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Strategies & Market Trends : DAYTRADING Fundamentals -- Ignore unavailable to you. Want to Upgrade?

To: fut_trade who wrote (14184)	9/21/2001 7:15:55 PM
From: Dan Duchardt	Read Replies (3) \| Respond to of 18137

fut_trade, I'd like every advantage "discretionary traders" have. "discretionary traders" is a new term for me. Every trader has to have a set of rules. To me a system is just a way to trade a pattern. My point is that a book showing a few charts with Bollinger Bands, moving averages, DeMark Indicators, etc., does not provide a tradable system in itself. And even if it did provide clear buy and sell signals, I still want to see the system tested to make sure it produces a profit. It may be hard for us technical/analytical types to swallow, but I don't know of anyone who has reduced trading to anything like a deterministic set of rules. My impression is that some of the best traders talk about such fuzzy things as "being in the zone" or simply being in synch with the market. Ultimately, one might be able to quantify all that, IF you could really identify all the inputs and processes used by these successful traders. As with many other human endeavors, that has proved very illusive. I could analyze every movement ever made by a Michael Jordan and never come up with a smart mechanical system to reproduce them because I would never be able to model the stimulus and response that enabled him to do things at the right time. Systems based on neural nets or other AI approaches may do better than the average person, but I don't think any of them can compare with having the "feel" for what inputs are important when and adapting to subtle changes with modified processes. If your system is working, by all means use it. If it stops working don't be too surprised, and accept the fact that it doesn't work anymore. That seems to be the way the market works no matter how clever you are. Dan

To: fut_trade who wrote (14184)	9/22/2001 11:28:11 AM
From: hypostomus	Read Replies (2) \| Respond to of 18137

Dear Fut - As an engineer myself, permit me to point out a fallacy that technical people understandably fall into when they start to trade. We treat the market as if it were a physical phenomenon and apply time series analysis, Fourier analysis, optimal estimation theory, conditional statistics, Kalman filtering, etc. ad nauseam. The reality of the market is that it is an insider-manipulated, semi-chaotic, totally psychological phenomenon. We buy a shelf full of TA books and lose money playing textbook setups until we wise up to reality (perhaps through the medium of this thread). That reality is fully laid out in Schabacker - Stock Market Profits, for understanding insider manipulation Plummer - The Psychology of Technical Analysis, for what charts really mean Douglas - The Disciplined Trader, and Trading in the Zone, for understanding that the game is played totally in your own head Mamis - The Nature of Risk, for understanding the relationship between information and risk Tharp - Trade Your Way to Financial Freedom, for understanding probabilistic profit expectancy. TA is a fabulous tool to determine what NOT to buy after you possess the above understandings. It's like a map of a mine field. Good luck on your journey.

To: fut_trade who wrote (14184)	9/22/2001 11:56:12 AM
From: KymarFye	Read Replies (1) \| Respond to of 18137

<<I'm not looking to give anyone a hard time here, I'm just trying to get some of my questions answered.>> Didn't think you were giving anyone a hard time, though I do think that some of your statements, or at least the way your phrased them, may have disturbed certain sensitivities or may have implied more of a dismissive, "know-it-all" attitude than you actually possess. What are your questions? Not that I'm sure I can answer them... I have also wondered why system-trading appears so much more prevalent in commodities than in stocks, but I'm not at all convinced that the reason has anything to do with an inherently lesser susceptibility of the latter to systematic approaches.