A Wrong Direction

All that brain power going to all the wrong ways to trade the markets. Reacting to market moves must not stimulate ’em enough!

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8 thoughts on “A Wrong Direction

  1. It is human nature to take something inherently simple and complicate the hell out of it……….

  2. In my research of price movement I have found that market price moves inline with laws of physics measured using mathematics, in an excel sheet, take 25 rows of price and divide how much price moved from A to B on the absolute dollar value from A to B (measure how much price moved in between A and B)… you would always find that maximum percentage would on average be 20% ($5/$25).

    Everything follows laws of physics, but sometimes it becomes too complex that we don’t see part of the picture, therefore the best action is ‘no action’.

    You can not predict the future, but you can forecast the limits and control risk, and with diversification you would lower the risk of incorrect forecasts.

    All what I found was never from books of physics, but from sheer comparison between life and price movement, for example a break pad loss in a car is the maximum accepted loss which we all try to maintain, but if we make a mistake due to complex situation, then we would lose the bumper or air bag, yet even lesser frequent but real accidents may cause losing part of our body in a more severe accident that may require emergency services (ambulance and hospital sponsored by everyone in form of tax money, just like car insurance).

    Physics and math are just words that describe what we already know, yet we live it day by day, therefore there is a lot to learn from what we already know, I mean we just have to look at our daily life in detail and because most of life is self similar but only deferent in similarity, we would learn a lot from simple things, for example: The guy who makes shawerma sandwiches usually prepares more chicken than beef, he says that people in our area eat more chicken than beef, he also knows the ratio of chicken to beef so that at the end of the day he would have sold both equally adjusted to ratio, this is a man whom didn’t even finish high school…

    I think people read too many books which makes them unable to think for their own, like eating too much because food is available, knowledge is becoming an objective instead of purpose, people are eating not because they are hungry but because they can, even in the world of fast food, its become about branding and advertising, I find it unnatural to advertise for food because I assume all food to be good unless someone is selling bad food and should be advertised, otherwise food is a facilitator to other processes and should not replace higher or delay processes, obesity is wide spread around the world for this reason.

  3. Technical skill is the mastery of complexity. Simplicity is the mastery of creativity. — E. Christopher Zeeman, Catastrophe Theory

  4. I’m delighted Mohammed Saleh is a trader. Someone to take the other side of mine!

  5. Do you not find relationship between price movement and physics, math, statistics?

    How would you feel if traders from funds such as ‘Renaissance Technologies’ are on the other side of your trade?

  6. “How would you feel if traders from funds such as ‘Renaissance Technologies’ are on the other side of your trade?”

    Who cares who is on the other side of your trade as long as you are following a system you believe in.

  7. How would I feel if traders from funds such as ‘Renaissance Technologies’ are on the other side of your trade?

    I’m sure they are on the other side of my trades quit often….. All I can say is. Thank you guys for contributing to my balance…….

  8. Guys, I am not advocating prediction or complex systems, all i am saying is that we go through life dependant on averaging, forecasting and statistics to simplify rather complex day to day issues, like car insurance, starting a coffee shop, when to change car tires, what is a safe driving pattern, etc. Basically measuring risk to be able to define it and limit the downside volatility while keeping the upside to the unknown fate.

    I come from a moderately religious family and I did not like the vagueness of how religion is being taught to me since I was young, but in statistics I found that religions are time tested systems that seek to limit risk, yet maybe not updated with current era variables which is why it was vague to me, but now I understand that when I have a system that is statistically significant, all I need is to have the discipline ‘faith’ to apply it no matter what, i would not be greedy when I make extra profits because I know that is infrequent and would be spread across a long time horizon on average, and if I lose a lot I know such losses are infrequent and will also be spread across a long time horizon, eventually even out and I come out on top.

    Basically I understand the relationship between short term profit/loss and long term average of both; I have faith and faithful to the system and no longer have bias towards the short run.

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