Dump it Here

[Skate]

As "Trend trading" has notoriously a low strike rate (win/loss ratio) can it be reversed by swapping the buy & sell signals? (is it as simple as that?)

Nah, it's not that easy, to be honest, it only makes the results worse.

Simply "chart patterns" fail
Critics of "technical analysis" think that chart patterns work until they fail, & they are correct to a certain degree. The failure of the pattern may not always be predictable from following the past pattern, especially if there is an unforeseen shock as in this past few weeks.

Skate.

 

[ducati916]

Have you ever reversed the signals?
Technical Analysis is based on trends, "well to be truthful" all trading is based on trends & Technical Analysis (my preferred method of trading) is basically chart based studies of trading volume & price. By analysing past prices & volume we attempt not to measure a security's intrinsic value, but instead, use charts & other tools to identify patterns that can suggest future activity.

Assumption trading
We are working on the assumption that the past performance gives us a glimpse "an indication" of future performances by revealing the actual buying & selling decisions of other market participants.

Trend trading is trading with the herd
As "Trend trading" has notoriously a low strike rate (win/loss ratio) can it be reversed by swapping the buy & sell signals? (is it as simple as that?)

Skate.

(i) 'all trading is based on trends'; and
(ii) 'Trend trading has (a) notoriously low strike rate.'; and
(iii) 'an indication" of future performances by revealing the actual buying & selling decisions of other market participants.'

Are these all true statements?

(i) & (ii) seem to be contradictory. Do the various timeframes create conflict within the trends, resulting in the low strike rate? Or, the definition of a trend needs greater precision. For the first part of the issue: what impact if any does fractal theory contribute or remove to the understanding of a trend? If not, what is required to better understand a trend?

(iii) Are all buying/selling decisions (immediately) visible? Some examples where they are not:

(a) hedged positions in the futures markets and physical markets (relevant if you are trading commodities);
(b) Hedged or outright positions in the Options, Futures and Stock markets (an example of this was provided on another thread).

jog on
duc

 

[divs4ever]

i find trends more useful as a ( mostly ) long investor , timing those buys( accumulations ) and sells ( reductions ) a fraction better ( but that extra gain spreads over a longer period ) ,

the key in my opinion is the ability to back off from a trade because i am neither a forced buyer nor forced seller ( i reckon trying to trade the market for constant income , would be beyond my abilities )

but then again i mostly find myself on the contrarian side of the trading herd ( because i don't NEED to sell at the end of the week/month )

besides i really don't need the distraction on a lender sending out margin alerts every time they think the market will implode

Assumption trading
We are working on the assumption that the past performance gives us a glimpse "an indication" of future performances by revealing the actual buying & selling decisions of other market participants.

now of course i am using the 'what IF ' principal , say i was interested in FMG yesterday , and lobbed in a buy order at $19 , it really isn't that urgent if i buy yesterday or even Friday and missing out totally isn't a heart-breaker either

a professional trader ( trading for regular income ) faces much more pressure

 

[Skate]

(i) 'all trading is based on trends'; and
(ii) 'Trend trading has (a) notoriously low strike rate.'; and
(iii) 'an indication" of future performances by revealing the actual buying & selling decisions of other market participants.'

Are these all true statements?

@ducati916 to answer the first question, I believe every statement I make is true but at times not to others. That's why alternative views are always encouraged. I would also like to make this statement - "we all see the world through our eyes" and "Our perception forms our reality".

the definition of a trend needs greater precision - what is required to better understand a trend?

@ducati916, now that's one great comment & even a better question as I trade using technical analysis using a robust mechanical trading system but at times falls well short of expectation.

What stock do we choose & what criteria do we use?
Well, that is the $64,000 question, & you are correct in saying we need to have a better definition of a trend so we enter it with greater precision. Striving for excellence is the goal & there are different trading methods that work better than others. I spent countless hours studying the market as new investors only focus on the allure of recent past returns which are right there to read or see. They downplay risk because it isn’t in sight and that’s a point worth remembering. At times I fail to perceive the real risk of trading always seeking to improve both areas you have mentioned.

What's annoying with trend trading (IMHO)
It's more of an irritation than annoying as no matter what I do (code-wise) it usually ends in (a) greater returns or (b) lower drawdowns & at times I achieve both "at the same time" but the ultimate strike rate never changes to any degree.

Skate.

 

[Skate]

say i was interested in FMG yesterday , and lobbed in a buy order at $19 , it really isn't that urgent if i buy yesterday or even Friday and missing out totally isn't a heart-breaker either

a professional trader ( trading for regular income ) faces much more pressure

Timing the markets
As a systematic trend trading "timing the markets" rather than "the time in the market" is how I make money trading. Jumping on & off a trend is how I make money. Let's use FMG as the exercise as "I am a holder".

What's the point of the chart?
To clearly show how timing the market works in real-time. It also displays two entries that failed. Trading trends is not all "peaches & cream" BUT over time it works because of the mathematical edge trading this way.



Skate.

 

[ducati916]

@ducati916 to answer the first question, I believe every statement I make is true but at times not to others. That's why alternative views are always encouraged. I would also like to make this statement - "we all see the world through our eyes" and "Our perception forms our reality".

Skate.

Trends form a 'pattern'. Is a pattern subjective or objective? Clearly it is subjective. Further we subject that subjective perception to further perceptive filters via 'indicators' and other enhancements and tools of clarity.

Reality and perception can therefore be very far apart.

The Quant's (may) jump in and claim (greater) objectivity via their meta-data analysis. The Quants (invariably) rely on statistical tools to quantify the data. This is an empirical method. If the past is prelude, fine. Are statistics reality? Probably not.

Reality and perception remain, very far apart.

jog on
duc

 

[MovingAverage]

Thanks, @basilio for getting the "Dump it here" thread back on track. In retrospect, it was a poor choice of subject matter to reinforce "my" point of view that COVID & China's national rejuvenation program

Oh I dunno about that @Skate—you outlined a very broad remit for this thread when you set it up. Seems like the recent digression from the usual “system trading nuts and bolts” is still within scope. It’s nice to stray off topic at times. Yes discussions of a political nature can turn into a shitshow as is evident from other politically focused threads here. Certainly hope we can respectfully venture off topic from time to time.

Sometimes you feel like dumping stuff & this thread might be the perfect place.

Helping Others
You might want to dump stuff here to help others

Unload
You might want to unload & dump something off your chest

Gems
You might even want to dump some gems here

Let it go
Sometimes you can't let somethings go till you dump it on paper

Dump it here
If you want to dump it, dump it here

Skate.

 

[Skate]

Reality and perception remain, very far apart.

@ducati916 you are absolutely correct in the statement above & so is mine below.

"Our perception forms our reality".

Perception = reaction
Let me take this comment one step further "Our reaction is driven by our perception"

That's the reason we tend to do stupid things at times
A lot of our expectations affect the assumptions we use to shape our perception when it comes to trading. Our perception even shapes what we want to read & what we want to hear or learn. Our expectations, assumptions & perceptions shape the way we trade in ways that some will never understand.

Our brain is constantly assessing & re-assessing only information that matches our (beliefs) & blocks out the rest
This is why when experienced traders take the time to express ideas (ideas from their trading experience) others are not accepting of those ideas. This non-acceptance is because the idea doesn't fall into line with what the reader believes or what they have previously read in a trading book.

Skate.

 

[Skate]

Oh I dunno about that @Skate—you outlined a very broad remit for this thread when you set it up

Perception
@MovingAverage you are correct to some degree as your perception of my original statement can be taken in many ways. But the true interpretation is consistent with "helping others". There isn't much about the way we function that "beliefs" don't play a major role.

Beliefs
Let's combine two powerful words (a) Beliefs & (b) Perception. At times combining both (Beliefs & Perception) can get us into trouble as we interpret what has been said or written from our perception then our belief forms our opinion. At times those opinions can be wrong without even realising it.

Our Belief structure
Bloody hell, our belief structure keeps on working regardless of whether or not we are consciously aware of them. If you were to follow my train of thought you would have read a slant towards education. Dumping information that can be helpful to others.

Helping Others (condensed)
You might want to dump stuff here to help others & unload (dump) something off your chest. You might even want to dump some gems. Sometimes you can't let some things go (thoughts) till you dump them on paper. If you want to dump it, dump it here to "Help others"

Skate.

 

[ducati916]

@ducati916 you are absolutely correct in the statement above & so is mine below.



Perception = reaction
Let me take this comment one step further "Our reaction is driven by our perception"

That's the reason we tend to do stupid things at times
A lot of our expectations affect the assumptions we use to shape our perception when it comes to trading. Our perception even shapes what we want to read & what we want to hear or learn. Our expectations, assumptions & perceptions shape the way we trade in ways that some will never understand.

Our brain is constantly assessing & re-assessing only information that matches our (beliefs) & blocks out the rest
This is why when experienced traders take the time to express ideas (ideas from their trading experience) others are not accepting of those ideas. This non-acceptance is because the idea doesn't fall into line with what the reader believes or what they have previously read in a trading book.

Skate.

This subject is canvassed (more or less) fully by Tversky and Kahneman.

One example, also highlighted by Keynes (who was a better mathematician than he was an economist) is the difference between the 'probability' of the evidence as opposed to the 'weight' of the evidence, in coming to a decision under uncertainty. How would you measure them? Is one better than the other in the markets?

There are many of these anomalies that lie in wait for traders.

A question. Is trading a zero sum game? If yes, how does that affect a trend? If no, same question.

A second question. In the markets is there an informational imbalance? If there is, what trend should you be trading fractally?

jog on
duc

 

[Skate]

"WSS are getting ready for another co-ordinated buying spree of physical silver. I’ll jump on board for further physical +5kg this week".

In the markets is there an informational imbalance?

@ducati916 made a great comment in his daily update today & this short video should be of interest to "physical Silver hoarders". I realise that the question Duc refers to about "information imbalance" is different from my reply about the imbalance of information about "physical silver" is what I would rather highlight. The video chat with David Morgan was casual, & his views when it comes to the silver market were enlightening.

Highlights from the video
(a) Why the silver's investment & industrial demand will be robust in 2022?
(b) The silver market has seen a modest supply deficit in prior years - what could alter the demand-supply imbalances?
(c) What role does silver play in the new energy era?
(d) Can it be viewed as a store of energy?
(e) What's on the horizon that could indicate that 2022 will be Silver's year?
(f) Is the rest of 2022 looking promising for precious metals?



Summary
If you put all the physical silver in a football stadium on "one side" & the silver claims on the "other side" they don't match. This point has been reinforced by @ducati916 forever. This signal point is missed by most. (paper silver doesn't match the physical)

Skate.

 

[Skate]

There are many of these anomalies that lie in wait for traders.

Yep, the anomalies are so enormous they can't be coded.

What lays in store for traders in 2022
The short video goes a long way to explain why Jim Rogers believes the worst "Bear Market" is coming. Can you believe this "Silver is 60% down" from its all-time high?

Jim Rogers talks about the Chinese economy & interest rates
I don't want to start another off-topic comment but Jim Rogers explains the best way to protect yourself from this bear market & discusses if now is a good time to invest in gold and silver. Also, he discusses if interest rate hikes have a significant impact on the stock market & if China's central bank's digital coin be a new dimension in the Chinese yuan's bid to compete as a reserve currency with the US dollar?

This video should hold interest for every trader.

Highlights from the interview include
(a) Is this going to be the #WorstBearMarket in history?
(b) Is there anything the Federal Reserve can do about it?
(c) Will they be able to avoid a major bear market if they cease printing money?
(d) Is there anything we can do about the alarming developments in China's real estate market.
(e) The risk of contagion for Chinese & international banks as a result?



Skate.

 

[MovingAverage]

Perception
@MovingAverage you are correct to some degree as your perception of my original statement can be taken in many ways. But the true interpretation is consistent with "helping others". There isn't much about the way we function that "beliefs" don't play a major role.

Beliefs
Let's combine two powerful words (a) Beliefs & (b) Perception. At times combining both (Beliefs & Perception) can get us into trouble as we interpret what has been said or written from our perception then our belief forms our opinion. At times those opinions can be wrong without even realising it.

Our Belief structure
Bloody hell, our belief structure keeps on working regardless of whether or not we are consciously aware of them. If you were to follow my train of thought you would have read a slant towards education. Dumping information that can be helpful to others.

Helping Others (condensed)
You might want to dump stuff here to help others & unload (dump) something off your chest. You might even want to dump some gems. Sometimes you can't let some things go (thoughts) till you dump them on paper. If you want to dump it, dump it here to "Help others"

Skate.

Perception
@MovingAverage you are correct to some degree as your perception of my original statement can be taken in many ways. But the true interpretation is consistent with "helping others". There isn't much about the way we function that "beliefs" don't play a major role.

Beliefs
Let's combine two powerful words (a) Beliefs & (b) Perception. At times combining both (Beliefs & Perception) can get us into trouble as we interpret what has been said or written from our perception then our belief forms our opinion. At times those opinions can be wrong without even realising it.

Our Belief structure
Bloody hell, our belief structure keeps on working regardless of whether or not we are consciously aware of them. If you were to follow my train of thought you would have read a slant towards education. Dumping information that can be helpful to others.

Helping Others (condensed)
You might want to dump stuff here to help others & unload (dump) something off your chest. You might even want to dump some gems. Sometimes you can't let some things go (thoughts) till you dump them on paper. If you want to dump it, dump it here to "Help others"

Skate.

That’s all a bit deep for my peanut sized brain but we all take different things out of different posts. I simply scroll by those posts that don’t interest me—no big deal. Just because someone thinks a few posts here are off topic doesn’t mean others don’t find them helpful in some regard. If the underlying motive is to be helpful then surely all posts do not need to adhere to some person’s strict definition of “trading”. Your post about China while digressing from the usual dry posts we all make relating to trading nuts and bolts it certainly had some relevance to trading—as you pointed out. There were some responses to that post that didn’t interest me so I just scrolled by—pretty easy. Those posts that resonant with followers of this thread will generate engagement and spur further discussions (plenty of examples of that) and those that are not relevant will quickly fall by the wayside. I think this thread has a way of recalibrating itself onto the interesting trading discussions and I don’t think we need content police saying what’s worthy of this thread and what’s not (that’s not a shot at anyone other than to say allow folks to post what they want) Anyhow…I’m of to my beach to have a swim and a few very cold brews and think about all things not trading related. Stay classy ASF.

 

[Skate]

Your post about China while digressing from the usual dry posts we all make relating to trading nuts and bolts it certainly had some relevance to trading—as you pointed out.

@MovingAverage you have hit the nail on the head. My posts are "DRY" & becoming more so. I'm finding it harder to post information that is not only beneficial but interesting to read.

Skate.

 

[ducati916]

That’s all a bit deep for my peanut sized brain but we all take different things out of different posts. I simply scroll by those posts that don’t interest me—no big deal. Just because someone thinks a few posts here are off topic doesn’t mean others don’t find them helpful in some regard. If the underlying motive is to be helpful then surely all posts do not need to adhere to some person’s strict definition of “trading”. Your post about China while digressing from the usual dry posts we all make relating to trading nuts and bolts it certainly had some relevance to trading—as you pointed out. There were some responses to that post that didn’t interest me so I just scrolled by—pretty easy. Those posts that resonant with followers of this thread will generate engagement and spur further discussions (plenty of examples of that) and those that are not relevant will quickly fall by the wayside. I think this thread has a way of recalibrating itself onto the interesting trading discussions and I don’t think we need content police saying what’s worthy of this thread and what’s not (that’s not a shot at anyone other than to say allow folks to post what they want) Anyhow…I’m of to my beach to have a swim and a few very cold brews and think about all things not trading related. Stay classy ASF.

I agree.

For slightly different reasons.

The comments are more 'macro' orientated than systems orientated. Macro is a perception that involves the big picture for risk assets and risk assumption.

jog on
duc

 

[MovingAverage]

@MovingAverage you have hit the nail on the head. My posts are "DRY" & becoming more so. I'm finding it harder to post information that is not only beneficial but interesting to read.

Skate.

Your posts are not dry. My reference was more a flippant reference to the general topic of system trading, which is inherently dry and it is what it is--nothing wrong with that. Trading is not all beer and skittles. Your posts, and those of other contributors to this thread, are nonetheless extremely interesting and relevant to regulars of this thread.

 

[divs4ever]

but isn't Macro an important part of WHEN to trade ( or resist )

if it isn't it must be pretty tough out-witting the HFTs and automated traders , who get serious discounts on the costs

 

[ducati916]

So here is an example of price chart anomalies:

So these are the gold futures:



This represents (very) unusual activity, some $500 million of contracts long in 1 day in the Options market.



Now the MM's who sell the contracts are now net short $500M, unless they hedge their positions. Now the COMEX doesn't (unless you look) see the physical market as this is essentially the producers, who, by long standing convention sold into the consortium of Bullion banks and the London market. Due to the Basel III requirements hedging became a lot more difficult in the paper markets.

Long story short: what you see, is not always what you get.

Simply looking at the chart...bull or bear? If you were a systems chap, bull or bear?

Historically, silver always lags gold in bull moves, eventually overtaking it along the way. If you trade silver, you really want to know what gold is up to. Another 'illusion' that can be generated by charts.

jog on
duc

 

[othmana86]

"Conviction" is absolutely what it is all about. I hear you on the missed opportunity but my system was 100% cash at that stage because the index filter had the system turned off.

Your chart is the epitome of resilience . I think you shared something similar a few months back.

 

[othmana86]

@Skate i am officially appeased .