interesting , old trader. thank you for the reply. i heard once that every trade is a winner if you scale into to, and hold it long enough, and of course dont run out of capital. if something isn't quantifiable, testable, and scaleable---i have no use for it. mathematically, there is no edge to "trend trading" in the traditional sense.
You invited me to discuss my theorys to a group of closed minded greedy corporate talking heads, to which I declined. If it would have been to open minded academics, I would have been there in a heart-beat. You still promote the tired methods of a Market locked in tight ranges of the pre-90's and are unable to view any new technology or ideas from a standpoint of rational thought. Your response speaks volumes. Be sure not to bump your toes at night on your way to bed by candlelight.
A system that could make a profit with random increments would do extremely well in the real world. Are you a billionaire yet?
Let's go a step further. I submit that no one can trade the market without "trend trading". Here's what I mean by that: Let's say that you go long. Makes no difference to me how you made the decision to go long....in your case, let's say you flipped a coin. Now the price begins to move in your direction. It's clear that you must hold the position long enough to make a profit....in other words, you must "hope" that it "trends" to your profit point. Now, you may not have made your decision based on some of the more traditional methods of "trend trading"ie moving averages, moving above a prior high (or low), etc but nonetheless you are still dependent upon the markets ability to trend to make your profit. All of us when it comes right down to it are nothing more than trend trades. Perhaps I get into a position in some manner determined in my mind by deciding that a market has "stopped" going down, has begun to "turn" and is now "heading" up. You say this has no more chance than a coin flip, which is how you decide. But in the end it makes no difference how we decided (especially if your contention is really true that the market is never any more than a coin flip).....we must still sit with our position long enough to realize a profit, which depends on the markets ability to trend. I note by the way that you did not answer my question: How do you know that stock price movement is comparable to a coin flip? OldTrader
What you're getting at is valid in general but does not apply to what price trend traders think they see on the chart. Just because price has drawn itself with a certain slope over a previous timeframe doesn't mean it has done so due to a tendency that will continue into the tradable future.
That's the problem with most people who went to university. The think that they know everything and think in an academical way. They talk about the most complicated mathematical calculations and break their head thinking about random figures etc etc..... But they don't even realize that flipping a coin is not at all the same as the price evolution of a stock. The market is driven by human mass behavior, while flipping a coin cannot be influenced at all. If you flip a coin till eternity each side of the coin will come up approx 50% of the time. But in trading it is different. What would you say if someone said: i never had a loosing week for the last 5 years and i have more than 85% of profitable trades. You will probably say that the statement was a lie. So my question to the academical experts in trading: what return do you need to proof that stocks don't move at random? How many trades have to be profitable? I have probably less than 20% of the intelligence of most people here. How is it then possible that i make good profits?
Trends have nothing to do with slope. Slope is a by-product of the trend and has nothing to do with the continuation of the trend.