2009.06.24 WHY 95% OF TRADERS LOSE PART III

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fxfreddie
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Postby fxfreddie » Mon Oct 19, 2009 11:12 am

Thank you for posting this material TRO. Very important to the self discovery process necessary to achieve personal trading success. This stuff is very valuable, I appreciate it very much.

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TheRumpledOne
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Postby TheRumpledOne » Mon Oct 19, 2009 3:15 pm

A further complication
One further complication of seeing needs mentioning. The eyes
gather visual information by constantly scanning the environment.
But visual data from "out there," gathered by sight, is not
the end of the story. At least part, and perhaps much of what we
see is changed, interpreted, or conceptualized in ways that
depend on a person's training, mind-set, and past experiences. We
tend to see what we expect to see or what we decide we have seen.
This expectation or decision, however, often is not a conscious
process. Instead, the brain frequently does the expecting and the
deciding, without our conscious awareness, and then alters or
rearranges?or even simply disregards?the raw data of vision
that hits the retina. Learning perception through drawing seems
to change this process and to allow a different, more direct kind of
seeing. The brain's editing is somehow put on hold, thereby permitting
one to see more fully and perhaps more realistically.
This experience is often moving and deeply affecting. My
students' most frequent comments after learning to draw are
"Life seems so much richer now" and "I didn't realize how much
there is to see and how beautiful things are." This new way of seeing
may alone be reason enough to learn to draw.

The New Drawing on the Right Side of the Brain

http://www.4shared.com/file/109993404/6 ... Brain.html
IT'S NOT WHAT YOU TRADE, IT'S HOW YOU TRADE IT!

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TheRumpledOne
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Postby TheRumpledOne » Wed Oct 28, 2009 7:26 pm

IT'S NOT WHAT YOU TRADE, IT'S HOW YOU TRADE IT!



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Postby TheRumpledOne » Tue Nov 10, 2009 1:32 pm

IT'S NOT WHAT YOU TRADE, IT'S HOW YOU TRADE IT!



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Postby TheRumpledOne » Fri Nov 13, 2009 10:55 pm

Interesting:

Cause of the Financial Crisis In One Word

"Too keen an eye for pattern will find it anywhere." ~ T.L. Fine

http://financialphilosopher.typepad.com ... -word.html
IT'S NOT WHAT YOU TRADE, IT'S HOW YOU TRADE IT!



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Postby TheRumpledOne » Fri Nov 13, 2009 10:58 pm

THE NEW MARKET WIZARDS

==== Do you use chart patterns in your systems? ====

Most things that look good on a chart-say, 98 percent-don't work.

==== Why is that? ====

The human mind was made to create patterns. It will see patterns in random data. A tum-of-the-century
statistics book put it this way:

"Too fine an eye for pattern will find it anywhere." In other words, you're going to see more on the chart
than is truly there.
Also, we don't look at data neutrally-that is, when the human eye scans a chart, it doesn't give all data
points equal weight. Instead, it will tend to focus on certain outstanding cases, and we tend to form our
opinions on the basis of these special cases. It's human nature to pick out the stunning successes of a
method and to overlook the day-in, day-out losses that grind you down to the bone. Thus, even a fairly
careful perusal of the charts is prone to leave the researcher with the idea that the system is a lot better than
it really is. Even if you carry it a step further by doing careful hand research, there is still a strong tendency
to bias the results. In fact, this bias exists in all scientific research, which is why they have persnickety
double-blind tests. Even the most honest researcher will tend to bias data toward his or her hypothesis. It
can't be helped. When I did research by hand, I took the attitude that I had to discount my results by 20 to
50 percent.
IT'S NOT WHAT YOU TRADE, IT'S HOW YOU TRADE IT!



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Postby PTG » Fri Nov 13, 2009 11:25 pm

TheRumpledOne wrote:Interesting:

Cause of the Financial Crisis In One Word

"Too keen an eye for pattern will find it anywhere." ~ T.L. Fine

http://financialphilosopher.typepad.com ... -word.html


Interesting blog.

Here's another interesting read from that blog: http://financialphilosopher.typepad.com ... -bias.html

What's your existing view ?

Does a 'trend' not exist ?
Or does it ?

Does 'herd mentality' not exist ?
Or does it ?

Am I, by posting these questions, making some kind of statement re. my opinion ?
Or am I not ?
This is my new signature: "new signature".

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True reasons

Postby Paul » Sat Nov 14, 2009 10:54 am

Hi there,

It is about the right time to exit the maze and stop competing with the rat.
I am grateful to TheRumpledOne for the riddle because it is so much easier now to turn to other aspects of the problem of understanding the FX market.

I want everyone to see what is around the maze, besides the maze, outside the maze, as the maze itself is in a more general environment.
Everything what has been discussed about the maze is absolutely true. Unfortunately this is not the whole of the market. It is a part of it, and I will not try to evaluate how big or how small part. For this stage of the discussion I will only stress that this part is significant. But have we discussed other significant parts of the market? NO. And I am very surprised that even some members who tried to mathematically ridicule certain tremendous efforts of The RumpledOne and other leading members of this forum did not leave the maze, though a mathematical mind is supposedly able to see the broadest context of a well defined problem.

When a mathematician cannot see a major problem but tries to contribute to this forum, it means one thing:
This one thing is that he exhibits a Yale personality. A selfish and lazy mind. We are to believe what he says because he has licked some maths and we can only watch his licking. Hence the bla bla bla about the statistical analysis and the dispute how much randomness - how little randomness - and so on. Such a pseudo-authority fails to observe that statistics is just one of the poor girls of the whole of mathematics and it is also a best manipulative tool of seemingly scientific significance. YES, statistics gives scientific results only and only if it is applied correctly, and I mean proper tools for proper phenomena. Otherwise, statistical analysis will never be more than bla bla bla for spin doctors.

In short, those mathematicians attacking TheRumpledOne exposed themselves as poor people indeed, bouncing their heads off the walls of the maze. I just want to ask you what it the worth of proving how much randomness is in a system if a system is not random?
But how will you know that? Are you able to test the system from this angle? Or you just suppose it is like flipping a coin.

I am surprised that so many myths about the FX markets are being circulated on end. Sometimes I think of them as myths-terrorism. It is time to admit that the maze is not an entire market and there are more problems and other surprises on the path to good trades.

The FX market is never only stochastic.

to be continued...

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continued

Postby Paul » Sat Nov 14, 2009 2:31 pm

Traders are concentrated on the stochastic market.
Market makers are concerned with the chaotic market. I will not explain what is stochastic or what is chaotic. There are enough articles over the net at your hand. Do not assume that you understand the difference without their perusal.
Traders want to make some money whereas market makers want to stabilize the market.
Chaos can be controlled (to some an extent some would argue).
Traders and market makers have different goals and use different tools. Market makers know traders' tools. Do traders know market makers' tools? Both of them cannot ignore the impact of each other on the market behavior though.

The FX markets are intermittent. If you told me when it is stochastic and when chaotic, if you showed me exactly the transition of phases, I would make myself millions very soon, and some decent money for you as well.

to be continued

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ccontinued

Postby Paul » Sat Nov 14, 2009 8:36 pm

TheRumpledOne wrote somewhere about the implications of focusing on certain aspects of the market like patterns.

Such a focus leads to losing the big picture and when the inevitable comes we end up with a loss.

Patterns belong to the category of Reductionism, a methodological attitude of explaining properties of a system through properties of its elements alone. Reductionism may work only for linear systems.

Some systems have properties that depend more on the way how the elements are connected than on what the specific properties of individual elements are.

In the systems being close to equilibrium one can observe linear processes while in the systems being far from equilibrium processes are nonlinear.

Equilibria are the states of "death". Nobody would trade.
FX markets are constantly in inequilibrium.

to be continued

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