I know the system parameters and have verified them for myself. I have no affiliation with any of the above, just some obvious examples that come to mind. I offer them as tidbits of empirical data that systems-based approach works.
FIREHAWK, "Let's bring in some sanity..." Absolutely. I agree. It seems self evident. But, you see, I have this special gift, some people have it, some people don't........., it takes a certain breed..........., HaHa YukYuk. Oh, and I forgot, my spirit guide! HayhayaHayahaya, and my mantra '"un-yelliman, uuuuun-yelliman!" Sincerely Rigel P.S. Also, sometimes, to remain sane, it helps to remember the concept of epistemology.