Skc what you have listed above is what I was, probably unsuccessful, in getting at in bonkers "TA which pattern to trade" thread.
If you want to trade short term, imo, there is no "pattern" to learn. There is something far more dynamic going on because you are dealing with an uncertain market that has constant change in not just direction/trend but volatility, time, speed, volume and even where the action is.
Do you feel like what you are doing once you take a look at the progress over the years is actually quite different every say 6-12 months? But at the same time the process that leads to the change is actually the same?
Can you guys explain more on the dynamic thing? Not any "pattern" to learn etc. What do you mean by that? What are we supposed to be looking for/doing? How can you be consistent if it's ever changing, do you mean keeping track of avg volatility/volume, how fast it moves on a continuing basis or?
Some great posts here
My bolds.Improving Trading Performance by Building Fluid Intelligence
An important distinction emphasized by cognitive psychologists is crystallized vs. fluid intelligence. Crystallized intelligence represents what we know, our storehouse of knowledge. Fluid intelligence represents our "how to" ability: our capacity for reasoning and dealing with new and unfamiliar problems. Interestingly, what improves crystallized intelligence does not necessarily improve fluid intelligence and may even interfere with our fluid capacities. Our ability to solve problems in unique and unfamiliar areas is not advanced by having accumulated more information, but creative activities--such as performance in the arts--may build our ability to handle new situations creatively. Physical activity also appears to be linked to improvements in aspects of fluid intelligence.
Discretionary trading is a great example of an activity that requires fluid intelligence. We can read and memorize information about markets until we have an encyclopedic database, but that does not cultivate the skill to reason and function in uncertain and rapidly changing markets. Pattern recognition is an important aspect of fluid intelligence: the ability to understand new situations based upon patterns experienced in similar situations.
My bolds. Sorry about the red highlights but really please!!!How Can We Make Ourselves More Intelligent?
The recent post suggested that trading ability may be more linked to intelligence than is ordinarily acknowledged. That is because intelligence embraces both crystallized knowledge (what one knows) and fluid abilities (what one can do with what one knows). It is the latter, fluid abilities--not the crystallized information that tends to be tapped by achievement tests--that are most like trading, where reasoning in fast-moving situations is critical.
There are two big implications of this research. First, it may well be that the right kind of deliberate practice in simulation mode not only teaches trading patterns and skills, but acts as a fluid intelligence booster. By requiring traders to reason quickly in moving markets and providing them with immediate feedback regarding their decisions, simulated trading could be good brain training. Game playing could be great training for trading.
A second implication is more profound. Perhaps traditional trading psychology has had it all wrong. What if it's not lapses in discipline and emotional interference that lead to bad trading, but rather failures of fluid intelligence? If traders do not hold the right information in working memory and can't juggle that information in real time to make quick decisions, that could easily lead to frustration and other emotional interference. The cause of the trading problems, however, would be a lack of fluid thinking, not the consequent emotional reactions themselves. If that is the case, perhaps what losing traders need is brain training and not sessions with the shrink!
I'm think I'm getting this now and I can relate to it. I can't recall when exactly it happened but it was more sudden than a long transition. It seemed like a matter of a couple of weeks between when I was trading what I thought could happen based on previous day's levels, channels etc., to what I could feel was happening in front of my eyes.
Skc what you have listed above is what I was, probably unsuccessful, in getting at in bonkers "TA which pattern to trade" thread.
If you want to trade short term, imo, there is no "pattern" to learn. There is something far more dynamic going on because you are dealing with an uncertain market that has constant change in not just direction/trend but volatility, time, speed, volume and even where the action is.
Do you feel like what you are doing once you take a look at the progress over the years is actually quite different every say 6-12 months? But at the same time the process that leads to the change is actually the same?
apparently thats called Fluid intelligence.
Doesn't knowledge come in spurts and then plateau for long periods followed by another spurt? That's how it works for me anyway. I have a big break through where everything is sharp and clear and that leads to new questions which build on the previous knowledge (hopefully!) with a lot of cognitive dissonance in between.
Self doubt is also an incredibly useful force.
As far as fluid intelligence is concerned, I think it's more continuous. Like driving in a new area... you are constantly looking, steeling, adjusting the accelorator and brakes etc. The "spurts and plateau" would be more akin to studying a new map area before going on a trip. It is a somewhat different process imo.
The simple fact is that HFT companys spend 10's of millions even 100's of millions to position servers and write algorithms to get the tiniest of an advantage over the other HFT companys...they do this to get a clear measurable (speed) edge.
So if it was possible to obtain a consistent measurable edge by using patterns or anything else that could take advantage of the masses of data that is available, then i imagine someone would of spent x millions and done it...but of course no one has.
One could argue that no one has done it because the data is useless, making any study of data equally as useless.
I'm think I'm getting this now and I can relate to it. I can't recall when exactly it happened but it was more sudden than a long transition. It seemed like a matter of a couple of weeks between when I was trading what I thought could happen based on previous day's levels, channels etc., to what I could feel was happening in front of my eyes. An example is after a big sell off where I used to get killed fading the initial impulse move, later I had the patience to wait until I recognised the short covering along with new shorts that would later get squeezed out...this leaves a pattern behind which I called the 'hockey stick'. The pattern needs to be recognised as its forming to be very useful...the pattern is not just a shape but a collection of transactions that represent a certain behaviour by a percentage of the market participants...you need to recognise what's happening and who it's happening to to profit from it...in Real time.
This was the biggest ahhh ha moment for me after risk/reward.
CanOz
Yeah, I think you're right. I can see the distinction.
Dance with the market. Learn that and you will have another ahhh ha moment.
You have now discovered why lagging patterns are what they are and you need to see them starting to form rather than waiting for them to form. Much too late in a dynamic environment, even worse in a fast moving situation.
I fail to See the connection here SC
Connection is that if data/patterns were a predictor of anything an algorithm could be written to take advantage of that...since no such algorithm exists we can assume with great confidence that there is nothing to be learned from data/patterns.
For more than twenty years, Simons' Renaissance Technologies hedge fund, which trades in markets around the world, has employed complex mathematical models to analyze and execute trades, many of them automated. Renaissance uses computer-based models to predict price changes in easily-traded financial instruments. These models are based on analyzing as much data as can be gathered, then looking for non-random movements to make predictions.[7] Some also attribute Renaissance performance to employing Financial signal processing techniques such as pattern recognition.
Renaissance employs staff with non-financial backgrounds, including mathematicians, physicists, astrophysicists and statisticians. About a third of the 275 employees at the East Setauket office have Ph.Ds. http://en.wikipedia.org/wiki/Renaissance_Technologies
James Harris "Jim" Simons (born 1938) is an American mathematician, hedge fund manager, and philanthropist. Considering his background as a code breaker and an expert in pattern recognition[4] some also consider him as one of the pioneers of financial signal processing.
Simons taught mathematics at Stony Brook University on Long Island in New York.
In 1982, Simons founded Renaissance Technologies, a private hedge fund investment company based in New York with over $15 billion under management. Simons retired at the end of 2009 as CEO of one of the world's most successful hedge fund companies.[5] Simons' net worth is estimated to be $12.5 billion.
http://en.wikipedia.org/wiki/James_Harris_Simons
Connection is that if data/patterns were a predictor of anything an algorithm could be written to take advantage of that...since no such algorithm exists we can assume with great confidence that there is nothing to be learned from data/patterns.
1. So basically we're talking about having the feel for the market based on experience and being able to quickly adapt and make decisions based on what you've seen before, and that pretty much practice makes perfect?
So I'll keep watching market replays on 10x speed then, sounds like the way forward, get my mind used to and trained in what to see, like speed reading, get with the flow.
2. That's really all it is? Just a certain set of skills that differentiates the big boys from the failures. Seems too simple to be true.
You cannot be serious?
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