From practice to theory and back to practice - page 9
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The theory of mirror anti-randomness is very attractive in its radical frankness, and indeed such an approach was discussed in the secret trading sects, but so far no one has been able to convincingly demonstrate how exactly one should build a sequence of counter numbers to the market, and most importantly, for what unknown reason they can even have at least some then the connection with quotes, because in the absence of a causal relationship, it is unthinkable to imagine that some specific generated sequence will have more chances of success than any other random sequence, unfortunately at the moment, research in this area very little resembles science, but rather magic chaos, in which, as you know, there is the concept of an acausal connection, which, nevertheless, despite its obvious delusional at first glance, can have a very simple explanation ( N . B .): two sequences generated from different sources can have a connection if there are some general These are the generation rules, it’s as if two random number generators with the same initial seed were spaced a considerable distance from each other but would still give out the same numbers, only here the situation is more complicated and it is assumed that the common causes lie in the fundamental planes that form the conditions for physical implementation two processes, perhaps even the effect of quantum entanglement will one day be explained in this way, information is not transmitted at all in a supernatural way, but simply ab initio both processes contain all possible synchronized outcomes, the great magicians of antiquity knew about this and used symbolic systems to describe the common attributes of different processes, attributing, for example, planetary characteristics to people, objects, substances, thus trying to encode reality through the images available to them, later it received an adequate name - archetypes - prototypes of completely different phenomena that have a commonality in their natural basis or structure, the history of technical analysis developed similarly to ancient alchemy and astrology, and traders still use symbolic descriptions of setups, among which you can find mountains, alligators, bowls, flags, diamonds, candles, heads with shoulders, hammers, stars and a huge variety of different things, it is interesting that in hermetic philosophy there is such a moment as the principle of causality: "Each principle has its effect, each effect has its cause. Everything is done in accordance with the law ohm. Chance is nothing but the name of a law that is not recognized. There are many planes of causality, but nothing escapes the law. This principle embodies the fact that there is a cause for every effect. An effect comes from every cause. He explains that everything happens according to law, that nothing ever simply happens, that there is no such thing as chance, that although there are planes of cause and effect, with higher planes dominating the lower, nothing has ever escaped the law in anything. . Hermeticists understand the art and methods of rising above the simplest planes of cause and effect to a certain extent, and by means of an intelligent rise to a higher plane, they become sources instead of being effects..." and then a rather extensive passage about what the essence of Hermetic science is in including in order to rise to ever higher planes of the causal principle, finding common structures and elements of behavior in various particulars of life, well, it’s also possible in trading, so let’s imagine two sequences of real numbers, the first one will reflect, for example, quotes (in the simplest case, just closing prices ), the second is a specially created archetypal sequence, then it is argued that there is a function of two arguments that generates a number containing information about the next member of the first sequence explicitly or in the form of an estimate of the probability or confidence interval of the values of the next member, it is easy to see that using this function function sequentially, each time we substitute information about the past from the first (vanguished) sequence, which canonically corresponds to the principles of technical analysis on the use of past values of the time series, and this can be represented as an iterated function senus lato , we will keep silent about the second sequence for now, but I immediately want to note that this has nothing to do with the popular myths about the Parrondo Paradox or the Penny game, usually traders assume that the first sequence is just prices, but this is only the very initial understanding, the vanguished sequence can be any stream of events that are codified in prices by some set of rules, e . g . in the simplest case, it can be indicators jumping into a certain zone or triggering renko levels, the stream of events can be codified for a portfolio, and in this case, the data source is the total equity of positions, the most advanced encoding method is probably the presentation of time series microfragments in the form wavelets according to a pre-formed bank of wavelets, so for a complex curve you can give a very compact description in the form of a wavelet number or a set of weights of several wavelets, and then the microfragment will be their average, having received a stream of events in the form of a sequence of numbers, then you can apply the developed methods of mathematical analysis and heuristics to such sequences, or apply "what-if" statistical methods with a time lag, which in the simplest case can be represented as a correlation of pairs of values, for example, if events #A and #B are formed, then the next event will most likely be event #C with a probability of at least four m X%, which in most cases will correspond to the transition of the market from a less probable to a more probable state, however, this approach is difficult to implement, so many traders use relatively simple visually identifiable events such as compression / expansion of a beam of averages on several scales, counting the number of overshoots and timing of oscillators, multi-period corridors of zone boundaries for selling volatility, counting zigzags of numbered waves, etc , although in this case it becomes sensitive to subjective interpretation, nevertheless, such traders exist and even trade even right now, however, it is not possible to trade reversal patterns on Forex it’s so complicated and everyone has been able to do it for a long time, so you shouldn’t even waste time here describing such vulgar platitudes, just like on an impulse breakdown of volatility, this is known even to schoolchildren, but some time ago in one trading sect by a respected author ( l . b . s .) the hypothesis of splitting chains was presented in which the parameters of the second (archetypal) sequence were used to determine the level of risk / reward and volumes in each next transaction, and the most paradoxical is that it was a sequence of natural numbers (natural numbers, Carl!) mixed according to the rule very reminiscent of Pekar's transformation, the author argued that the use of this sequence allows you to effectively place orders on any market, forming a probabilistic portfolio for a previously unknown volatility, such an impressive statement stirred up the public, but later on the author for some reason left his audience, there were rumors that he was taken away by security officers to the cellars of the Lubyanka for disclosing information about the Grail, and evil tongues claimed that he simply leaked and then went to the factory, but it doesn’t even matter, I just want to note that this approach can also be attributed to the theory of mirror anti-randomness, and the fundamental novelty of the method was volume, that the market could not be analyzed at all, because the consistent application of the iterated Function, each time choosing the next number in the archetypal sequence, automatically adjusted the process of placing orders to any market, in other words, the transactions themselves became part of the sequence, and the analysis seemed to be carried out automatically by itself ( sic !) but the author didn’t explain how this was supposed to happen, and in general the idea of abandoning situational analysis in trading looks rather counter-constructive, here on the forum and in numerous sects, statements have already been made more than once that it is supposedly possible to make money on pure chance, but convincing So far, no one has demonstrated examples of long-term trading (or carefully hides it), and how would this be possible at all if there is no structure in truly random series to which one can cling to an archetypal sequence? - means either one should abandon such bold statements or make an amendment in terminology, specifying that market series are mixed modes of randomness and regularity, as for the mentioned concept of split sequences, it is only known that applying the Baker's transformation to a natural series creates something like an intricate zigzag with a visible repetition of some zigzag structure, this is easy to verify, for example, in MS Excel , some commentators suggested that this could be some kind of wave archetype and in the format of an extended discussion it was discussed that the nature of the market can be described by similar constructions as a fractal repeats its structure, it is noteworthy that after the completion of the sequence, if the final profit was not reached on time, then the sequence split into several subsequences identical to the original one, which also indicates a fractal nature, only the peculiarity of this fractal is that it lies along the time axis in one dimension, of course, this author was subjected to fair criticism, it is funny that some critics themselves were supporters of the archetypal wave theory and argued that their wave setups of alternating long and short waves with an impulse breakout are found literally everywhere in every market on every instrument, and even news is not able to violate this universal law of wave alternation, but on the contrary, news harmoniously integrates into this process, and more In addition, critics have continued and continue to trade on this concept, unfortunately it is not possible to cover these issues in more detail due to copyright, and we can only make very general references to such techniques, in addition, one must wait 70 years after the alleged death of the authors before one can will publish these materials, and if by that time medicine has significantly extended the duration of human life, then in general the disclosure period may be postponed indefinitely, in addition, even a broad criticism of these esoteric concepts is difficult due to the large number of omissions and gaps, in particular despite While the idea of an ideal market archetype is very attractive (and often we can see repeating patterns of movements in the market), nevertheless, the question remains - how is it possible in principle to abandon the situational analysis of the market and unrestrictedly receive profit simply by repeating some sequence? - a similar question should be asked by any traders who expect to make a profit by running any deterministic algorithm - in fact, for what reasons do they even dare to hope for income, because if in the end any algorithm, even adaptive with recursions and multiple chains, can be represented as a sequence numerical commands, then wouldn't it completely fit into the theory of mirror anti-randomness? - thus, the problem turns out to be much deeper and more monumental than one could have imagined from the very beginning, what if you ask the question - what kind of data does any adviser use from the numerous opuses presented on the forums and in stores or in the personal repositories of the army of traders? - of course, these are the past data of the time series of the target traded instrument, sometimes additional data of other instruments for the same period, and that's all, in rare cases, the presence/absence of news data is used, what else is included in the trading system? - the actual code of the algorithm, the mathematical model, we can say generalizing - a function of the time series / series, i . e . there are two classes of information: time series and code / model, time series are already initially presented as a numerical sequence, and the code / model can also be represented as sequential numerical data by some transformations, after all, any algorithm code is numerical data of machine instructions that with painstaking work with correspondence tables, it is possible to reverse-engineer into any representation in any algorithmic language, thus it can be argued without loss of generality that any modern trader, no matter what trading philosophy he professes, he necessarily searches for the final archetypal sequences, applying which to the data chain of the temporal series would generate a predominantly monotonically increasing function of the yield curve with minimization of the spread of returns, considering this phenomenon bona fide , we will come to the conclusion that it doesn’t matter whether the trader uses strictly mathematical models or the methods of occult metaphysics - or worse, traditional technical analysis, but he still operates within the framework of the designated theory of mirror anti-randomness, of course, here I want to add quite a bit about what the concept of randomness in trading remains rather vague, few people wonder what exactly is randomness, for example, the number pi looks random in decimal notation, that is, without a visible pattern, however, there is an algorithm that allows you to calculate each next number, so the number pi cannot be called random although its numbers look like that, but is it possible to argue that it is possible to pick up such an archetypal sequence (algorithm) that would generate real market time series in real time, or at least something similar to them? it’s not even necessary to draw quotes exactly, it’s enough just to give the numbers of codified events, there are fierce critics of the analytical approach who argue that for trading in general, analysis is not needed and you just need to follow the market movement, you can often hear “ trend is your friend ”, they enter on corrections along the thread or in the breakdown of a flat on an impulse, others act on the contrary and catch deviations to return to the conditional average or enter a break in the trend, some merge on a protracted flat with zigzags, others merge on long non-recoil movements, someone merges with stops slowly and systematically, and someone without stops abruptly and uncompromisingly, wraps some well before they hit a real trend impulse, drags others without a retracement against the position into a deep overstay of the drawdown or accumulates so many stops that subsequent profitable trades no longer cover the drawdown , games with the sizes of stops and targets usually only affect the speed and smoothness of the drain curve, one group merges in a trend, the other in a flat, maybe they even merge each other one by one, remaining with a total zero amount minus commissions from the spread, the binary nature of the device this universe does not allow to come up with something fundamentally different, there are only four strata gies in relation to the completed movement: (1) trend continuation, (2) trend break, (3) volatility breakdown and (4) return to the average, some try to switch from one to another or even combine several strategies with weights, but the problem is that these weights are not constant, and the alternation periods are also of different lengths, some confidants of trading sects have already tested the concepts of a deterministic trend rectifier in different variations, this concept consists in obtaining a trend fragment in one way or another on a certain window (for example, a regression portfolio) and to follow the trend immediately from the market or from a correction, it is easy to guess that such attempts have suffered a natural fiasco due to the predominant recurrence of Forex and constant self-corrections, the variability of the alternation of fluctuations, the length of trends and sluggish flats, uneven zigzags, etc , when the trend rectifier model rolls from the hill of one short trend to another hill changing direction more often than desired in the end, even entering from corrections does not help, simply because corrections are of different depths and are often algorithmically indistinguishable from reversals (although it would be better with manual analysis and involving a fraction of the foundation) in a word, it turns out by the fact that trend is your fiend (English - enemy, adversary, from Old English f ē ond , further from protogerm. * fijandz , ultimately from the Proto-Indo-European root * peh ₁- = to hate), while some tried to do an increase in volumes, but as a rule this is only unpleasantly increases the size of account equity zigzags, guessing that the drain always happens under any conditions, it was also invented to invert buy / sell transactions , but funny as it may seem, even the inverter did not help and the drain continued, it should be noted that this is not so much a drain as just random actually an uncontrollable curve, another group practiced and practices countertrend trading with filtering and confirmation, and even right now, it’s amazing that by some incomprehensible miracle they didn’t leak (maybe you just need to wait) and even showed amazing results using simple graphical setups, but decay in any case is inevitable due to the lack of filtering of bad periods and situational analysis, “because no one has yet left the market free azanim ”- the chronicler of the sectarian movement reports, and in his words some kind of sardonic chuckle seems to be heard, some claim that he really thinks so, others say that he writes it on purpose so that the grail does not get to anyone, so that people who read it think that there is no hope in trading and it is better to quit this business, others with rational enthusiasm argue that there is no grail, this is an unattainable state, and you can only collect the average market return at a given risk level lying on the effective boundary of the portfolio cloud or move along capital market line , if you fantasize a little, you can imagine that taking into account the excess of the risk measure in the form of a return range over the return value and if we assume that the return is still conditionally positive on average, then you get a bunch of possible trajectories for a trading account and a lower confidence limit for a given level after some time intersects with the abscissa axis, then such a trading system deserves attention, but if the lower confidence limit does not cross the abscissa axis in the foreseeable future, then such a trading system is complete decay and it is better to go to the factory because the range is too large, so the trader's task is obviously in order to find conditions for minimizing the dispersion of returns without significant loss of returns, or for the minimum of the oblique parabola to be no more than a given percentage of the allocated capital in absolute terms, this will give at least an estimate of the return for the maximum acceptable risk, and then the investment p decides whether he needs such a return or not, unfortunately, the trading and trust management industry does not even provide such statistics yet, as a rule, and the investor has to do it on his own, however, it is not so difficult if there is representative honest trading statistics, but even according to the results of such an analysis it is impossible to reliably say whether the trading system will retain its properties, whether it is worth waiting for a drawdown in the system before starting to invest in it, whether there will be a pronounced alternation of growth-fall waves, whether it is worth inverting the system’s signals when it reaches the peak of profitability or exits the equity flat , and if try to generalize all these situations, it turns out that in order to achieve success, you need to require either the continuation of the movement of something (instrument, portfolio, system equity) by at least “so many percent” compared to the number of return zigzags, or vice versa, require at least N zigzags of a comeback before the big one-hundred only a few percent "... in general, it's easier to go to the factory ...
Theoretically, these situations are possible:
It's more complicated than that. There is a big difference between understanding the market and experiencing it. And this difference is not constant in time and varies from market to market, and most importantly - it is unknown in advance. Making a profit with the lack of understanding of the market often leads to an overestimation of risk and the subsequent understanding of the lack of initial understanding due to the inevitable margin call. It is therefore very important to understand the impossibility of fully understanding any market.
The mirror anti-randomness theory is very attractive in its radical straightforwardness and indeed such an approach has been discussed in secret trading sects, but so far no one has been able to convincingly demonstrate .......
... in general it is easier to go to a factory...
Yes, you have given away your sadness and grief.
At first I read every line, then one after the other, and then five after that, and everything is clear and understandable.
Why do I always follow you with interest? You are clever and reasonable. But from your opus one can conclude that the market is invincible to anyone.
You're probably a little wrong. I know some guys from my childhood who were not too bright and went into business after the USSR collapsed. Today they are selling millions of dollars worth of metals. And there are a lot of them. This is also a market. And one has to understand it. Well, forex is specific, it has to be studied, absorbed and understood. Every bend in it is logical.
5% a day is nothing. Just for fun))
P.s. I removed the picture, so as not to irritate)).
The mirror anti-randomness theory is very attractive in its radical straightforwardness and indeed in secret trading sects this approach has been discussed, however [...] it is easier to go to a factory...
I'll digest the most important thing for busy forum visitors as always, ok? )
The mirror anti-randomness theory ...
Here, on the contrary, everything is simpler. It is enough just to remember a very simple mathematical fact that the set of algorithms has countable power, and the set of all sequences - the power of continuum. Hence, errors in sequence prediction (and hence sagging) are inevitable.
Why do I always follow you with interest? You are clever and sensible. But from your opus one can conclude that the market is unbeatable by anyone.
You're probably a little wrong.
No, he's just a cunning member of an ancient people. What do you call them... Oh! Schumer! ))
No, he's just a cunning member of an ancient people. What's their name? Oh! Schumer! ))
Why are you so angry?
Why are you so angry?
That's the way to do it! )) Maybe I'm a Schumer, too.)
The mirror anti-randomness theory is very appealing in its radical directness and ...
Once upon a time (a long, long time ago) I sinned a bit about writing compound sentences, but I have never even come close to creating such an opus (!!!)...
Once upon a time (a long, long time ago) I made a bit of a sin of writing complex compositional sentences, but I've never even come close to creating such an opus...
Opus or opus, if only it were formatted... It's too long to read such a sheet of paper (