Trading the sun

[Trembling Hand]

You don't know why it works (even though you have theories, there's no proof at all). And at some point, it will stop working, and once again, you won't know why or how.

GB I guess thats the difference between the three professional traders on this site rubbishing it and the other ...... err?.....non professionals thinking its useful.

There is a good correlation for you. And its a 1.

 

[Gringotts Bank]

GB I guess thats the difference between the three professional traders on this site rubbishing it and the other ...... err?.....non professionals thinking its useful.

There is a good correlation for you. And its a 1.

Were you and skc bullies at school?

I notice you both pulled your heads in very quickly when sinner arrived and explained it to you.

 

[Trembling Hand]

Were you and skc bullies at school?

Nah mate a jock...... sorry just used to winning...............

 

[Trembling Hand]

By the way I think skc has on many accusation shown remarkable restraint and respect. I on the other hand ......

 

[Trembling Hand]

Of course one always has the ability to prove something right by actually putting up 100 or so trades........

This is me not holding my breath.

 

[skc]

Were you and skc bullies at school?

I notice you both pulled your heads in very quickly when sinner arrived and explained it to you.

GB, no I was not a bully at school. I was one of those ultra smart kids .

I was rubbishing the paper, not you personally. I actually assumed you were sharing a paper because you found it to be ridiculous... So don't be too sensitive about it. And any time in the future when it may appear that I am rubbishing you... I am not. I am rubbishing your view or your logic in those posts, not you personally.

And the paper is rubbish for the reason TH has already stated. There is no way for the cloudy Chicago trader's mood to be affected by the sunniness or otherwise at NYSE. I am open to ideas of market cycles, mood affecting market behaviour and all that, but these things can't trumpt logic and common sense. I don't care how strong a correlation there is between grass in your backyard and BHP share price - it won't be useful to any real trader unless he/she can logically find a plasible explaination to the observation.

As to "pulled my head in quickly"... Posting on the forum is seconardary to many things in life (such as actually trading), so forgive me for not responding within the designated time period (which I wasn't aware of such). Plus TH has already highlighted the logical BS in the paper and there was no sensible response. So I had nothing further to add.

I've never put money on any astrological bet, but I am consistently intriuged by return profiles which differ based on astrological cycles, as if you don't believe in the astrology then it seems pretty inexplicable as to how those return profiles can exist.

So why not?

 

[skc]

Heat can cause one to go troppo.

Good question, but in the results section (after the references) you'll see that New York was the only US city included. I realize people from all over the world trade on the NYSE, but they were just looking for sun:return correlation, no more than that. A better study would be to look at an averaged world weather sunniness and compare that to the MSCI world index.

FWIW, if they determined the weight of money trading the NYSE geographically (e.g. 25% NY, 20% Chicago, 15% LA, 10% Tokyo etc) and calculated the weighted average relative sunshine in those cities where trading decisions are made, and find some correlation, then I won't rubbish the paper nearly as much.

 

[sinner]

So why not?

Purely on a relative alpha basis. Why long lunar cycles when you can short (for example) volatility?

FWIW, if they determined the weight of money trading the NYSE geographically (e.g. 25% NY, 20% Chicago, 15% LA, 10% Tokyo etc) and calculated the weighted average relative sunshine in those cities where trading decisions are made, and find some correlation, then I won't rubbish the paper nearly as much.

lol! So you've made a big assumption, something like: authors conclusion is that the sun exposure in NY completely drives returns on the NYSE. Then proceeded to rubbish said strawman. Bro, do you even logic?

The findings are pretty tame, and like I said the r^2 is something like 2%, hardly a massive scientific revelation? Exactly nobody, except for the "3 professional traders" in this thread, have interpreted the research paper GB posted (especially if they read it) as saying the sun drives magical unicorn returns in the local index.

 

[sinner]

Is this thread too long for you to read? That's OK, I've made a quick summary for anyone who needs to catch up:

Scientist: I would love to test hypothesis X, as the solution for commonly asked question Y. I will gather some data and attempt to observe whether the hypothesis is incorrect, correct or needs refining. I am not married to the result and will report it objectively. Hopefully this will build on the previously completed research on Y, and advance understanding for all mankind.

"Professional Trader": I know X is impossible, even though I've never tested against it, therefore logic dictates I will mock and deride all who attempt any discussion of hypothesis X or even question Y, especially in spite of existing research which seems to indicate further investigation would be useful.

Fin.

 

[Trembling Hand]

Scientist: I would love to test hypothesis X, as the solution for commonly asked question Y. I will gather some data and attempt to observe whether the hypothesis is incorrect, correct or needs refining. I am not married to the result and will report it objectively. Hopefully this will build on the previously completed research on Y, and advance understanding for all mankind.

"Professional Trader": I know

That one can find 100,00000's of tiny tiny fleeting correlations if one data mines hard enough but they don't matter a F to profitable trading. THEREFORE I would not, in my not so humble opinion, waste my time on such human effort and deprive mankind of any practical advancement.

 

[minwa]

Are markets meant to have a logical explanation to them ?

This is like Fundamental vs Technicals that the market wizard guy mentions, you will find people completely rubbishing each others method which is making millions. Should read the chapter on Zen and trading or something like that which sounds ridiculous like trading astrology yet apparently provides massive returns.

 

[Trembling Hand]

I just wasted another 10 min of my life rereading this and they seem to be doing the classic back-testing F-up by taking a trigger in the morning and using yesterdays close price.

Nowhere have they stated that their returns are from trade-ble numbers, that is open prices rather they are using index data of "daily returns" which is todays close less yesterdays.


LOL

Scientist hey!!

 

[herzy]

Sorry to jump back a bit, but this is a question for TH and SKC - as GB eloquently said with the grass/BHP example, isn't technical trading based purely on correlation rather than causation? Isn't that the main difference between technical trading, and a causation-based fundamental approach? With this in mind, I wonder how skc doesn't care how strong a correlation is without a plausible explanation.

I'm interested in plausible explanations for candlesticks, formations (heads and shoulders, etc) trends, etc that isn't purely correlative - because the lack of causation was something that put me off technical trading initially.

 

[Trembling Hand]

- because the lack of causation was something that put me off technical trading initially.

Then Like GB you don't understand technical trading.

 

[skc]

Sorry to jump back a bit, but this is a question for TH and SKC - as GB eloquently said with the grass/BHP example, isn't technical trading based purely on correlation rather than causation? Isn't that the main difference between technical trading, and a causation-based fundamental approach? With this in mind, I wonder how skc doesn't care how strong a correlation is without a plausible explanation.

I'm interested in plausible explanations for candlesticks, formations (heads and shoulders, etc) trends, etc that isn't purely correlative - because the lack of causation was something that put me off technical trading initially.

There's a distinction between plausible causation vs possibility of causation. On grass vs BHP share price, I rank the possibility of causation as zero. There is nothing in my limited knowledge that can suggest any possible causation. If someone can do new research using the right method to prove that for the betterment of mankind - good on them and I'd be the first to read the paper. But until then I will simply ignore that piece of information.

On chart patterns vs share price... ther are many possible causations. E.g. A support is found when the shares are overwhelming under valued. While one may not be able to pinpoint or verify the exact causation, he/she is still able to see how it can indeed has some influence (even by self-fulfilling).

But that's not really the point of most technical analysis anyway. A head and shoulder pattern (assuming you believe in such patterns) doesn't cause the share price to bounce. It is a record of share price movement that shows the activities of buyers and sellers, and such pattern has a x% chance of breaking out. It's like saying a flud is often preceeded by a sore throat and a runny nose - but they are not the cause of the flu.

 

[herzy]

Then Like GB you don't understand technical trading.

I absolutely agree that I don't understand technical trading (GB seems like a sharp-witted guy on these forums, but I have no idea about his trading ability). Disappointed that you chose to simply point out my (self-professed) lack of knowledge, and ignore my actual question. I realise there is often a lot of cat-fighting when it comes to trading, but my question was genuine.

Thank you skc for the explanation.