How much analysis is enough? Does complexity equal profitability?

[Timmy]

I believe I am amongst friends here. And I am a devotee of TA. I preface my comments with these remarks in the hope of avoiding, or at the very least reducing, the flames ......

Can trading with TA be separated from trade management? That is, does trading with TA 'work' without trade management. Does trade management work without TA? I wouldn't even know where/how to begin testing this idea, so will throw it out there.

Does trading with TA rely on trade management/MM to be effective?

Another question .... does better TA equate to better expectancy (trying to hold everything else - which I suppose is trade management/MM - equal)? I suppose an answer can be found in 'whatever works for you' - and recognising there are many paths to succes, as ASXG points out. But without wishing to start a pointless argument, with us all peeling off into our various 'camps', are there better forms of TA, such that trading with those forms equates to better expectancy?

 

[Nick Radge]

That is, does trading with TA 'work' without trade management.

In my opinion, no. The only reason I am a successful trader using TA is because I am a good manager of bad trades. I am yet to find any TA that offers any kind of edge above a 50/50 bet.

I will not get into a discussion on the fact that FA is any better. Its simply not. I can provide a weeks worth of reading as evidence.

The goal of participating in the markets is to make profits.

We all need each other to facilitate liquidity.

 

[MRC & Co]

Have you ever looked into or observed quant trading Nick and any opinion? I would have thought it would be used at Mac.

Despite my not grasping exactly how it works, it interests me nonetheless, though, I could not handle the math, I have no doubt about that

 

[tech/a]

Have you ever looked into or observed quant trading Nick and any opinion? I would have thought it would be used at Mac.

Despite my not grasping exactly how it works, it interests me nonetheless, though, I could not handle the math, I have no doubt about that

The Maths
I spent some time with a Quant professor at Adelaide Uni who had done a paper using the Stock market as his sample. I was invited by Kris as I traded.
I remember podting it on reefcap.

The maths and the formulas used were just way beyond me I just tried to make head and tail of the Charts (Distribution) that he put up. Basically he could prove that he could find an edge in a data set.
However after my discussion he also admitted that he could prove that there wasnt an edge.

So from my discussions with maths brains way beyound mine Kris I think summed it up very well.
"Dad he said I can prove mathematically that Black is White and nothing is something!"

To me there is the mathamatical answer.

To T/A.
Having discarded most T/A other than VSA and Patterns
I have come to the conclusion that these tools of analysis do one thing.

They supply me with Trade Start/Failure/and End points of reference for my trade management.
NOT ONLY for the three distinct points mentioned but also for continuation of trade management over the duration of a trade wether that be pulling back or belting the hell out of a trade.
With this I can and do skew the results in my favor.

The answer is in the simplicity for all who want to see it.
I like many before me and many will follow---thought there was/is more--has to be ---RIGHT????


To academics.
I have found those that ASX talks of are found where they are developing in their field.Those "generally" who have mastered their field understand the expertise in a Professor of Automotive reconstruction (Panel beater) or a Doctor in House Construction. All have their place and few overlap.

 

[nizar]

Scalping works, but its stupid.

Try telling that to the Japanese guy that turned 13k into $100m+ in 8 years.
I believe he was mainly scalping.

 

[nizar]

These guys may not be billionaires but they're chart traders and wouldn't be far off:

Louis Bacon
Paul Tudor-Jones
Toby Crabel
Jerry Parker
Salem Abraham
Rich Dennis
Bill Eckhardt
Keith Campbell
Ken Tropin
Monroe Trout

Paul tudor Jones has a net worth >$1billion.

He is really a machine.
Check this out.

Founded Tudor Investment Corp. hedge fund 1980. Predicted 1987 stock market crash, returned 125% net of fees that year. Assets now $20 billion. Estimated average annual returns 24%

 

[nizar]

The Maths
Basically he could prove that he could find an edge in a data set.
However after my discussion he also admitted that he could prove that there wasnt an edge.

Sounds like neural nets.

 

[theasxgorilla]

To academics.
I have found those that ASX talks of are found where they are developing in their field.Those "generally" who have mastered their field understand the expertise in a Professor of Automotive reconstruction (Panel beater) or a Doctor in House Construction. All have their place and few overlap.

I must admit that Australia is pretty good as far as being meritorious goes, but when you're talking about US 'Ivy Leaguers', for example, I wouldn't underestimate the elites will to keep their elite clubs elite through discrimination. It's a whole other world.

 

[It's Snake Pliskin]

Try telling that to the Japanese guy that turned 13k into $100m+ in 8 years.
I believe he was mainly scalping.

....and he was assisted with a large sum thanks to a brokering error that he didn't have to pay back even though big banks DID!

 

[It's Snake Pliskin]

Can some of the "it doesn't work" crowd please tell me when my LUCK will run out. I mean I must be the luckiest person alive. On average 150 trades or more a day for the last 3 years. Surely my luck should have ran out by now. I mean that is at least 30,000 trades probably many more.

I keep looking over my shoulder for "the law of large numbers to catch up with me" But even after all that brokerage I still seem to be out running the wankers that sprout this "I carn't so no one can" RUBBISH.

Survivorship bias.

Humility is a good quality. I think the reaction here in an (intended) intelligent discussion is overdone with emotion.

It's a U not an A.

 

[theasxgorilla]

It's a U not an A.

I think TH is right. Run is an irregular verb, so to have run, or I presume, to have run out is correct for both present and past tense.

 

[wayneL]

It's a U not an A.

Not intended as a challenge, I'm still learning this confusing language of ours, but I would have used a U as well.

a/ Surely my luck should have run out by now.
b/ My luck ran out when I started losing.

Comment?

 

[wayneL]

SNAP

 

[It's Snake Pliskin]

I think TH is right. Run is an irregular verb, so to have run, or I presume, to have run out is correct for both present and past tense.

ASX,
It is conjugation. Have run is correct not have ran as Th put it.
It goes like this:
run, ran, run.
I run everyday.
I ran home last night.
I have run a marathon before.

Wayne, yes luck has a U. Spot on.

 

[theasxgorilla]

ASX,
It is conjugation. Have run is correct not have ran as Th put it.

Sorry. I thought you made the correction to "have ran". Geez we're a picky bunch aren't we??

 

[wayneL]

Wayne, yes luck has a U. Spot on.

A lucky gess I gess.

 

[It's Snake Pliskin]

A lucky gess I gess.

Fanny mun.

Ah Wayne, I just realised I didn't see the words you were giving examples of in your sentences. I just quickly saw LUCK and responded. Your examples are good.
Cheers.

 

[Temjin]

Survivorship bias.

Humility is a good quality. I think the reaction here in an (intended) intelligent discussion is overdone with emotion.

It's a U not an A.

Heh, I agree with the emotion part. So much involved in here right now.

Wasn't there a research article (from Van) saying the higher the IQ a group of traders are, the worse results they get. It seem "intelligence" is an impediment to successful trading. Of course, some complex PHD guru will disagree with me otherwise.

Also, isn't it true that simplicity is the key to successful trading and that humans often have a bias for doing "complex" things because it give them some sort of intellectual satisification?

 

[Trembling Hand]

Humility is a good quality. I think the reaction here in an (intended) intelligent discussion is overdone with emotion.
It's a U not an A.

Humility from the self appointed Grammar Nazi. LOL.

 

[bingk6]

In my opinion, no. The only reason I am a successful trader using TA is because I am a good manager of bad trades. I am yet to find any TA that offers any kind of edge above a 50/50 bet.

Hi Nick,

At the risk of extrapolating what you're are saying a wee bit too far, are you suggesting that you would be able to duplicate the level of performance that you have been demonstrating in your power setups by using your trade management procedures on say, a randm entry ?

At the end of the day, a random entry is pretty much 50/50 and if there aren't any TA techniques that offer above 50/50, then one should theoritically be able to generate returns approaching the levels reached by your power setups using trade management techniques alone.

Would appreciate your clarification.