SIUYA

can you go from being a professional with money to an amateur because you have no skills?

"Half of you in this room are going to be below the average intelligence for the room - the other half probably don't belong here"...anon

Hi Logic, i too would be interested in the above quote (I dont care about the returns but are more interested in what you mean) i saw a similar quote (I cant remember where) from AQR Capital and he talked about creating systems differently. Given you brought it up it seems unfair not to continue Also just as an extra - I have always thought of any signal as being reactive from the point of view that everything is drawn from data in the past.....ie; there is not really any predictive signals. (even most fundamental analysis is similar, unless you are really trying to predict certain market trends, new innovations etc) Slight semantics maybe/definately, and while i can understand that mean reversion systems (even if the mean is entering on trend reversals say) might be considered more 'predictive' as you are trying to pre-empt a move....I was wondering if this is a large factor in what you mean when you talk about creating systems?

Check out Jez's site - he does a review, is very thorough and he is a nice straight shooting guy . Plus his site is something you might like. Vince's Leverage Space Model: better than MPT? | Au.Tra.Sy blog - Automated trading System I have never gotten into the maths side in detail --- so it holds little interest for me.

Futures offer leverage - but that does not mean you have to use it. Unless of course you are undercapitalised. As to how to trade while hanging on to your day job..... Well 1) either have a day job that allows you to constantly monitor the markets, or 2) spend any time you have researching the markets looking only at strategies that allow you to set and forget.eg; trend following, swing trading over 2+ days.....otherwise day trading is a waste of time IMHO - it requires a different set of skills and viewpoint.

For the rest of us who dont have that, we just have to drink the cool aid and choose the ugliest girl in the room. Its too bad those seem to be getting fatter and uglier, binging on the twinkies of debt, and the only thing they can do is say "why am i so fat - i will eat more to cheer myself up" - I can tell you here in the UK (I cant speak for Europe) but I think its continuing its slow decline into oblivion. If you believe that the UK has a great legal system and democracy etc, a reason why people persist in investing and supporting it; then WTF is it doing trying to export these to the rest of the world.....it will loose its competitive edge! Then it will have nothing, soon everyone will be speaking Chinglish or Spanglish, and if they get the same institutions watchout..... by then we will all likely be dead.....so i am choosing to enjoy it while i can (end crazy rant - too many Friday afternoon snickers (i ran out of blue smarties) but managed to actually get some MFGlobal money back this week - slightly strange that i dont feel more up beat about it) Have a good weekend all....and go the wallabies against England - now that could be a game of two uglies.

yes - there is the distinct difference between, what is happening, what can be done to fix it, and what is currently being done, and then there is still the question of which is the ugliest girl in the room and do you just leave for another venue, or drink more to make them prettier.(does this make you more or less stupid?)

I attended a seminar about 18months ago (http://www.magellangroup.com.au/magellan-investment-briefing-recordings/) - there were some interesting stats about how quickly the US could fix a lot its problems if it actually increased corporate (hidden taxes) just slightly and also at the same time, reduced its medical spending (and not by cutting programs but by not subsidizing the crazy insurance schemes and the large drug companies) Radical I know.....but taking any politics out of it (if you can), it was fascinating to see that by small tweaks in the percentages, a lot of cash could be freed up - and it would most likely result in people not really missing out on anything. So I too am bullish the US as the prettiest ugly duckling. As a starting point Comparative effectiveness research - Wikipedia, the free encyclopedia and when it comes to comparing tax rates - remember its only on what you declare as profit in that country. As the UK is finding out, if the money is effectively not made - there is no tax on it! (an example: CBI Boss Calls For Reform Of Offshore Tax) Its a whole other can of worms, one that is fraught with danger, lies, those things called statistics and emotional politics......but i thought i would bring it up anyway.

your not thinking of the scam whereby you send out a newsletter with a stock saying they are a buy to 10000 people, then the same stock as a sell to 10000 people. If it goes up you then take a different stock rate it as a buy and send it to the first 10000 people again. However this time you send it as a buy to 500 of those, and a sell to another 5000. Once again you will have 500 people thinking you got it right twice in a row...... rinse repeat.....finally you have after ten times at least some people (17) with proof that you picked it right at least ten times in a row! Amazing right. 10,000,5000,2500,1250,620,310,150,70,35,17 Thats a statistic!

i use IB FX and usually pay the market.....the spread is small, and sometimes you get a better fill than expected - sometimes there is slippage - usually when you are trying to chase things. If i sit on the bid/offer with a limit order then I often get filled, and have had partial fills and had the market moved away from me as well. I have also placed orders where i can see i am the main bidder or seller (its easy to see if you try it with an odd number when volume is thin) FWIW - I dont think it gets any better than this

The photo you guys have is all black....I have managed to secure the one that FBI investigators took that reveals more (special cameras I hear).....but they are not sure if its Obama and Romney OR Petraeus and the biographer. It could even be Mitts latest artistic performance piece. (thats enough juvenile behaviour for the day for me - its amazing what the yearly admin and accounts will do to your brain) http://www.traderslaboratory.com/forums/attachment.php?attachmentid=32870&stc=1&d=1352969948

and there you have it folks - art speak - something more crazy than than anything in finance. and yes drawing is dead darrllings! That is why there have been no pictures in these recent posts....a 1000 words paint their own picture --- can i have those smarties please.

I hear you - I moved to the UK, and the language is completely foreign. If you ask for anything to be done, or have any request from the government, banks, service personel the first response is a flat out 'no' - its taken me time to adjust and rephrase the question On a serious note, while the article has nothing new in it, it still amazes me that many have not thought about their decision making processes, and how that affects a lot of other elements of life - from exhaustion, missing the obvious, big picture stuff. How often do people go into a restaurant and say "there is too much to choose from, or I dont know what to have"......and then spend wasted time fussing over changing it agonising the decision or whatever....:doh: - just enjoy it. Schools and unis dont often teach us processes of 'how to make a choice' - there are plenty of variations, but not much else - probably why effective self help books are the rage - plus everyone is different of course.....but i digress. One element I thing that certainly overwhelms many new traders is the myriad of supposed choice out there in trading, and too often the choices are made and the rationisations for it are then justified - but little is done in looking at how to make better choices using rational thought (as opposed to emotion - then rational reasoning) . Maybe here in lies the real benefit to automation. ..... random musing at lunch.

as for natural selection - we voted them in. Mind you other systems dont seem to work either.... This was an interesting article abut decision making in the FT. http://www.traderslaboratory.com/forums/attachment.php?attachmentid=32832&stc=1&d=1352880506

c'mon Mit - thats just your thumb in front of a picture of the sky....you need an artists CV to get away with that one. A great American conceptual artist once told me (or was I imagining it) that when it comes to art,....."if you cant make it good, make it big. If you cant make it big paint it red"

there are plenty of fund managers who are hopeless with their own money. The guy might have been so wealthy it was his everyday account. He might have been accessing an offshore account (they usually dont show balances) and this was money he was hiding from the wife.....hence the need to withdraw cash for his night out.

so no novices, dreamers or half wits.....but its ok for kids...where do i sign up? I already have a DIY brain surgery kit - I just have trouble getting the patients to survive long enough to determine the results. On looking at the basic patterns and some of the video, I think Mitt has done a good summary. For - if its indicator based and you cant fully automate it, then you may as well learn how the market works without indicators, because you still have to watch it.

Most 'professionals' dont do anything like what many retail traders who are successful do. You are very correct in that many were/are market makers, HFT arbitragers or deep value investors and doing different things with different mindsets and views. However I do think a lot of the same principles can be applied, the same mistakes learnt from and the the same work ethic (etc;) can be listened to. There are still plenty of market makers or arbitragers who dont become market wizards.....or just long term successful. As per usual, a lot depends on definitions of traders, speculators, investors......for what its worth, I can usually learn information from sports people, businessmen, artists, that i might be able to apply to my ideas in trading. As to it being non random - --- well - I have pondered this previously, been shot down in a few different threads for suggesting similar things (eg; Renanissance as an example who dont necessarily speculate or do they) and if you really boil it down you end up comparing apples and oranges as opposed to different varieties of apples.

Q: How many economists does it take to change a light bulb? A: Once we seasonally adjust for the numbers and take into consideration an amendments to last months numbers we will reach a sub-optimal number that has clear implications for any future fiscal or monetary policies at which we will be better suited to be able to give a more accurate assessment of what may or may not have been required many years in the future.

Ed.....actually the bet depends a lot on how you do phrase it.....as you are clearly aware. What are the odds of flipping a 10th head after 9 heads in a row is very different to saying i have just flipped 9 heads in a row.....what are the odds that the next coin is a head. When you said "the chance of flipping a tenth head after nine previous are small, it's 50/50" you introduced the aspect of 9 and then ten heads...... it would have been better to say the chance of flipping a head after nine previous are small, it's 50/50....as you corrected. and relating this to the theme of the thread.....it is these little things that do make the difference....the small print so to speak between making money and loosing money in trading. Possibly why its so hard to quantify why it works sometimes and not others.

is there a prize for flipping a tenth head only after flipping 9 in a row ---- I only ask as such a run is only a 50/50 chance....right?

I think it comes more from the idea that when you have winning trades going your way you should sit on your hands......given most traders (especially new ones) over trade, sitting on their hands is the right advice. Reminiscences of a stock operator..... "It never was my thinking that made the big money for me. It always was my sitting. Got that? My sitting tight! It is no trick at all to be right on the market. You always find lots of early bulls in bull markets and early bears in bear markets. I've known many men who were right at exactly the right time, and began buying or selling stocks when prices were at the very level which should show the greatest profit. And their experience invariably matched mine--that is, they made no real money out of it. Men who can both be right and sit tight are uncommon." "What beat me was not having brains enough to stick to my own game – that is, to play the market only when I was satisfied that precedents favoured my play. There is the plain fool, who does the wrong thing at all times everywhere, but there is also the Wall Street fool, who thinks he must trade all the time. No man can have adequate reasons for buying or selling stocks daily – or sufficient knowledge to make his play an intelligent play." "They say you never go broke taking profits. No, you don’t. But neither do you grow rich taking a four-point profit in a bull market."

this might be totally useless as i dont know enough EL - but it looks like you will have an END in the wrong spot.

There are still algorithms required to process data and the auction process.....given exchanges compete with each other they are unlikely to release these algorithms....or I hope you are not thinking the whole thing is some global conspiracy Ed....that feedback loop is the arbitragers. They both buy and sell depending on where the index is relative to the fair value. To do so they both buy and sell the index and the shares.....(it reads as if you are confusing the three different things.....the index made up of the basket of stocks, the futures contract based on future delivery (or cash settlement) of that basket of stocks (the index) and the fair value of that futures contract (v the actual trading price) so if a large purchaser in the futures pushes the futures up above fair value. The index will likely follow up as the arbitragers buy shares, and sell the futures. If a large seller of shares sells individual shares down, resulting in the index decreasing, the arbs will then sell the futures above the fair value and buy shares representing the index. Same result different starting points......there is the feedback loop

Patuca - it seems that what you are saying is ---- if the data feed you are getting has a time stamp on it from an exchange that has all the trades registered on it. Such that if each data point is sent out in such a form then it does not matter what anyones computer is set at. That makes sense....if then it also supposes that data providers dont interrupt that information and amalgamate trades or modify the data in some way because of the volume of data. If the data is not the same then there can be differences. Or is this missing your point? (This having nothing to do with the relevance of the meaning of a bar close)