Discretionary Versus Mechanical System Trading

Discussion in 'Strategy Building' started by Murray Ruggiero, Nov 3, 2005.

Are you a Discretionary or Mechanical System Trader ?

  1. 100% Mechanical

    35 vote(s)
    30.4%
  2. 100% Discretionary, Charts, Indicators, no systems.

    39 vote(s)
    33.9%
  3. Use mechanical systems as indicators

    12 vote(s)
    10.4%
  4. I trade with systems but use discretionary trading to sometimes override them

    29 vote(s)
    25.2%
  1. cnms2

    cnms2

    Mind will help you some times will let you down other times. Statistics is objective, but can be brought down by mind: both through data fed in, and through result interpretation. You have to use them properly and cautiously. :)
     
    #41     Nov 6, 2005
  2. What is the difference between "wishful thinking" pattern/trend following and projecting statistically "significant" numbers analysis from the past into the future? Both are just predictions that what has happened will continue to happen. But anything that appears to "work" reliably in the past can start to fail miserably tomorrow; anything that appears to be random and statistically insignificant today can become the holy grail for the next year. Same achilles heel.

    Pattern/trend followers and statisticians seem to share more similarities than differences to me.
     
    #42     Nov 6, 2005
  3. I completely agree that any pattern found in a simple univariate time series is bound to completely disappear sometime, the trick is to find 'hidden' time series which are constructed via other means that display short term patterns which persist over a long time that are not visible to the majority of traders.


     
    #43     Nov 6, 2005
  4. cnms2

    cnms2

    One difference: TA works on equity indices as well as on equities, trend following doesn't work on indices. TA indicators measure market internals too, price shapes don't. Both rely on statistics but on different sets of data. Now: I agree that a good trend following system could beat a poor TA based system. But I can't imagine an indicator as MACD stopping to work.
     
    #44     Nov 6, 2005
  5. And how can you tell when that pattern you trade ceases to be significant and becomes no better than "random"? How can you tell that a period of drawdown in only a temporary setback, or a sign that your signal has truly lost predictive significance? How many times does it need to fail before you stop using it?

    Isn't this the same issue facing those that jump onboard a trend and hold until it appears broken, albeit on another level? That is, staying with it while it works, and getting off when it stops? The same issues of rear-view projection apply in both cases.
     
    #45     Nov 6, 2005
  6. The patterns I've found are deep and persistant and change very slowly over time. There are temporary diversions from the long term during the day which I take advantage of and hedge appropriately. Basically, for the patterns I use, all money managers and traders in the world would have to have to agree at once to change their methods at once in some sort of grand conspiracy. These patterns do change, but I optimize daily and thus my models self-adapt to changing patterns and are always scanning the markets for new ones.

     
    #46     Nov 6, 2005

  7. Hey Harvard boy use the spell check !!! LOL
     
    #47     Nov 7, 2005
  8. LOL!!! Like a troll, you just hang on to everything I post. Spell check doesn't catch that because it IS spelled correctly. You misread the error as a spelling instead of grammatical. Punch in the sentence and run spell check, you will see that it does not find SEAM as misspelled. ET does not come with GRAMMAR check. "Jibberish" is the misspelled word for the record. What a piece of work you are. Your handle is getting handled all the time. :cool: PATHETIC!
     
    #48     Nov 7, 2005
  9. Your ideas reflect the same attention to detail you give to grammar and spelling. Mullet...
     
    #49     Nov 7, 2005
  10. Discretionary is winning:

    http://www.barclaygrp.com/index.html

    Q

    Barclay CTA Indices => October ROR† => Percentage of funds reporting => YTD through October†
    Barclay CTA Index => -0.17% => 84.31% => -0.72%
    Agricultural Traders Index => 1.41% => 58.33% => 2.82%
    Currency Traders Index => 0.53% => 82.05% => -1.36%
    Discretionary Traders Index => 0.29% => 77.63% => 5.96%
    Diversified Traders Index => -0.93% => 84.34% => -2.73%
    Fin./Met. Traders Index => 0.66% => 86.11% => 0.55%
    Systematic Traders Index => -0.20% => 86.36% => -1.79%

    UQ
     
    #50     Nov 17, 2005