The Flip-A-Coin trading strategy and lessons learned from it

Discussion in 'Psychology' started by NET, Dec 28, 2003.

  1. Net, I can't possibly more agree with you and be happy with the road you're following.

    When I early in my career did the coin flipping experiments I was ridiculed. That muted when the results showed up.

    With this experiment you'll find for instance that money management will not make or break a 50% edge strategy. In fact it will not matter the least. That is IF there are no trends!! If the market shows just the slightest bit of trendiness you will make it big depending on commissions and slippage.

    Thanks so much for bringing back these fond memories!!

    Cheers,

    t4s
     
    #11     Dec 29, 2003
  2. NET

    NET

    Bbmat...

    Your post helps me understand that communicating an idea is not so easy.

    Evidence suggest that the majority of traders wash out. I think I'm just beginning to understand why (really understand why, not just intellectualize it).

    I believe this board is psychology, not trading systems. If something works to break a trader out of a tail spin, is it worth sharing? Or shall we withhold to not make the critics sick?

    I'm convinced that most traders do not lose money because of bad technical analysis--it's because of psychology.

    Early in my post I call the Flip-A-Coin strategy ridiculous. However, when my trading edge was reduced to just flipping a coin to improve my odds, that suggested a trip to the mirror (i.e., self reflection) was in order.

    This created a profound change in my trading, because I NOW look to TA to give me an advantage on entry over a coin toss--nothing more. This forces the recognition that entering a trade a gamble on probabilities, and one must be IMMEDIATELY prepared for the wrong probability. Prior to this way of thinking, I was striving to be "right" on every trade, and that effort was not only futile, it was taking me out of the game.
     
    #12     Dec 29, 2003
    Apophenia likes this.
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    #13     Dec 29, 2003
  4. Pabst

    Pabst

    Pabst
    Elite Member

    Registered: Dec 2001
    Posts: 1516
    12-29-03 12:04 AM

    Net: Oldtrader is part of this old school of philosophy that thinks you need to know whats going to happen if you want to make money. Since reading Flipping Your Way to Financial Freedom two years ago I've changed my life. The dirty little secret: Everyone from Soros on down is using coin tossing entries. Some of the more sophisticated funds are working on exit strats with both coins and decks of cards. I don't want to get into some of the more esoteric derivatives trades involving dice throwing but I will say, if you see me roll snake eyes, cover your short options premium! I'm trying to cut down on my trading and the number of signals generated by flipping. I'm now taking an average of 13 flips with a 34 flip crossover. MUCH smoother equity line. GOOD LUCK NET!!

    bbmat: IMO only a total idiot like yourself could not recognize my post as 100% sarcastic!!!!
     
    #14     Dec 29, 2003
  5. why won't you even consider fundamental analysis to identify potentially profitable trades, entry levels, and exit levels? That is all I am sick off: At ET, TA is often presented as the only valid alternative to random picking. Newcomers, reading such posts, jump on the bandwagon and have no idea there are alternatives to TA (I wont argue against TA here).
     
    #15     Dec 29, 2003
  6. Sorry Pabst,

    shame on me. I have not read the last 2-3 lines of your post (although I now admit it was the best part) and therefore apologize. However, there are tons of guys who really belive in what you just wrote about. I should slow down and take back my criticism about your contribution!!!

     
    #16     Dec 29, 2003
  7. Pabst

    Pabst

    No prob!! Thanks bbmat.
     
    #17     Dec 29, 2003
  8. coffee has asked me to comment...so I will (but don't know why I was asked, care to comment on that coffee?)

    What NET has described is not terribly far off from my own path. It is what I have tried to convince others of on this board (and elsewhere) for eons. You can NOT know what will happen next. And of course, you don't need to.) Problem is, there is an underlying human need to know. The need is so powerful that most of us will do anything, up to and including self sabotage to get that certainty. That's why 95% fail at this game. These losers simply can't give up on the need to know.

    TA is successful (for those selling books, seminars, videos, etc) for one reason only: it supplies it's followers with some level of certainty. I'm not using coin flips (I have discovered something equally simple but far more elegant) but had the same shift in thinking. The shift from trying to "figure out what's going to happen next" to " I can't know anything but my risk".

    For me, this shift was caused by studying TA so deeply, seeking the underlying concepts in such detail, that I got into sort of a double bind. I finally got to the point that I could use TA to equally call any given market scenario as a great short or a great long. Boy, did that give me a headache for a while.

    Fundamental analysis is equally weak. Just try following supply and demand in a commodity market for a day, seeking out all the nuances in the beliefs and behaviours of the market particapants that directly effect the s/d curve. No neural network in the universe can deal with shifting supply/demand curves based on human pyschology in real time.

    Coffee, I don't see any need for a shift in NET's "map". He followed RULE #1 to the letter of the law: if what you're doin ain't workin, try somthin diff. RULE #2 is even more interesting and creates even more argument from the masses: if what you're doin IS workin, try somthin different too.

    Congrat's NET, I suspect you got it. Now run with it!
     
    #18     Dec 29, 2003
  9. nitro

    nitro

    LMAO

    Do you remember the guy that wanted to trade spoos using the california lotto numbers for entries and exits - that took the cake :eek:

    nitro :D :D
     
    #19     Dec 29, 2003
  10. MRWSM

    MRWSM

    Soros? I saw him in an interview with Maria Bartiromo. I'm not so sure he has progressed to the point of using a coin flip for trading. According to his own statements his secrets to his trading (which were advertised all night until the show to get you to watch) are solely based on his back aches which tell him whether to buy or sell. When he gets a really bad back ache he knows to sell. If I didn't know he was a Billionaire, by just looking at the way he carry's himself and his statements I would think him to be very ignorant.

    Actually this thread reminds me of another poster who has been 2x short QQQ since May and has called a top just about 3 times a day since. I suggested to the guy that he must not be flipping a coin to come up with his calls otherwise he would have gotten a few of them correct.
     
    #20     Dec 29, 2003