And personally, I think you are doing a good job at it. It is certainly interesting to watch. Frankly, lots of CTAs that I know are down this year. Bernanke literally killed the vol, so it is hard to get any traction at all.
Well, because I have no idea of what a trend is (except being a meaningless representation of what had happen in the past) I consider those returns a coin flip trading. However, looking at my sentiment gauges I get a very strong feeling, INTUITION if you will, that buying some cheap way OTM October puts is not a bad investment these days.
If this is random data it's not very good. While this chart sample does not clearly exhibit the rules of mathematical relationships or human psychology like the last chart did, that can be because the data sample is too small. It appears to be close to random data from what is shown here, but it is not excessively random - just enough to throw curve balls and I would need to have it in my own software to test it properly. So my guess is it's random because there is not enough for me to go on. However I have seen real charts like this. So let's say it's a real chart - what do we do? Can it be traded when it's a mess? Most certainly it can be traded because we can ignore price and concentrate on what information is screaming at us. It has direction, momentum, time and energy. We are also over simplifying the movement by restricting it to two dimensions, but let's accept that confine. The biggest vulnerability in the fabric of the market here is Time plus Energy creating momentum. I don't need a perfect chart if I can get a grasp of where it is in relation to time and energy. In other words, something bigger is pressing down on this time frame and that is the point of control or the boss as I call it. Now I can't reference it here, but I can see the effects. In order to crack this chart, all I need to do is go up in time frame and get my measurements there.
Based on that chart, I'd take that challenge of proof and win. In fact that chart is a gift. Without trying to be a smart ass, I know I am in the 0.1% if for no other reason than the fact that I don't do what anyone else I have seen does. I blame mum - she's autistic
This indicates that all traders using TA should break even minus fees. What could be said about a trader that looses more then the fees? This should be impossible as you say. Yet there are many that loose and few that gain. Those that say they gain tend to be very sensitive to fees which is a petty small amount when you consider the investment. Here the winners have a slight advantage, just like a coin toss being skewed 1% either way for an extended time. They cant capitalize on the gains cause it is not them that make it. It is simply that they take on trades that tend to even out over a longer period of time. Within the random data, exists trades that trend and other trades that even out much faster. So in this case the winning trader tries to postpone things. He may do this for years when things start to show that they are reverting he can switch up staratgeis and start over. Each strategy becomes like a trade in itself. The less strategies you have or the less trades you have the higher your chances of profit (or loss). Its all about the art of kicking the can down the road. and as long as one has a short life they are fine. Fine, what about the trader that is consistently loosing beyond his fees? These are usually newbeis that fail and then learn to take emotion out of things and use a "system" Then they then rewarded by a 50 50 break even. The fact that they begin by loosing is a key here. It suggests that there is an advantage when one trys to guess, they have non random results. We are not talking about a 10% disadvantage, nor a 1% like our winner. The conclusion that can be made is simple. The market runs in a way that is inversely propionate to human psychology. The tool is given but associated with lose, so it is discarded for other ideas that have a 1% edge. After all the market is only what the person on the other end wants it to be. if you buy off some one that is has a pattern you get a pattern, if you buy off some one that sees random you get random. If you buy of some one smarter then you you get screwed. A market is what the other side wants it to be, so it can change. use a random entry which does not look at what type of day it is and you influence the market to be a nit more random.
I see a lot of the price action corresponds to various diagonal lines serving as support & resistance. Is that some of what you mean by mathematical relationships?
Yes, some of it. Time, energy, space, PA, S&R and the actual flow are all directly related mathematically.