Thanks for answering my question. Allow me to paraphrase your view, so that I may get it right. Based on your last couple of sentences, what I am inferring is that you trade looking more at the fundamentals, using probabilities to manage uncertainty in the eventual outcome. In a sense also, taking a bet that a view. May I just go one step deeper on how does one "quantity the future", resolving uncertainty into an absolute number, translated to the risk reward ratio of a trade. Follow on would be, then how should retail traders trade, you could keep it broad, in order to avoid it being challenged and bring the conversation off tangent. Let's keep it focus. Side comment, I am seeing the contrast, which I believe is good and beneficial to all. Thanks to you, Db, and others who contributed. ETA
I genuinely like the posts of IAM. Would be a shame to see a good poster hounded off the boards. Too many good posters have left ET already. Maybe you weren't being sarcastic? Don't agree with everything Surf writes but wouldn't want him to leave either.
I am sorry, personally I don't see any issue with my sarcastic style. BTW, I think your style of frankly speaking is good and positive! Much appreciated!
If a poster has been on ET for long time, sarcastic could be one of the best ways to Just survive! lol
Sure, i apprieciate the opportunity. However, I don't believe DB answered your question, unless i missed it. Yes, painted with broad strokes, you are correct. our system attempts to quantify fundamentals both economically and on the individual instrument level. we take over 100 factors that result in price movement, assign a weight (number) to each based on past instrument reaction to the same stimuli then plug this into a formula that provides a bearish to bullish bias on the instrument at the time--hence the Price Drivers. I am fortunate enough to have a group consisting of academic and finance pros who helped me develop this system. the more extreme the reading, the larger the trade, up to the max risk size of the account ( its controlled) and often the entry is done in stages ( livermorian market testing) but not always. Risk should then be controlled by using ATR either daily , weekly or monthly depending on a variety of factors one of which what releases, and other price moving events are expected in the future. But not always. Flexibilty remains key as fixed systems ALWAYS lose. I couldn't believe that traders were using computer power to draw charts of price then guessing on the next permutation of price but using scientific words to describe what they were doing to attract others, make thrmselves feel better, or just ignorance. It seemed absurd to me. Like making a chart of roullette or something. We firmly believe, and think it can be proven ipso facto that price DOES NOT predict future price-- this is so obvious to us despite the fractal illusion and other delusions of "price action" which has ruined many many traders. surf
You mentioned a couple of books that influenced you as a trader. I have a question. I remember that you do not use historical price to forecast the future. In the book, evidence based TA, it uses historical price to design rules, that regulates a trader's entry and exit. It involved a lookback into history, Data mining is a form of utilizing historical price. What is the takeaway in this book? ETA
Aronson tests 6400 technical rules on the S&P 500 in a proper, scientific manner -- noting that NONE provide any statistical edge. The book clarifies the proper way to view TA-- if you use it. In addition to making clear the inaccurate observations of price action TA traders that lead to their delusions. This is one way i know that the claims and teachings of these folks are completely wrong and ineffective. Im curious to hear the scribblin price action folks response. What's your testing? Why do u believe what you do? Silence as expected. Personal attacks and platitudes don't count!! surf PS. I would look into the teachings of one of my direct mentors Victor Niederhoffer for some color on my thought process-- certainly not all of it, but its a starting point. If anyone is unfamiliar here is a decent primer http://www.wsj.com/articles/BL-FAB-2488