Trend riding

Discussion in 'Index Futures' started by cpo, Sep 13, 2002.

  1. I really have no opinion on the plumbers of Billings Montana. But if somebody is going to try to throw them in jail for no just cause, then I will stand up and defend the plumbers. Not because I like the plumbers, just because I don't want to live in a country of people who mindlessly accuse anything they don't understand.

    If you can clean out a drain with a bottle of drano, that's fine, I'm happy for you. But how is eliminating plumbers going to help keep your drain clean?

    Maybe some people lost money using moving averages. If so, we now know there are at least 2 possibilites. There is something wrong with moving averages, or there is something wrong with some people.

    If we could find a right moving average, we could compare it to other moving averages to see if they are wrong. Or we could just take everybody who has ever lost money using them and declare them wrong and throw them in jail. It wouldn't solve the moving average problem, but it would get rid of the wrong people.
     
    #51     Sep 22, 2002
  2. But getting back to the topic of trends, DG's information is really quite profound. I for one have often stated (now apparently falsely) that over time any ma crossover would make you money, but the annual profit may not even beat a t bill if you don't run out of money first. But now, if this information is correct, it puts into jepardy

    1. any trend following system (no great loss)

    2. any trend (big problem)

    If you think ma has gotten a bad rap, it has lived on easy street compared to the over bought over sold crowd. Maybe their day is coming. Maybe all trends are coming to an end.

    Very interesting contribution DG. Very thought provoking indeed. If you take away trends, you have taken away the way I pay my bills. Oh, I can hardly wait for the emotional defending and accusations that are gonna fly around on this debate!

    And the same guys who are making money on trends will be making money on chop, and the same people who are arguing will still be arguing.

    I love life, it is the most entertaining pastime I have ever discovered. It's sort of like macd. I don't understand it, but I use it when I don't have anything better to do, and so far it has been profitable.
     
    #52     Sep 22, 2002
  3. This could explain why just a short while ago I was using 2 pt stops looking for 6 handles. Now I am using 2 tick stops and over joyed at 1.75.

    If the trend continues, I will be using no stops looking for 1 tick.
     
    #53     Sep 22, 2002
  4. Actually, I should clarify my previous statement a bit...

    For single and double moving average trading systems in 'mature markets', they were found to be unprofitable at all MA lengths.

    That's why the triple MA was developed.

    Of course, by creating an adaptive MA, I think using MA's in a trend following system will still be viable. Myself, I designed an adaptive triple MA, just to be sure I kept two steps ahead.

    As the markets become more noisy, more sophisticated methods will be required to beat them.

    DGBrothers
     
    #54     Sep 22, 2002
  5. Actually, ProfitSeer, I am trying to figure out how you guys are trading profitably in such small ranges?

    I'd love to be able to pick up those two point moves, as well as the larger trends.

    How do I do it?

    Are you guys floor traders, or you have extremely low commission costs?

    How do you determine if a small move is going to be large enough to pull a profit out?

    Do you use stops at all, and if so, where do you set them for only a 2 point move or so?

    What type of methodology do you use?

    Do you look for specific patterns, or use volume/open interest, or something else I don't know about?

    What type of trading platform do you use?

    What is the average time to get filled on your orders?

    What type of return is average for 'trading the chop'?

    Thanks in advance for any help you can give me,
    DGBrothers
     
    #55     Sep 22, 2002
  6. #56     Sep 22, 2002
  7. cpo

    cpo Guest

    I think you fellows gave me the answer I needed. It seems to be all about subjective choices. :)

    In other words, MA's are useful as long as you use your judgement to complement the "system".

    "Methods, as they relate to trading, are nothing more than a process of discovery. The trader discovers, methodizes, applies and repeats the process. It is only upon the traders application of these methods that they become significant. If a trader were to trade a method as simple as 'Buy Low Sell High', success or failure would not be a result of the method, but rather the traders application of the method." Rogue Trader

    cpo
     
    #57     Sep 22, 2002
  8. cpo

    cpo Guest

    DGBrothers:

    I appreciate your input and effort. Keep up your good work.

    PEACE and good trading,

    cpo
     
    #58     Sep 22, 2002
  9. cpo

    cpo Guest

    :D :D :D

    profitseer:

    Actually I brought the questions because I myself never use them for trade signals. Instead they help me to assess the market flow.

    Nevertheless, as everybody in this business seems to have those fancy lines on their charts, I would like to know which averages would better represent the major, intermediate and minor trends, respectively. And it would appear that the choice is subjective and dependent on the market and time frame under focus. I mean, there seems to be no consensus about it.

    cpo
     
    #59     Sep 22, 2002
  10. Thanks, ProfitSeer.

    I'm definitely trader type #2. I prefer to sit quietly on the sidelines until I see the right setup.

    Then, my ears perk up, I lean forward in my chair, and I say to myself, "Ooh, here we go!", and proceed to pull money out. The only thing I don't like about it is looking at all the small moves and seeing the amount of money I left on the table.

    Fortunately, with my proprietary indicators based upon signal analysis, I should be over 50% (the system isn't ready for prime-time yet, I'm designing it for our brokerage, so I'm being extra careful to account for every contingency like report days, stale trades, options exiration days, etc.)

    I think trading in the chop would be an exercise in frustration for me.

    I'd still like to take a crack at trying the EasyLanguage coding for trading in the chop, though. Might be that I could figure it out and really come up with a kick-butt trading system for all types of markets.

    Thanks,
    DGBrothers
     
    #60     Sep 22, 2002