talolard

@Simit: Amen

@Ruben
It depends on how theoretical you want to go. I.E. before i got into trading i had an interest in Systems in general and a lot of my understandings about trading systems are based on much more abstract observations. in that field i would recomened. Come to think of it, I havenet read a single book that mentioned adaptive risk in a trading context.
1. Hidden Order: how adaptation builds complexity, By John Holland
2. Complexity: The Emerging Science at the Edge of Order and Chaos, By Michael waldrop
3. Operating manual for spaceship earth, By R. Buckminster Fuller
4. A first course in probobility, By Sheldon Ross (Which is obviously about probobility theory and different calculations and ways to go about them).

Happy reading
Tal

trendisyourfriend

In gambling circles we have seen propositions to test situation awareness and some swear by it as being the way to go. Others use the term making educated guess as you move into risky territories. There are so many variations of these concepts that we can say almost everything has been tested. I have done my share of it over the years to finally realise that a trained brain with a simple approach is better than all of these approaches. At least, it is more portable.

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talolard

A TRAINED brain?

trendisyourfriend

A trained brain can adapt without any preconceived scripts or instructions on how to react when an unknown situation occurs. But with trading there is no uncharted territories. I see the same patterns every day over and over. I just react and adapt to them as they occur.

Can you read this pattern of letters 'eveyr day' as meaning 'every day'. it is very tough for a computer to tell what these letters really mean. But for a trained brain it is nothing.

De tradin is an exercise in sef discovry. << do you understand this pattern of letters ?

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coronajazz

I stand with trend!

What trend is talking about is what I believe is refered as "the edge". I strongly believe that in order to make money in the market you must "do" something unique, not done by any other trader in the world. To distinguish yourself from "the herd" so to speak. Again, it does not have to be a complicated routine that only genius would understand but it must be unique. That is why (again it is my belief), a computer cant substitute a human brain in this game, except for a short run while "other machines" sort of catch on with what your machine is doing and mess it up on terms of increased competition.

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Ektrader

Hi Corona,

I repectfully disagree! You don't need to do something unique to seperate yourself for the "herd". You just need to do something correct on a relatively consistant basis.

Computers have the ability to do all of these things and more. The problem is, computers can't seperate every single variable so they must be managed. There are algorythm programs all over the globe that make money on a consistant basis for banks and trading companies. But they have to be managed and tweaked as market conditions change.

Ektrader

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Magic

The Monty Hall Problem is a good example of the weakness of mathematics when the hypothesis is based on wrong assumptions. The false assumption here is that the player actually has a choice during the first phase when he doesn't. It doesn't matter which door he picks he cannot win with that choice - even if he has picked the correct door - the probability of winning = 0. On the second round the game begins in actuality and the probability is 1 in 2 - 50/50.

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Ruben..

Thanks!

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coronajazz

I think that we are saying the same thing, just in diffierent manner.
I too believe that automated systems can make money. But you have to be able to manage them, as you said, and that is the part of the trained brain, or the edge, the separation from the herd that I am talking about. Take a simple system like buying on the lower and selling on the upper bollinger band. It will work like charm on certain conditions, and destroy you on other. The computer will fail in determining the market conditions in which it should trade like this from both sides, the times when you should only take the long side or the short side, and of course the times when you should just stand aside. That condition determining process can only be made by human.

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