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Re: [RT] cycles


  • Date: Wed, 20 Jan 2010 09:03:04 -0800
  • From: "Jim White" <jwhite431@xxxxxxxxxxx>
  • Subject: Re: [RT] cycles

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Ira,
I agree with some of what you say but rather than ego, I believe the key element is discipline. If a trader has a specific trading methodology with proven reliability and with specific stop loss criteria, he will not be successful if he does not have the discipline to follow the rules. I think it is discipline that separates the successful from the unsuccessful.
I disagree that a reliable methodology won't work for everyone - it will if the individual is disciplined enough to follow the rules.
 
Jim
----- Original Message -----
From: Ira
Sent: Tuesday, January 19, 2010 2:50 PM
Subject: Re: [RT] cycles

 



Every individual has their own criteria for success.  The thing that gets in the way of most traders is ego.  The need to be right.  This is a major problem for most traders.  I have seen traders be successful using planets, numerology, the phases of the moon, Gann, Elliot, trend lines, channels and every other system up to neural networks.  There are those that have 99 losing trades out of a hunderd and make enough money on that one trade to cover all the loses and end up with a profit and there are those that are 80% correct and lose money because they take profits too quick and let their loses run because they can't admit that they made a bad trade. 
 
Each person is a unit unto himself and what works for one just won't work for everyone. 
 
Ira
tradingone.wordpress.com
----- Original Message -----
From: Jim White
Sent: Tuesday, January 19, 2010 2:14 PM
Subject: Re: [RT] cycles

 



Jim,
Thanks for the reply and references. When I began this game I studied just about all the cycle methods available including Hurst and Delta. I doubt that there is a cycle book of note that is not in my library. I concluded that there was just to much variability in the accuracy of the trend change forecasts from cycles to give me an acceptable trading methodology. Now, I admit this is a personal thing - I just cannot stand drawdown and waiting to be in a profit position as is required when trading with cycles.
But there was something else about cycles - they told me nothing about the why of market moves and I wanted something that was more science than art.To believe that markets moved according to planetary positions or some physical number periods just was not acceptable.
It was not until I began to study chaos theory and the psychology of traders that I developed a methodology that satisfied my curiosity as to why markets reverse and to give me an indication of reversal that was close enough to trade with. I set as my goal a +/- one period accuracy on reversals and a 70% to 80% reliability on the trading signals , performance which I have documented over the last ten years.
Now this is not to say that I don't believe that cycles exist - I certainly do. They just do not satisfy my criteria for a trading methodology. Others may be able to use then successfully.
 
Now regarding the discussion of the importance of volume. I also have no found no reliable way to use volume as a trading tool. However I do use measures of tic direction to give me readings on the sentiment of the market and changes in sentiment leading to price reversals. I use these every day.
 
Jim White
----- Original Message -----
From: J Curry
Sent: Tuesday, January 19, 2010 7:40 AM
Subject: [RT] cycles

 

Hello Jim!
I would cycle analysis is more of an art than a science; I think
even those who follow them would often wonder if they are there - at
least at times. However, I might agree with you on the 'static'
comment, as the cycles that I track always have an average variance
of plus or minus 20% in either direction.

A similar notion could be applied to Elliott-wave; it is more of an
art than a science - but there are some who are very adept with it.
As far as statistical validity, I would doubt you would find any hard
evidence of that in any trading method (other than something slightly
above-average). if there were something that worked 100% of the time,
then please let us all know as we would like to use it :-)

as for methodology, I am going to reference Hurst's 'Profit Magic',
along with Raymond Merriman's book 'Cycles and Patterns in the market'.
these two are a good starting point for those interested in cycles. take
what you find useful, discard the rest - and then add that to what you
come up with yourself. it is certainly an evolutionary process.

where is Clyde Lee when you need him? :-)

thanks for the message
Jim



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