Traders' Roundtable

The problems of causality and of imperfect induction in the social sciences are beyond the scope of this forum but in general, I steadfastly believe risk cannot be quantified with precision in the social sciences as it is routinely done in the physical sciences. I feel we need to bestow some attenti...

To quote SirG I have found focusing on performance of trading in terms of equity might not be the "best" way, as your emotions might ride the equity curve. This might make the drawdowns an issue. Instead, focus on the performance of trading as a function of the management of the system. Di...

I trade anything that meets my criteria: 1.Interest Rates 2.Currencies 3.Individual Stocks and Stock Indices 4.Energy 5.Metals 6.Commodities.I tend to view my system as a supportive and firm partner. I take care of the qualitative work, which I believe is essential for a dynamic portfolio, and my pa...

damian


I missed that

Also: When selecting markets to trade based on how trendy they have been in the past and then back-testing you are curve fitting your system. I could use a cycle trading strategy and could make a fortune in back-testing if I preselected my markets based on those that exhibited cycle behaviour. Could...

You’ve brought up a topic that doesn’t receive the attention it deserves.

This suggests that one should trade as many markets as is reasonably possible and goes against preselection as some of you suggest.

I find “broad diversification to be a hedge against ignorance.â€

Savings, savings, savings. ...or borrow from the bank, family memeber etc. Understand the risk each one entails.

Toni,

Im sure William Eckhardt and other long-term trader would agree with you. But it is not necessarily so. There are a few discretionairy traders where the above doesn't apply.

In short, they don't. The trends are caused by other things, most often some actual fundamental reason based on supply and demand or bargaining power considerations. I agree with c.f.’ comments … human psychology is fractal in nature …as c.f. pointed out: Hope, Fear, and Greed can indeed add ...

Hi kiwi, Was your Monte Carlo analysis based on a single issue? If so, have you had a chance to rerun a Monte carlo simulation utilizing position sizing at the portfolio level [to account for serial correlation] with a list of trades that were optimized for expectancy using the ProSizer software? MT

Western philosophy regarding event causality seems to have inverted causal relationships. Social mood, reflected by the aggregate record of stock market prices, “leads eventsâ€

[quote]“For unleveraged investments this is a pretty good indicator of the exposure to the risk of crazy unpredictable events like 9/11, the 87 crash, etc. If you only have 20% of your money in the market on average, you will only lose 10% of your account if the market drops 50% overnight. If you ...

I personally feel such calculations and efforts are futile
MT