Correct. The "trend" provides no edge, let alone a "high probability" one. If you flip a coin 10 times and you get 10 heads, are you in a heads trend?
Of those here who are consistently profitable in the markets, I'll make a claim without ever knowing how you trade: Your system does not have both a high winning pct and high payoff ratio (avg win / avg loss). [sorry, but scratched trades count in the totals because you took risk] . Note to beginners: stop looking for 60%+ winning systems with 2:1+ RR ratios. They don't exist. Most of you who are successful win between 40%-55% of the time long-term and make $1.20 to $2.00 for every $1 at risk. Those of you who are in the 70%+ club are risking $1 for every 50 cents to $1 you're trying to make. You can argue about TA working or not working all day long. But the above are the stone cold facts when you finally do make it.
A coin flip is a discrete variable represented by a binomial distribution. A stock/futures price is a continuous variable. You can't use an example from a discrete probability distribution (e.g., a coin flip) to infer anything about the properties of a continuous probability distribution (e.g., fluctuations in stock/futures prices).
No matter how many times you tell or even prove to surf that price movements aren't random, he'll keep pulling that old stinkeroo of a coin-flip analogy out as if it actually has some relevancy to real trends. Sad.
xspurt, thank you for starting the most entertaining thread we've seen here in a long time. How much testing on random entries have you done on your own? If you can't come up with ideas of your own try running the tests Van Tharp claims he did. Just because something is in print does not mean it is true... does it?
You give silly examples and should be a lot smarter than this. There is substantially more fundamentals behind a market trend than mere chance. Flipping a coin 10 times to get heads is sheer chance and gambling unless of course the coin was somehow weighted or designed to land or show heads more than tails then yes you are in a heads trend. To make a statement that a trend does not matter flies against the beliefs and advice of many of greatestpney making traders and to say you know more than they which with any due respect, you clearly do not. When Paul Tudor Jones says it is his belief the chart moves before large fundamentals are revealed, and market surfer and others say, don't look at a chart it means nothing it, it's a crap shoot, this is the day we know most of what is on internet forums is baloney and useless. It's the only way you have a voice with your erroneous beliefs. Remember, no one is saying TA is more than a tool to help identify set ups. You are saying it means nothing and there are not market forces behind them. Standing in front of a freight train is gonna hurt whether you falsely believe otherwise.
How many moves or series of moves in one direction increase the odds that the next move or series will be in the same direction? Tudor Jones-- LOL. He was over a year wrong with his supposed 87 crash call with charts From Victor Niederhoffer: </b>Victor: Any trend that exists can be quantified and its departure from randomness can be measured with the usual statistical procedures, such as confidence intervals and likelihoods. Serial correlation coefficients, regression coefficients of current changes versus past changes, and magnitudes of the impact of past moving averages on the future, distributions of the length of runs, the correllelogram, the expected waiting times between peaks and valleys, survival statistics. All these techniques are very good at discovering any non-random elements. To join a proper debate, such measures must be quantified for various markets and various times, and the degree of uncertainty and departure from randomness must be ascertained. I have never found a movement in prices that anyone could make money with by a trend following method that didn�t also show a major departure from randomness revealed by the standard statistical measures I mentioned. The tragedy is the mysticism and blind acceptance of trendism, that trend following exponents proclaim, without any evidence as to magnitude and uncertainty. No self-reported results that selected individuals or leaders might have made in the past shed light on the debate. Dave: Your well known saying, �If it can be tested, it must be tested� comes into play here . Exactly what testing have you done to prove the above idea? Victor: These tests can readily be performed My group of colleagues performs these tests maybe 2-3 thousand times a year over different markets and time frames. Those of a cognitive bent and those with their feet on the ground are always open to the existence of trends, but they test them with the best statistical methods existing. If you apply these tests to stock market moves, you will find that all such tests show negative serial correlation. In fact, they indicate a tendency for reversal. Dave: What about the upward bias in stock prices? Why cant that be interpreted as a trend? Victor: Well, all proper statistical tests take into account this upward drift. They would look for serial correlations over and above the basic drift of the market. One of the other market cons is the permanent bearishness of some of market pundits, and I am the last person to say that this upward drift, evidenced over the last 200 years, does not exist. This in no way refutes, but it does refine the statistical tests required for the stock market. However, I hasten to add that no such upward drift exists in any other market. </b> Any questions? surf surf