Technical analysis

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The problem with pattern spotting without an underlying theory is that you don't have a basis to believe the pattern can't change.

For example, what happens when other investors, maybe lots of them, adopt the same algorithm? Would it still work or would that break it?
 
Spindrift said:
Wouldn't making a ton of money trading solve your cash flow problem?

If the system works I simply don't understand why you haven't put everything you have into it. If it works why are you afraid to actually use it?
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Always a good question. As I said, I have traded s and p 500 thsn emini and everything else on and off for 40 odd years, so I may have left my run a little late.
The algorithm is one line of excell code, plus a fair bit of experience. I expected the general thread reaction, as I would say the same of any of you. But in this case it is true.
Since there is a bit of interest I will post the trades on this thread in real time for curiosity. That is pretty well time stamped. At the moment I seem to have an excellent ongoing free charting package, so while it lasts.....
 
marplots said:
The problem with pattern spotting without an underlying theory is that you don't have a basis to believe the pattern can't change.

For example, what happens when other investors, maybe lots of them, adopt the same algorithm? Would it still work or would that break it?
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The depth in the electronic futures instruments like emini standard and poors would support quite a few small time traders, eg 10 lots at market is always done straight away. The currencies are thinner, but the us bonds are huge. Also the eurostoxx has massive depth. I always prefer futures contracts because the history is transparent.

There is an underlying theory. In simple terms, markets can only change direction by breaking a sequence of lower lows or higher highs. That first break is the time to attack. Remember also the algorithm operates from 15 minute periods through to monthly, so multiply that by independent instruments, and there is room for everybody.
 
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Samson said:
Always a good question. As I said, I have traded s and p 500 thsn emini and everything else on and off for 40 odd years, so I may have left my run a little late.
The algorithm is one line of excell code, plus a fair bit of experience. I expected the general thread reaction, as I would say the same of any of you. But in this case it is true.
Since there is a bit of interest I will post the trades on this thread in real time for curiosity. That is pretty well time stamped. At the moment I seem to have an excellent ongoing free charting package, so while it lasts.....
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That's nice but none of this explains why you don't put your money where your mouth is if it is true.

Why would you not want the money?
 
Spindrift said:
That's nice but none of this explains why you don't put your money where your mouth is if it is true.

Why would you not want the money?
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I do want the money, as I said I will post some real time trades to prove my point. You may be surprised. It is a little hard to explain why I am not funding it myself, but that will change soon.
 
Samson said:
Almost all trades were executed at market, and the Emini seldom has less than 100 a side.
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Should I take that as a "no, it doesn't take into account market depth, and assumes the market has a perfect liquidity which doesn't exist in the real world"?
 
Anyone know what happened to kevsta?

I remember going back and forth with him in a similar manner. My last PM was back in October 2013.

Similarly wasn't silver supposed to be at $75/oz ages ago?

I was then, and am now, with the skeptics.

Recommend "Fooled By Randomness" by Taleb for insight into this sort of claim.
 
Brian-M said:
Should I take that as a "no, it doesn't take into account market depth, and assumes the market has a perfect liquidity which doesn't exist in the real world"?
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That is why I use the emini. I was doing 10 on the simulator at market. In real trading these would always be done at the bid or offer, or at worst a few might be a quarter point away minimum tick $12.5.
It is true if I sold say an aussie dollar contract with 2 on the bid the simulator would register any number at that price. But the emini is has quasi infinite liquidity for a small trader.
I will get the person who took the data off to enrol, post the trades and the graph. And he can explain that he had no idea what it was all about. Categorically independent. We manually correlated every trade with a hand written sheet I had kept.
I was surprised how good I was.
Incidentally, the simulator started with 100,000 Aussie dollars, and by the time it was switched off it showed a balance of 206,000, but that was a much wilder ride, I was trading a whole lot of other things for fun simultaneously, plus a broker friend was logging in and throwing trades on.
All these trades were $50 round turn in their currency, so that 206,000 would have been over 100k commission, so in fact was a great result.
The simulator used current margin requirements too by the way.

Ah, skeptics unite. I have no axe to grind, so I will work out how to photo the screen real time and just annotate sell or buy and post. Anyone can trade if they like what they see. As they say, no skin off my nose, and I would love someone to benefit.
 
Samson said:
That is why I use the emini. I was doing 10 on the simulator at market. In real trading these would always be done at the bid or offer, or at worst a few might be a quarter point away minimum tick $12.5.
It is true if I sold say an aussie dollar contract with 2 on the bid the simulator would register any number at that price. But the emini is has quasi infinite liquidity for a small trader.
I will get the person who took the data off to enrol, post the trades and the graph. And he can explain that he had no idea what it was all about. Categorically independent. We manually correlated every trade with a hand written sheet I had kept.
I was surprised how good I was.
Incidentally, the simulator started with 100,000 Aussie dollars, and by the time it was switched off it showed a balance of 206,000, but that was a much wilder ride, I was trading a whole lot of other things for fun simultaneously, plus a broker friend was logging in and throwing trades on.
All these trades were $50 round turn in their currency, so that 206,000 would have been over 100k commission, so in fact was a great result.
The simulator used current margin requirements too by the way.

Ah, skeptics unite. I have no axe to grind, so I will work out how to photo the screen real time and just annotate sell or buy and post. Anyone can trade if they like what they see. As they say, no skin off my nose, and I would love someone to benefit.
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Frankly I don't care if you achieved a theoretical, or even a real doubling of your money in the past 6 months. Among the forum members out there, others out there would have done equally well or better using another algorithm, or just picking investments with a dart board. What is important to realize that yet others would have probably lost equal amounts of money in that time by using another apparently powerful algorithm, or lost the same amount of money using your algorithm over the next 6 months. But those latter individuals seldom brag about their losses on an Internet forum.

There is an interesting scam where a con artist sends a free email to 500 people telling them that a particular stock will go up, but sends emails to another 500 telling them the same stock will go down. Then, after it goes up or down, the con artist sends a similar email just to the 500 who got the correct prediction the first time and repeats the scheme, 250 up predictions and 250 down predictions. After a few cycles the con artist has the remaining people thinking he is incredible at predicting the market; the con artist then offers the final pick for a fee. Randomness plus people's tendency to want to believe in a pattern can lead to very misleading interpretations.
 
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Samson said:
As I said, I have traded s and p 500 thsn emini and everything else on and off for 40 odd years, so I may have left my run a little late.
The algorithm is one line of excell code, plus a fair bit of experience.
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Why not post the line of Excel code? Any number of posters here would be able to give it a good soak test.
 
Giordano said:
Frankly I don't care if you achieved a theoretical, or even a real doubling of your money in the past 6 months. Among the forum members out there, others out there would have done equally well or better using another algorithm, or just picking investments with a dart board. What is important to realize that yet others would have probably lost equal amounts of money in that time by using another apparently powerful algorithm, or lost the same amount of money using your algorithm over the next 6 months. But those latter individuals seldom brag about their losses on an Internet forum.

There is an interesting scam where a con artist sends a free email to 500 people telling them that a particular stock will go up, but sends emails to another 500 telling them the same stock will go down. Then, after it goes up or down, the con artist sends a similar email just to the 500 who got the correct prediction the first time and repeats the scheme, 250 up predictions and 250 down predictions. After a few cycles the con artist has the remaining people thinking he is incredible at predicting the market; the con artist then offers the final pick for a fee. Randomness plus people's tendency to want to believe in a pattern can lead to very misleading interpretations.
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Yes of course there are scams. However this is a public board, and of course short of that two hour editing window there is no escaping one's past.
Skepticism is healthy, and I realise 1985 was my first trading, so 30 years not 40. I will let the data guy make an explanatory post. I told him his data retrieval would not be believed, and so it turns out.
 
Samson said:
Yes of course there are scams. However this is a public board, and of course short of that two hour editing window there is no escaping one's past.
Skepticism is healthy, and I realise 1985 was my first trading, so 30 years not 40. I will let the data guy make an explanatory post. I told him his data retrieval would not be believed, and so it turns out.
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I believe it. Why not?

But here's another important question. What would have to happen (market/investing results) to falsify your algorithm? In other words, if I could find an historic sequence which didn't fit, would that be enough, or would that just be an outlier?

Asked another way - How accurate do the predictions have to be to believe the algorithm works, and for how long do they have to meet that standard?
 
marplots said:
I believe it. Why not?

But here's another important question. What would have to happen (market/investing results) to falsify your algorithm? In other words, if I could find an historic sequence which didn't fit, would that be enough, or would that just be an outlier?

Asked another way - How accurate do the predictions have to be to believe the algorithm works, and for how long do they have to meet that standard?
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A good question. I have been reading about optimisation for years. I once retrofitted a data series years long, and solved each pattern anomaly with a special condition till the excell program was hundreds of lines long. I kind of knew I was fooling myself, but the resultant profit graph was so beguiling I wasted years on it. I never actually traded it fortunately, it was a crock.

This particular algorithm is simple enough that if I posted a dozen pictures you would decipher it. I won't do that exactly right now, but I am of an age that I am keen to prove the OP so people don't think I am just another eccentric.
 
Samson said:
A good question. I have been reading about optimisation for years. I once retrofitted a data series years long, and solved each pattern anomaly with a special condition till the excell program was hundreds of lines long. I kind of knew I was fooling myself, but the resultant profit graph was so beguiling I wasted years on it. I never actually traded it fortunately, it was a crock.

This particular algorithm is simple enough that if I posted a dozen pictures you would decipher it. I won't do that exactly right now, but I am of an age that I am keen to prove the OP so people don't think I am just another eccentric.
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Kind of ironic that your premise is that past history can be used to predict future performance.
 
Samson said:
I perceive a wish to assume I am wrong, which is in itself ironic.
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You perceive incorrectly. I hope you make millions and millions. I don't think you will but I hope you do.

I will explain the irony. Your current super-duper algorithm is based on past history of stock prices. Your own past history of developing an algorithm was a self-admitted failure.
 
Spindrift said:
You perceive incorrectly. I hope you make millions and millions. I don't think you will but I hope you do.

I will explain the irony. Your current super-duper algorithm is based on past history of stock prices. Your own past history of developing an algorithm was a self-admitted failure.
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Super-duper is a little perjorative. I expect it. Remind me of the OP. I take it you would bet both your arms against both mine that my contention is wrong on a long time scale, say 10 years.
 
Samson said:
Super-duper is a little perjorative. I expect it. Remind me of the OP. I take it you would bet both your arms against both mine that my contention is wrong on a long time scale, say 10 years.
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Why would you take this bet? You won't bet on your own contention with your own money. And speaking of the OP, you said 6 months, not 10 years.
 
Spindrift said:
Why would you take this bet? You won't bet on your own contention with your own money. And speaking of the OP, you said 6 months, not 10 years.
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Yes, but 6 months was scorned by other posters. 65 round turns has its own likelihood of statistical clustering, how do you assess that?
 
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