the only way you can make money directionally trading is to be with the trend, and you are only with the trend if you are making money on a directional trade. however, the trend in and of itself is not quantifiable, testable or tradeable consistently in the traditional "trend trading" ways. when you enter a supposed trend, there are no greater odds of it continuing from your entry point in the same direction than a simple random entry at the same point in time. that is all i am saying--not that some trend traders dont make tons of $$.
I personally think that it is very difficult to mathematically test the concept of 'trend' because one needs a time-frame of reference. Timeframe is ambigious and is different for different people. If the next 2 ticks are down, to someone, that's a downtrend. However, to another, they are only looking at monthly data points, etc.
Hank Do you really think that these trend traders would make tons of $$ on systems that are firing off signals that would be no different than signals from a random system? So they are really just purely lucky traders?
yes, they are highly skilled, and they are the lucky winners in the game. if trading is as easy as "trend following" as defined in MC's book of the same name, why couldn't you replicate the success of , say, henry ?
Shouldn't we question then Warren Buffet as well. His system is known by everyone . But how does it come that he's the only one who got so rich with this system? Why couldn't you repkicate his success?
You sure are a slippery poster aren't you. The inference in my post was: Do you believe that pure luck alone is responsible for their results? Or do you believe that it was some luck and some skill (doesnt matter what ratio of luck to skill, assume whatever you want) ? If it was indeed such a combination, would removing the luck element eliminate their extraordinary results? You tell me. No one, on this board, said trend trading was easy. If you have a 'fight' to pick with that author, go argue with him. I'm surprised your interview with him sounded so tame and restrained relative to your posting here. There are only a few stars in any sport. Michael Jordan in bball for ex. John Henry in trend trading. (although I am sure everyone has their own pick, Seykota, Dunn, Abraham, etc) We all have to find our own way, and what works for Henry might not work for others. Trend trading requires an almost superhuman ability to withstand drawdown, even though it does deliver spectacular returns over the long run. I don't think I have that 'almost superhuman' ability, but I don't assume that no one else has it either. Where are those traders then you ask? Well again, trading is a sport. Especially futures, where it's a zero sum game. Don't expect the masses to be winning in trend trading, not because of the method, but because of the fact that only a select few are talented enough to extract the gains it has to offer. Every sport will highlight the winners, who will by definition, be in a minority. The only question that you want to ask yourself, Hank, is : does my track record indicate I am in that minority?
ok, maverick, i dont have an issue with your points in the above post---- but not sure of the reasons for your personal attacks.
Is there any difference in claiming a trader or his methods were just "lucky" or "no better than random" because they failed to maintain a certain level of performance, as opposed to saying they just failed to adapt their methods to changing market conditions? I think so. Back when the only charts available were hand-drawn, I'm sure trading off S/R lines was far more profitable than it is today; but to call those who made fortunes using simple chart lines just "lucky" for the mere fact that the technique may appear no better than random today is a bit smug. I don't think anyone today would claim that trendfollowing is as effective as it was 2 decades ago, but that doesn't change the fact that it once had it's moment in the sun. A technique loses effectiveness as more and more players approprate it and enters into the mindset of "public" domain? Of course it does. But that's entirely different from declaring some edict that no technique based on past price history or trend can be profitable.
id go along with this (although i know im at great risk in introducing some harmony to this thread by agreeing here) it is my sincerest belief that all these arg/computr models have well and truly fucked the markets on an intraday basis. yes, there are still swings as they all kick in together, but intraday trends are few and far between these days.
I apologize if I came across as an 'attacker', so please forgive me for that. I just do not understand what you are trying to accomplish here. But I have to tell you, I'd be willing to wager that John W Henry would not be sure of the reason for your personal attacks on his performance and what he stands for, were he aware of the thread that you started.