Surfer... Trend following vs coin flip.

Discussion in 'Trading' started by jem, Apr 12, 2013.

  1. jem


    Go to that thread and look at the chart posted by convertiblity...

    go to the bottom part of the chart.

    Where it says after any (S&P 500) 3 month high.
    One year later 86% chance of being higher.
    Similar stats 1 month (63% chance of being higher) and 3 months later (76% chance of being higher) .

    Now compare that to any 3 month high for heads.
    I hope we put an end to your b.s. about the market being like a coin flip.
  2. Time frames need to be distinguished. Shorter the frame the more randomness and lower win percentages. As you increase the interval winning percentages are directly related not only to the length of your trades but highest rr, too.

    Surf does not ever articulate these things but when he does... Wait, he never does, since the chart doesn't do anything for his decisions the research that might have made him realize this just isn't there.

    So, intraday more randomness, lower win percentages and more optimal parameters found thought asymmetrical max risk reward.

    Longer time frames allow for relatively higher win Percentages to shorter ones and will have optimal risk rewards more closely apart percentage wise than if you were looking at shorter ones, and these are empirical results you'll find through real financial research especially in live intraday trading, swing trades and qUarterly to annual position buying and holding.

    Jen also the stats you posted are statistical anomalies that do not account for the forces of supply and demand and so are irrelevant bc that information is more implausible as a source of income than any of the real trading strategy methods that should be used in lieu of these ridiculous statistical asides about when that happens this happens a certain percent of the time bc that isn't trading or a strategy. It's what happened not whether supply or demand is pushing or pulling us away from where we are now, and that statisticif it is explained correctly and qualified would make more sense as an aside than as an absolution that hangs out there as if you could always count on it.
  3. jem


    I am not discounting the value of finding signals which indicate real demand or real supply... I would think that is the point of most fruitful systems research.

    But, I think you are discounting the value of new high.
    The question... is... is a new high likely to be a good signal that there is strong demand... I think the answer historically has been yes... when the highs have been separated by enough time.

    In fact I am sure stats like those are why some trends followers now own professional sports teams and some mean reverting hedge funds have blown up a few times.

  4. Let me assure you the systems that do this do not get signals for anything to sell or sell short or within trends are already long. It's not profitable. The freak shows that finally explained why the percent success rate was so high were using 0.1% up as proof positive it can be profitable. Don't buy into this. U sb long b4 this and not bc it pays to take positions there. Higher lows indicated entry points there before it resumed making new highs and when this happens the best systems have already traded anticipating this.
  5. jem


    I would be assured if you wanted to send me some successful systems coded up in tradestation or something so good it would be worth investing in your infrastructure.

    Till then I believe it depends on the market.
    there are times when the IBD strategy kills it. And times where you can just about fade all new highs.

    Unless you have enough money to trade every signal on every stock and future you have to pick the ones you will trade.

    There are times to trade breakouts.

    I remember about a 3 month period when I first started trading you could buy the drug stocks after every consolidation. almost every day.

    The market is noiser now... but that may be in part because we are not trading new highs in most markets. However if we get there because of inflation, eventually the faders run out of guts or money.