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jonathan
Posted: Tue Mar 18, 2008 8:16 pm
Guest
Is my performance so far this year good, bad or ugly?

On a total of 26 trades
I've had 13 winners, 5 losers and 5 ties (+-1%) this year.

The 13 winners ave return was 8% each
The 5 losers -4% each.
The average return for all 26 trades was about 3.5% each.
That's roughly 21/2 trades a week, 8% return per week.

Damn, now that I've typed this out, that sounds pretty good
to me. I'm getting psyched.

The basic idea behind my trading system is outlined
abstractly in the first link....great stuff. I think I can claim
to have successfully used Chaos Theory, now called
Complexity Science, in creating a very simple trading system.

I think I've finally done it!!!

Does anyone know of any trading systems using the concepts
of chaos theory? I've looked and haven't found anything
online yet even close.



TOWARD THE 'EDGE METHODOLOGY' FOR COMPLEX
SYSTEMS SIMULATION
http://www.calresco.org/milov/ymtemcss.htm


My bible

The Complexity & Artificial Life Research Concept
for Self-Organizing Systems
http://www.calresco.org/


s
Bill Reid
Posted: Tue Mar 18, 2008 9:00 pm
Guest
jonathan <maatschj@write.instead.net> wrote in message
news:NPZDj.22537$vr3.19345@bignews2.bellsouth.net...
Quote:

Is my performance so far this year good, bad or ugly?

I can't decide, like a Mexican stand-off...

Quote:
On a total of 26 trades
I've had 13 winners, 5 losers and 5 ties (+-1%) this year.

Well, you're doing better than just about everybody here...

Quote:
The 13 winners ave return was 8% each
The 5 losers -4% each.
The average return for all 26 trades was about 3.5% each.
That's roughly 21/2 trades a week, 8% return per week.

MUCH better...

Quote:
Damn, now that I've typed this out, that sounds pretty good
to me. I'm getting psyched.

I'm getting bored...what makes you THINK that these results
aren't the result of "luck" rather than design?

Quote:
The basic idea behind my trading system is outlined
abstractly in the first link....great stuff.

I ain't gonna look at it...what's it say?

Quote:
I think I can claim
to have successfully used Chaos Theory, now called
Complexity Science, in creating a very simple trading system.

Where have I heard this before? Oh, that's right, right in this
newsgroup (misc.invest.stocks) from a guy who posted a few
times, couldn't back up any of his claims, then disappeared...

Quote:
I think I've finally done it!!!

You THINK?

Do you know the difference between "thinking" and "hoping"?

Quote:
Does anyone know of any trading systems using the concepts
of chaos theory?

My system draws in part from chaos theory. It most importantly
draws from the chaos theory concept of "multiplication of errors",
in which very small initial data errors are magnified and prediction
becomes well-nigh impossible...hence the name "chaos" theory...

Quote:
I've looked and haven't found anything
online yet even close.

Anything that really "works" isn't going to be widely-disseminated...

Quote:
TOWARD THE 'EDGE METHODOLOGY' FOR COMPLEX
SYSTEMS SIMULATION
http://www.calresco.org/milov/ymtemcss.htm

If I actually looked at this, it'd probably be something I worked
out like twenty years ago...

Quote:
My bible

The Complexity & Artificial Life Research Concept
for Self-Organizing Systems
http://www.calresco.org/

How ya feel about genetic algorithms? They're "fun" too...

---
William Ernest Reid
Post count: 975
jonathan
Posted: Tue Mar 18, 2008 10:37 pm
Guest
"Bill Reid" <hormelfree@happyhealthy.net> wrote in message
news:Ms_Dj.22159$D_3.15454@bgtnsc05-news.ops.worldnet.att.net...
Quote:

jonathan <maatschj@write.instead.net> wrote in message


I'm getting bored...what makes you THINK that these results
aren't the result of "luck" rather than design?


Too early to say, but the results have been steadily improving.
Of the five losers, two of them were the very first two trades (-3% each)
where I was more interested in seeing if the account still worked.
And a third was a 9% percent loss that was a fluke I believe.
I bought the stock online as usual, but when I went to sell
a couple of hours later that day, dear e-trade said the stock
can only be sold through a broker now, not online anymore.
Since it was going up too fast.

By the time I got a broker a nice gain turned into the loss.
The other two losers were 2% each.

But 8 out of the 13 winners were 5%, %5, 7%, 10%, 10%, 10%17%,23%.

And this is trading while I can only sneek onto the company
computer for less than an hour a day, and mostly using
my cell phone for trading. With it's little-bitty fuzzy charts.


Quote:

The basic idea behind my trading system is outlined
abstractly in the first link....great stuff.

I ain't gonna look at it...what's it say?


It says, that under certain dynamical states, all stocks will
behave in the same way. And (only) at this state, the behavior
becomes not at all dependent on the specific inner details of the
company at hand. Also, (only) this dynamic state is defined the
theoretical point at which volatility and predictability
converge to /simultaneous/ maximums.

These are some of the key properties of what is called
The Edge of Chaos. You already know the basic idea
but probably don't realize it's potential.

A cloud, while a cloud, stands persistanly poised at the
transition point between water and vapor. It's at the
Edge of Chaos. What happens if the temp or humidity
changes even a bit? The cloud suddenly becomes....either
water or vapor.

A very dramatic yet predictable change that occurs
in the very same way every time, regardless of the
nature of the system. Living, physical or even emotional.

The trick is to find a chart that is at this delicate transition point.

Drive a system just far enough from equilibruim, and they can act
like a flock of birds when driven by good news.
Or thunderstorms when the news is gloomy.

Either way, dramatic yet predictable change takes
place at or near either extremes in possibility.
Whether a bubble bursting or a company teeteriing
on the brink of disaster. Exploring the sweet spots
or transition points of either /extremes/ are where
it's at.



Quote:

I think I can claim
to have successfully used Chaos Theory, now called
Complexity Science, in creating a very simple trading system.

Where have I heard this before? Oh, that's right, right in this
newsgroup (misc.invest.stocks) from a guy who posted a few
times, couldn't back up any of his claims, then disappeared...


That probably would be me, I've been working on this for
a couple of years. I'm finally giving it a test with larger
sums of money. Eh hum...I finally have larger sums of
money to test it with...I should say~
In the past it's tested out about the same.


Quote:

I think I've finally done it!!!

You THINK?


I'm pretty sure, but ya know, I've been wrong once or twice~



Quote:

Do you know the difference between "thinking" and "hoping"?


Amount of data. The trades so far are only a tease, more than hope
but less than sure.


Quote:

Does anyone know of any trading systems using the concepts
of chaos theory?

My system draws in part from chaos theory. It most importantly
draws from the chaos theory concept of "multiplication of errors",
in which very small initial data errors are magnified and prediction
becomes well-nigh impossible...hence the name "chaos" theory...

I've looked and haven't found anything
online yet even close.

Anything that really "works" isn't going to be widely-disseminated...


Well it should be, in (chaos) theory the more that know, the better
it will work for everyone. Once I'm fat and happy, I'll be more
detailed. For now I'm sticking with discussing theory only.
These concepts require some ability to take an idea and run with it.


Quote:

TOWARD THE 'EDGE METHODOLOGY' FOR COMPLEX
SYSTEMS SIMULATION
http://www.calresco.org/milov/ymtemcss.htm

If I actually looked at this, it'd probably be something I worked
out like twenty years ago...

My bible

The Complexity & Artificial Life Research Concept
for Self-Organizing Systems
http://www.calresco.org/

How ya feel about genetic algorithms? They're "fun" too...


Nature shows us the process for the best possible solution
to any problem.



Jonathan


Quote:

---
William Ernest Reid
Post count: 975


Bill Reid
Posted: Wed Mar 19, 2008 9:50 am
Guest
jonathan <maatschj@write.instead.net> wrote in message
news:OT%Dj.22123$dT.10080@bignews1.bellsouth.net...
Quote:
"Bill Reid" <hormelfree@happyhealthy.net> wrote in message
news:Ms_Dj.22159$D_3.15454@bgtnsc05-news.ops.worldnet.att.net...
jonathan <maatschj@write.instead.net> wrote in message

I'm getting bored...what makes you THINK that these results
aren't the result of "luck" rather than design?

Too early to say, but the results have been steadily improving.

What is the significance of the results "steadily improving?"
Have you changed your trade selection criteria?

Quote:
Of the five losers, two of them were the very first two trades (-3% each)
where I was more interested in seeing if the account still worked.
And a third was a 9% percent loss that was a fluke I believe.
I bought the stock online as usual, but when I went to sell
a couple of hours later that day, dear e-trade said the stock
can only be sold through a broker now, not online anymore.
Since it was going up too fast.

So you're day-trading a single "rocket ship", probably a low-priced
issue. You've already got a ton of volatility inherent in the stock, which
tends to negate any market out-performance of your short-term results
statistically...

Quote:
By the time I got a broker a nice gain turned into the loss.
The other two losers were 2% each.

I'm assuming that trading gap did not CAUSE the losses, right?

Quote:
But 8 out of the 13 winners were 5%, %5, 7%, 10%, 10%, 10%17%,23%.

This sounds like either a penny stock, or maybe Bear Stearns (same
difference)...

Quote:
And this is trading while I can only sneek onto the company
computer for less than an hour a day, and mostly using
my cell phone for trading. With it's little-bitty fuzzy charts.

So you're using charts for your trade selection criteria, and
nothing else? You're just using a time series of the price data
(and maybe volume), and nothing else?

BTW, this is called "charting" in stock trading (great name!),
and of course traders have been doing it for years. Just using
a time series of price data as trade selection criteria is
generally referred to as "technical analysis" by traders...

Quote:
The basic idea behind my trading system is outlined
abstractly in the first link....great stuff.

I ain't gonna look at it...what's it say?

It says, that under certain dynamical states, all stocks will
behave in the same way. And (only) at this state, the behavior
becomes not at all dependent on the specific inner details of the
company at hand.

This is also the key concept of all "technical analysis", but
the "true believers" will aver ALL future price action can ONLY
be reliably traded based on past price action.

The moth in that particular buttermilk is something like the
sudden near-bankruptcy of a major investment bank, but they
parry that by noting that you can rarely if ever predict stuff
like that anyway (personally, and statistically, I don't agree
with that).

Quote:
Also, (only) this dynamic state is defined the
theoretical point at which volatility and predictability
converge to /simultaneous/ maximums.

Well, one specific use I make of the "chaotic boundary" (another
name for what you're talking about) is for option trading, which can
be quite profitable if you can predict increases/decreases in volatility.
So I have been using some very specific techniques related
to what you're talking about for about 18 years now...

Quote:
These are some of the key properties of what is called
The Edge of Chaos. You already know the basic idea
but probably don't realize it's potential.

<John McLaughlin>WRROOOONNNGGG!!!!</John McLaughlin>

Quote:
A cloud, while a cloud, stands persistanly poised at the
transition point between water and vapor. It's at the
Edge of Chaos. What happens if the temp or humidity
changes even a bit? The cloud suddenly becomes....either
water or vapor.

Yeah, yeah, yeah, things fly apart, the center cannot hold...

Quote:
A very dramatic yet predictable change that occurs
in the very same way every time, regardless of the
nature of the system. Living, physical or even emotional.

I like how crazy people get when their stock trading schemes
don't pan out...which is of course part of the "chaos" of the
market.

Quote:
The trick is to find a chart that is at this delicate transition point.

Can't you parse out the condition using just the price data
alone? That's what I do, but I also have the capability to "read"
charts for "patterns" algorithmically if need be...in any case,
to either rigorously test or most profitably utilize your
"discovery", you need to be able to apply it to tens of
thousands of past/future charts quickly, the way only a
computer program can do it...

Quote:
Drive a system just far enough from equilibruim, and they can act
like a flock of birds when driven by good news.
Or thunderstorms when the news is gloomy.

I liked the rats in college. If they got a reward for pressing
the green button, they would press the green button more and
more, and if they got a punishment for pressing the red button,
they would press the red button less and less.

And if you just randomly gave out rewards and punishments
for pressing either button, they would go crazy, and begin posting
all kinds of racist idiotic hair-brained contradictory conspiracy
theoried stock trading strategies on Usenet...

Quote:
Either way, dramatic yet predictable change takes
place at or near either extremes in possibility.
Whether a bubble bursting or a company teeteriing
on the brink of disaster. Exploring the sweet spots
or transition points of either /extremes/ are where
it's at.

Been there, done that, made enough money to buy
my own T-shirt. You need to test this a LOT better
than just running a test with your own money, and the
fact that you began "testing" with your own money
without apparently performing back-testing casts
doubt on the rigor of your "research" to come to
this amazing "discovery"...

Quote:
I think I can claim
to have successfully used Chaos Theory, now called
Complexity Science, in creating a very simple trading system.

See above.

Quote:
Where have I heard this before? Oh, that's right, right in this
newsgroup (misc.invest.stocks) from a guy who posted a few
times, couldn't back up any of his claims, then disappeared...

That probably would be me, I've been working on this for
a couple of years.

It was a little longer ago than that, if I recall. But over the years,
all the amazing "discoveries" just kind of blur together, you know...

Quote:
I'm finally giving it a test with larger
sums of money.

Again, how many times have I heard THAT before? Anyway,
nice talkin' to ya...I mean, you do understand that the amount
of money YOU "test" it with has NOTHING to do with any actual
"proof" that the system works, right?

Quote:
Eh hum...I finally have larger sums of
money to test it with...I should say~
In the past it's tested out about the same.

So DID you actually perform rigorous back-testing, or just
do a little trading and declare "victory"?
Quote:

I think I've finally done it!!!

You THINK?

I'm pretty sure, but ya know, I've been wrong once or twice~

We all have, but in this case there's a way to be pretty much
right the FIRST time, potentially saving you a lot of your hard-earned
dollars...

Quote:
Do you know the difference between "thinking" and "hoping"?

Amount of data.

BINGO!!!! Now apply that concept rigorously, and if it truly
works, "do the right thing", never post here again, make a fortune
in secret!

Quote:
The trades so far are only a tease, more than hope
but less than sure.

From what I can tell, much closer to a "hope"...

Quote:
Does anyone know of any trading systems using the concepts
of chaos theory?

My system draws in part from chaos theory. It most importantly
draws from the chaos theory concept of "multiplication of errors",
in which very small initial data errors are magnified and prediction
becomes well-nigh impossible...hence the name "chaos" theory...

I've looked and haven't found anything
online yet even close.

Anything that really "works" isn't going to be widely-disseminated...

Well it should be, in (chaos) theory the more that know, the better
it will work for everyone.

Maybe you should study just a little bit of physics, look up
the name "Heisenberg", or any type of game theory dealing
with pari-mutuel payoffs, or poker (your chaotic boundary is
the result of what in poker is called players "going on tilt").

If all traders have access to the same information and use
the same strategy to trade the market, much of the potential
profit you can make would disappear. The stock market offers
excellent trading opportunities primarly because of the mistakes
made by other traders.

Quote:
Once I'm fat and happy, I'll be more
detailed. For now I'm sticking with discussing theory only.
These concepts require some ability to take an idea and run with it.

Tell me about it...it's a friggin' full-time job, that mostly results
in blind alleys, so don't quit your REAL job...

Quote:
How ya feel about genetic algorithms? They're "fun" too...

Nature shows us the process for the best possible solution
to any problem.

Nature shows us how to wreck the friggin' SuperDome, after
the weatherman "predicts" the storm will not hit New Orleans...but
Lorenz told us 50 years ago why we couldn't predict nature with
anywhere near 100% accuracy...riiiiiight?!??!!

---
William Ernest Reid
Post count: 976
Edward Hennessey
Posted: Wed Mar 19, 2008 1:21 pm
Guest
"Bill Reid" <hormelfree@happyhealthy.net> wrote in message
news:1L9Ej.45512$cQ1.39493@bgtnsc04-news.ops.worldnet.att.net...
Quote:

jonathan <maatschj@write.instead.net> wrote in message
news:OT%Dj.22123$dT.10080@bignews1.bellsouth.net...
"Bill Reid" <hormelfree@happyhealthy.net> wrote in message
news:Ms_Dj.22159$D_3.15454@bgtnsc05-news.ops.worldnet.att.net...

Can you kindly snip sci.geo.geology from your end of this exchange which
apparently has nothing to do with our focus?

Regards,

Edward Hennessey
jonathan
Posted: Wed Mar 19, 2008 11:21 pm
Guest
"Bill Reid" <hormelfree@happyhealthy.net> wrote in message
news:1L9Ej.45512$cQ1.39493@bgtnsc04-news.ops.worldnet.att.net...
Quote:



Quote:

So you're day-trading a single "rocket ship", probably a low-priced
issue. You've already got a ton of volatility inherent in the stock, which
tends to negate any market out-performance of your short-term results
statistically...


It's a short term system. The idea is to start with a system at equilibrium
that's been suddenly disturbed. It's the /reaction/ to the disturbance
that's being studied for emergent patterns, in complexity science.
And it's the edge behavior that's interesting, and where universal
patterns are found.



Quote:

Maybe you should study just a little bit of physics, look up
the name "Heisenberg", or any type of game theory dealing
with pari-mutuel payoffs, or poker (your chaotic boundary is
the result of what in poker is called players "going on tilt").

Here though we're dealing only with far from equilibrium states, and
properties of collective behavior where history matters.

In stock charts an edge state takes the form of a panic sell
or panic buy. Where a small perturbation over time cascades
and begins accelerating and converging on one or the other limits
in possible behavior. As with a genetic algorithm searching
for function limits. It's only a matter of time before the system
slams into its own practical boundaries when the disturbance
is of the proper character. Giving a very reliable bottom or top.
This presents situations where pretty much everyone that
will sell has, or might buy has. The future then is pretty easy
to predict.

When either limit is found, the near future is always obvious
to everyone. System behavior then becomes detached from
system specifics.

So the buyers and sellers, at the edge, suddenly agree and
flock together in a very predictable way. At least until the
energy gathered in the drive from equilibrium is gone.

This is an attempt to use the general properties of self-organized
complex adaptive systems as a guide to determine the
chart variable values which cause /any/ system to seek out and
converge upon it's own limits in possible behavior.

/Uncertainty/ drives systems to the edge and generates
universal behavior. To predict real world systems we must
learn to /quantify/ ...uncertainty. This is what I'm attempting
and will try to show below.

It turns out that when the primary driving variables of
any system are in the range where they give the very /least/
amount of predictability, and all at the same time, the system
begins hill-climbing, evolving and converging towards the edge.

When a variable is within this miminum, it is said to be in the
complex realm. As far from either simple endpoints as
possible, so that one can't tell which extreme dominates.
So that one can't gain any predictive value at all due
to the equal distance from either certain endpoint.

So, the mathematical task to define under what conditions any
system will display universal behavior, is simply to define the
primary system variables, then define the complex range for each.

Then draw the chart from that.

The three primary variables of a chart pattern are of course
price, volume and the transient length. Which is the length
the disturbance driving the system from equilibrium lasts.

Defining the complex realm is highly subjective, as is
complexity science in general. But that isn't an obstacle
to reliability.

All complex dynamic systems can be defined in terms
of their static, dynamic and chaotic attractor behavior.

Pattern/transient length.

The complex realm is simply the time period that's as far from
either extreme as possible as observed in practice.

One extreme as observed in time frames is the day-traders
which operate loosely speaking in /minutes or hours/.
The opposite extreme or limit in time frame is of course
the longs, which operate again loosely in periods of
/months and years/. So a complex time period would
be neither and both, in between.../days or weeks/.
More than a day, less than a month.

Ten to twenty day pattern/transient lengths define the complex
range or pattern length with the least ability to inform the
future.

Initial Price

One extreme is the penny stocks, the other is the blue chips.
Defining where blue chips begin is rather subjective.
But the price which typically reflects stability is sufficient.
Defining the penney stocks is easier of course, let the
lower extreme be the point at which stocks are booted
off the exchange, say $2. And the opposite extreme to
be over $10 or $20 is good enough. These boundaries
are defined much like porn, you know 'em when you
see 'em.

So the disturbance should take place on a stock that is
at the upper range of the complex realm, say $10
or $20. And the distirbance should end near the
lower range of the complex realm, say $5 or $10.

Initial Volume

Again, the high and low extremes are subjective and arbitrary.
Doesn't matter. Complex volume would not be, oh, 20 million
shares a day, or a hundred thousand. But somewhere
in between such obvious extremes.

Those are the necesary initial conditions.

Then comes the disturbance.

It must ...also...be a complex disturbance.
Neither so weak or so strong that it's future
effect is obvious. But it must also be of such
a magnitude so that one can't tell if it will quickly
die off or totally destroy.

The opposite extremes in effect on price of any
disturbance would be of course a price that
changes little over time, or changes all at once
in a single spike down. So, of course, a complex
rate of change of price would be again...in between.

A scale independent 45% degree angle or slope of
minus 1.

Final volume

Again, between little change and too much like
an order of magnitdue. The final volume, when
arriving at the edge, should be roughly double
initial.

Final price.

Again, a complex change in price would be between
no change and zero. While not falling out of the complex
range.

A fall of minus one half, 50%, that stops somewhere in the
lower portion of the complex range.


ALL variables, initial, final and total change must
display the maximum amount of ...uncertainty.
They must all be complex. Then and only then
the system behavior becomes universal.

Of course all parameters are loosely defined.
They draw a very recognizable pattern that doesn't
really need much accuracy.

If you've read this far, thanks. If you have chart options
for ...20 days, as with Quote Tracker, then look at the
chart patterns of these four tickers from the last few days.
As you can see, they all meet the parameters rather well.
There are plenty of them every week as you can see below.
Too many I couldn't decide which to play as usual.

Look at bxxx, smbl, rso, novn. (20 day charts)
A child could make ten percent a week.

And they all do the same thing. Independent of company
details, problems or whatever.

Like any nice thunderstorm, the phase change or reversal
is announced when the system finally converges on the edge
with a nice loud clap of thunder (volume spike), followed
by a brief rain-shower. Then the pattern is over. There
is no real predictability beyond that point.


Quote:
Nature shows us how to wreck the friggin' SuperDome, after
the weatherman "predicts" the storm will not hit New Orleans...but
Lorenz told us 50 years ago why we couldn't predict nature with
anywhere near 100% accuracy...riiiiiight?!??!!

The weathermen predicted Katrina well enough.
No one listened.

Who needs 100% accuracy. We need to know how to design
systems with the properties of naturally evolving systems.
And let the system find its own way to the ideal.
Science needs to get off the obsesssion on how to
predict based on part properties, on deriving fundamental
law from the simplest the universe has to offer.
And begin writing new fundamental laws based on the
most /complex/ the universe has to offer....life.

The Great Mistake of modern science is to think we can
unravel reality by starting with the simplest, the physical
universe, in order to later understand the most complex
such as life.

It's the other way 'round. Life....Darwin...the abstract properties
of biological evolution show us the fundamental laws of order
governing the entire universe. We can only truly understand
the physical universe through Darwin.




Quote:

---
William Ernest Reid
Post count: 976


Bill Reid
Posted: Fri Mar 21, 2008 9:09 am
Guest
Well, you don't have to worry about me stealing your system, since
I didn't understand it...but then I had the same problem with the "Jack
Hershey" system...anyway...

jonathan <maatschj@write.instead.net> wrote in message
news:IClEj.7560$Q52.1384@bignews9.bellsouth.net...
Quote:
"Bill Reid" <hormelfree@happyhealthy.net> wrote in message
news:1L9Ej.45512$cQ1.39493@bgtnsc04-news.ops.worldnet.att.net...

So you're day-trading a single "rocket ship", probably a low-priced
issue. You've already got a ton of volatility inherent in the stock,
which
tends to negate any market out-performance of your short-term results
statistically...

It's a short term system.

Yes, and as such requires even MORE data to prove statistically...but
I guess that's better than a less-volatile long-term system that requires
more than a human lifetime of trading to prove worthless...

Quote:
The idea is to start with a system at equilibrium
that's been suddenly disturbed.

Hmmmm, seemed somebody just brought up something similar
in another thread, but they were going to electrical oscillation constants
to trade...and there are always people who just buy anything at the
top of the daily losers list, hoping it will "oscillate" up (happens a lot,
also doesn't happen many times)...

Quote:
It's the /reaction/ to the disturbance
that's being studied for emergent patterns, in complexity science.
And it's the edge behavior that's interesting, and where universal
patterns are found.

OK. Not "OK, I understand", but just...OK...
Quote:

Maybe you should study just a little bit of physics, look up
the name "Heisenberg", or any type of game theory dealing
with pari-mutuel payoffs, or poker (your chaotic boundary is
the result of what in poker is called players "going on tilt").

Here though we're dealing only with far from equilibrium states, and
properties of collective behavior where history matters.

OK. OK, as in "OK, poker players 'going on tilt' is the result
of people getting bored with a game that nobody can win unless
somebody plays badly, so just about everybody suddenly decides
to play badly spontaneously just to keep things 'interesting'...I
just see that as a fascinating and relevant 'state transition' in
crowd psychology, but maybe it's not the 'edge behavior' you
are talking about (remember, I'm most interested in 'unpredictable'
increases in volatility for options trading)"...

Quote:
In stock charts an edge state takes the form of a panic sell
or panic buy.

How do you detect the "panic" in the buy or sell? Just by the
size of the move in relation to previous trading?

Quote:
Where a small perturbation over time cascades
and begins accelerating and converging on one or the other limits
in possible behavior. As with a genetic algorithm searching
for function limits. It's only a matter of time before the system
slams into its own practical boundaries when the disturbance
is of the proper character. Giving a very reliable bottom or top.

Well, if you can call "bottoms" and "tops" with great reliability
you're gonna be a very wealthy individual...

Quote:
This presents situations where pretty much everyone that
will sell has, or might buy has. The future then is pretty easy
to predict.

Well, if "news" gets even better or worse, that might motivate
some more buying or selling (or more accurately, always buying
AND selling, since both are needed to establish a price).

Quote:
When either limit is found, the near future is always obvious
to everyone.

A surprising number of people don't think that "bottom-fishing"
on sharp sell-offs (AKA "catching falling knives") is a great idea...

Quote:
System behavior then becomes detached from
system specifics.

Well, stock trading is always kinda detached from reality, but
that's because people can't agree on "reality"...that's the FIRST
thing that drives the stock market to "chaos"...

Quote:
So the buyers and sellers, at the edge, suddenly agree and
flock together in a very predictable way.

And sing "Kumbayah"?

Quote:
At least until the
energy gathered in the drive from equilibrium is gone.

Maybe until the "resonant frequency" is fully disappated?

Quote:
This is an attempt to use the general properties of self-organized
complex adaptive systems as a guide to determine the
chart variable values which cause /any/ system to seek out and
converge upon it's own limits in possible behavior.

I like the use of the word "attempt" here...

Quote:
/Uncertainty/ drives systems to the edge and generates
universal behavior. To predict real world systems we must
learn to /quantify/ ...uncertainty. This is what I'm attempting
and will try to show below.

OK, I actually have my own way to quantify "uncertainty" specifically
for market analysis, but it's not that different than traditional "variance"
(uncertainty over outcome, or deviations from the mean), just a way
of evaluating the psychological impact of all this "uncertainty"...

Quote:
It turns out that when the primary driving variables of
any system are in the range where they give the very /least/
amount of predictability, and all at the same time, the system
begins hill-climbing, evolving and converging towards the edge.

So what are the variables you use for the market? So far all
you've talked about are price and volume (actually, I don't think
you've mentioned volume, I read ahead). I use MUCH more than
that, though they tend to generalize down to about less than a
dozen general market/economic characteristics...

Quote:
When a variable is within this miminum, it is said to be in the
complex realm. As far from either simple endpoints as
possible, so that one can't tell which extreme dominates.

Middle of the "trading range"?

Quote:
So that one can't gain any predictive value at all due
to the equal distance from either certain endpoint.

So, middle of the "trading range"...or not?

Quote:
So, the mathematical task to define under what conditions any
system will display universal behavior, is simply to define the
primary system variables, then define the complex range for each.

OK, like I say, I have about less than a dozen or so general "inputs"
to the"system", but I have to re-orient my thinking somewhat because
I deal with a large-scale market/economic model where the "inputs"
are time- and effect-weighted with massive amounts of feedback
and feedforward in the "system"...

Quote:
Then draw the chart from that.

Would you overlay fundamental charts on technical charts?
Or are you talking about some specific representational techniques
from chaos theory? Are you looking at anything more than price
and volume?

Quote:
The three primary variables of a chart pattern are of course
price, volume and the transient length.

OK, we're up to three inputs...I guarantee you there are more
for stock analysis in general, but for your purposes these MIGHT
suffice (this is now starting to look a little like what technical
analysts call "stochastics" or "oscillators")...

Quote:
Which is the length
the disturbance driving the system from equilibrium lasts.

"Jack Hershey" used to say that you could detect LACK
of "equilibrium" when trading volume went DOWN (buyers and
sellers could not "agree"); this would signal a turning point in
the trading, and you'd wait for the next move on higher
volume to determine the direction and trade that way...

Quote:
Defining the complex realm is highly subjective, as is
complexity science in general.

Oh, I don't like the sound of that, don't like it at all...

Quote:
But that isn't an obstacle
to reliability.

It is an obstacle to testability, though...and I personally can't
"rely" on something I can't test (mind you, of course, that my
own personal "guessing" is always 100% accurate and requires
no testing whatsoever and I'd be insulted that anybody would
question it).

Quote:
All complex dynamic systems can be defined in terms
of their static, dynamic and chaotic attractor behavior.

Yes, "systems" in general can be DESCRIBED in certain
rigorous ways, and chaos theory does give us some tools
to detect linear and chaotic states, the boundary conditions
that transition linear states to chaos, and the "attractors"
within the chaos, which are useful additions to mere
probability distributions and whatnot...

Quote:
Pattern/transient length.

The complex realm is simply the time period that's as far from
either extreme as possible as observed in practice.

OK, OK as in "I'm listening"...

Quote:
One extreme as observed in time frames is the day-traders
which operate loosely speaking in /minutes or hours/.
The opposite extreme or limit in time frame is of course
the longs, which operate again loosely in periods of
/months and years/. So a complex time period would
be neither and both, in between.../days or weeks/.
More than a day, less than a month.

I personally tend to trade stocks in roughly about 3-9 month
time frames, so I can appreciate the idea of a "sweet spot" of
trading effectiveness, but I suspect I derived that time period
from a lot more blood and sweat (and practicality!) than
you did...

It's interesting that you are now skirting around the idea of
some specific classes of traders, based in this case on their
preferred trade duration...just saying it's "interesting" for now,
no further editorial comment at this time...

Quote:
Ten to twenty day pattern/transient lengths define the complex
range or pattern length with the least ability to inform the
future.

"Jack Hershey" liked to trade in roughly 8-10 day periods for
stocks...and I have my own ideas about the relative ability of
market participants to predict the "future" for varying values
of "future"...

Quote:
Initial Price

One extreme is the penny stocks, the other is the blue chips.
Defining where blue chips begin is rather subjective.

For Bear Stearns, they went from "blue chip" to "penny stock"
in the space of days...

Quote:
But the price which typically reflects stability is sufficient.

Yeah, but I gotta say, stocks are supposed to grow in price,
to da moon if dreams come true, and Enron/Bear Stearns et. al.
shows the contrary nightmare...but again, for YOUR purposes,
I guess we can establish a "trading range"...we ARE talking
about a "trading range" when we talk about "stability", aren't
we?

Quote:
Defining the penney stocks is easier of course, let the
lower extreme be the point at which stocks are booted
off the exchange, say $2.

Actually, it depends on the exchange, but they'll kick you
off NASDAQ "national market" if you trade below $1 for a
certain period of time...which has led to some of the most
popular stocks in this newsgroup to perform 1:27 reverse
splits to evade this rule...have you considered the "wrinkle"
of "reverse splits" on price? Personally, I look more at
"market cap", particularly versus trading volume, with price
just being a fractional value of the "market cap", and
price*volume being the trading fractional value of "market
cap" (or "tradeable float")...but that's just me...

Quote:
And the opposite extreme to
be over $10 or $20 is good enough. These boundaries
are defined much like porn, you know 'em when you
see 'em.

You get a little crossover if you just look at "price",
is alls I'm sayin', like Tracy Lords and Paris Hilton...

Quote:
So the disturbance should take place on a stock that is
at the upper range of the complex realm, say $10
or $20. And the distirbance should end near the
lower range of the complex realm, say $5 or $10.

OK, I'm still wondering if this has anything to do
with "trading range"...

Quote:
Initial Volume

Again, the high and low extremes are subjective and arbitrary.

Oh, I don't like the words "subjective" and "arbitrary"...

Quote:
Doesn't matter. Complex volume would not be, oh, 20 million
shares a day, or a hundred thousand. But somewhere
in between such obvious extremes.

Would this be something like "average volume"?

Quote:
Those are the necesary initial conditions.

Then comes the disturbance.

It must ...also...be a complex disturbance.
Neither so weak or so strong that it's future
effect is obvious.

You're really losing me when you say any kind of price
move will have an OBVIOUS future effect...if we can have
OBVIOUS future moves, why not trade those instead?

Quote:
But it must also be of such
a magnitude so that one can't tell if it will quickly
die off or totally destroy.

I think you're looking at this strictly through the
blinders of your selected variables, just price, volume,
and "transient length", and assuming that people
have some amazing ability to detect when a price (only)
move will "totally destroy", when in fact, for EVERY
price, there is both a seller AND a buyer, and for
prices moves down that "result" in eventual bankruptcy
of the company, the buyers are clearly WRONG, and
THEY ARE IN EQUAL NUMBERS TO THE "RIGHT"
SELLERS.

Quote:
The opposite extremes in effect on price of any
disturbance would be of course a price that
changes little over time, or changes all at once
in a single spike down. So, of course, a complex
rate of change of price would be again...in between.

OK, so you're not just trading big down/up days...


Quote:
A scale independent 45% degree angle or slope of
minus 1.

Oh yeah, absolutely...what? Actually, I THINK I may

know what you're talking about...maybe...

Quote:
Final volume

Again, between little change and too much like
an order of magnitdue. The final volume, when
arriving at the edge, should be roughly double
initial.

OK, not too high a volume either, gotcha...


Quote:
Final price.

Again, a complex change in price would be between
no change and zero.

That's not much wiggle room there!

Quote:
While not falling out of the complex
range.

A fall of minus one half, 50%, that stops somewhere in the
lower portion of the complex range.

OK, as in "I'm STILL listening"...

ALL variables, initial, final and total change must
display the maximum amount of ...uncertainty.
They must all be complex. Then and only then
the system behavior becomes universal.

IBID


Quote:
Of course all parameters are loosely defined.
They draw a very recognizable pattern that doesn't
really need much accuracy.

I don't like the sound of that, I don't like it at all..


Quote:
If you've read this far, thanks.

Hey, no problem, I'm gonna make $billions stealing your system!

Quote:
If you have chart options
for ...20 days, as with Quote Tracker, then look at the
chart patterns of these four tickers from the last few days.
As you can see, they all meet the parameters rather well.
There are plenty of them every week as you can see below.
Too many I couldn't decide which to play as usual.

Me personally, I would let my computer look for tens of

thousands of them historically, and see what the results
are...

Quote:
Look at bxxx, smbl, rso, novn. (20 day charts)

I looked.

Quote:
A child could make ten percent a week.

I'd say most people in this group have the emotional maturity
of an 8-year-old, but that would be an insult to 8-year-olds...
Quote:

And they all do the same thing. Independent of company
details, problems or whatever.

Like any nice thunderstorm, the phase change or reversal
is announced when the system finally converges on the edge
with a nice loud clap of thunder (volume spike), followed
by a brief rain-shower. Then the pattern is over. There
is no real predictability beyond that point.

As long as we have thousands of candidates, giving us

lots of trading opportunities at all time, not a problem...
Quote:

Nature shows us how to wreck the friggin' SuperDome, after
the weatherman "predicts" the storm will not hit New Orleans...but
Lorenz told us 50 years ago why we couldn't predict nature with
anywhere near 100% accuracy...riiiiiight?!??!!

The weathermen predicted Katrina well enough.
No one listened.

Actually, talk to anybody in hurricane country, they'll tell you

about how they get sick and tired of evacuating due to hurricane
predictions that never pan out, only to have the ride of their
lives, or to have their lives end...chaos (human behavior) on top
of chaos (the weather)...

The most important parallel of weather forecasting to stock
market "forecasting" is the greater accuracy of weather forecasts
these days due to satellites and computer modelling, since I
use parallel methods for my own stock market "forecasting"...

Quote:
Who needs 100% accuracy.

Not me!!! I just try to as well as I can...

The most important parallel of weather forecasting to stock
market "forecasting" is the greater accuracy of weather forecasts
these days due to satellites and computer modelling, since I
use parallel methods for my own stock market "forecasting"...

Quote:
We need to know how to design
systems with the properties of naturally evolving systems.
And let the system find its own way to the ideal.

I detect a rant coming on...

Quote:
Science needs to get off the obsesssion on how to
predict based on part properties, on deriving fundamental
law from the simplest the universe has to offer.
And begin writing new fundamental laws based on the
most /complex/ the universe has to offer....life.

Rant on!!!


Quote:
The Great Mistake of modern science is to think we can
unravel reality by starting with the simplest, the physical
universe, in order to later understand the most complex
such as life.

Go rant go!!!


Quote:
It's the other way 'round. Life....Darwin...the abstract properties
of biological evolution show us the fundamental laws of order
governing the entire universe. We can only truly understand
the physical universe through Darwin.

Don't mention that to "comical" here, he's a "creationist" (and
so am I, sort of, but for much different reasons)...

OK, I think I've got something to go on here, even if you don't
answer my questions...it shouldn't be that hard to create a filter
to find the stocks that exhibit the "complex" criteria you talk
about, then test for the results after they hit that "edge" (you
didn't really say WHAT they would do, but that won't necessarily
stop me, because they do SOMETHING that I can measure and
describe statistically...including NOTHING of any interest, perhaps).

---
William Ernest Reid
Post count: 982
jonathan
Posted: Tue Mar 25, 2008 9:59 pm
Guest
"Bill Reid" <hormelfree@happyhealthy.net> wrote in message
news:KkPEj.29235$D_3.1584@bgtnsc05-news.ops.worldnet.att.net...
Quote:

Well, you don't have to worry about me stealing your system, since
I didn't understand it...but then I had the same problem with the "Jack
Hershey" system...anyway...


Which is probably due to my inability to clearly explain it.


"If we have a complex system whose formula is unknown in
detail, one would think it is impossible to determine with any
certainty its ultimate behaviour. However, one of the main
themes within the field of Chaos Theory is the universal behaviour
of complex systems on the edge of chaos where the main
features of the "outward" behaviour are not dependent
on their hidden "inward" mechanism."
http://www.calresco.org/milov/ymtemcss.htm

At the edge, we should have very good intermediate term
predictability without relying on any internal variable
details. A way for an outsider to gain the advantage.
And at the edge, the stock should display many of the
other primary properties of edge states.

3.3 What is the Edge of Chaos?

"For systems on the Edge of Chaos the properties match those
seen in liquid systems, a potential for either solid or gaseous
behaviour, or both."
http://www.calresco.org/sos/sosfaq.htm#3.3

OR, where system uncertainty is at an absolute maximum.
As the edge is the region where the system displays both
opposite extremes in possible behavior at once, as in a cloud
standing poised between water and vapor.
Or in the market this point could be considered where one
can no longer tell if it's better to day-trade the thing or
go long. Both camps become out of their element at
the Edge. Fluids have short term order, molecules tend
to drag others along for awhile, combined with long term
unpredictability.

It's not a coincidence life is associated with fluids.
As an edge state is where systems begin the process
of self organization. They 'take on a life of their own'.





Quote:
The idea is to start with a system at equilibrium
that's been suddenly disturbed.

Hmmmm, seemed somebody just brought up something similar
in another thread, but they were going to electrical oscillation constants
to trade...and there are always people who just buy anything at the
top of the daily losers list, hoping it will "oscillate" up (happens a lot,
also doesn't happen many times)...



Some do. The ones that display maximum uncertainty in their chart
pattern. The idea is to derive from theory what a chart would look
like if it were at the Edge, or approaching a critical point

So, if we could derive this perfect chart, the one pattern that
/all companies/ would display at maximum uncertainty, we
would have a chart that display universal edge properties..which...

1) requires little or no knowledge of internal system details
2) displays the point where volatility and predictability are at
simultaneous maximums.
3) behavior becomes universal, any stock at all could display
this universal pattern which is at the point where uncertainty
overwhelms objective methods.

This will be a chart that has a very large change in direction
coming, which it will announce in advance in a very reliable
way. The saying applies that 'one can't know what exactly
will happen at the Edge, only that something interesting
will happen'.

Which means you can trust the pattern to act in the way
it should. And act big. The transition point always seems
to announce itself somehow, you just have to wait for it
to show. And trust in the pattern to behave as anyone
would expect.

Look at the fun I had with asti today. Or fmd last week.
How easy is that bottom to see? It announced itself with
a flippin lightning bolt. How can it be any easier?
They always do that in some way, sometimes
with a drop in volume or some other obvious signal.


Quote:

How do you detect the "panic" in the buy or sell? Just by the
size of the move in relation to previous trading?


The same definition as with a cloud. When all the primary
variables reside within the complex realm at the same time.

For falling stocks

Always at or near 50% off price, and following a slope of
minus one that steadily ...accelerates, and extends over
a 'complex' time frame between day traders and longs, about
ten to twenty days. And one good clue the system is
acting naturally, and not being disguised, is the false
bottom which almost always occurs half way down.

When all variables are midway between their opposite extremes
in possible behavior.

These values, and subsequent behavior, are all pyschologically
driven. The news is such that no one can really figure out what
it means, but they know it's important. And voila, the charts
of asti and fmd etc is what you get. Since this is a naturally
evolved or universal pattern, you can learn to trust it to
behave as you expect it too. It shows you the bottom, just
trust it and give it a couple or three days for a fifteen day
pattern. Shorter or longer bottoms are proportional to the
overall pattern length it seem

Quote:

So, middle of the "trading range"...or not?


Yes, the middle of the practical range as observed
in operation at any given time. Think of it this way.
If the change is so small, or so large, that it gives
us a good idea of the internal situation, then it
is near one extreme or the other and is NOT complex.

And this applies even more so to the intangibles like
the news or upcoming events where no quantification
is really possible. With news events and such, average
wouldn't be just another typical news event.
It would be a HUGE event, but one that only introduces
uncertainty so that no one can really tell what the
effect will be, only that it will be large.

And the panic selling/buying begins.

I only deal with the falling patterns as they typically
act as if everything is halved. Panic buying takes the
form of doubling. It's too fast in the upward direction, by
the time you find it, you've missed it.
But the falling ones give you plenty of time to find
them about halfway down and watch them for a while
before they hit the critical 45% percent fall in price.

In theory it should be 50% plus or minus, but the one
thing the market does best is anticipate. Most
seem to stop just short of 50% fall in price.
The disguised ones often fall to 60% off.
Even then the bounce usually bails you out fine.

Number of iterations, or average lot size is important.
The more the better. The falling knife patterns are
in every way a sign of a stock about to go belly up.
As the iterations are ususally just a few, giving a
HUGE hint as to who is doing the selling.

A large number of iterations means the little guys are
selling I believe. That alone is a big clue as to the future
of the company. If only the little guys are shaken out
that means the insiders have decided to stay
even after hearing the news. So the slope and number
of iterations is crucial.

Quote:

Would you overlay fundamental charts on technical charts?
Or are you talking about some specific representational techniques
from chaos theory? Are you looking at anything more than price
and volume?


Looking at the way price and volume changes after some important
event takes place. Does the effect accelerate over time, snowball, so
that the behavior must find a limit where everyone has sold that's
going to?


Quote:

The three primary variables of a chart pattern are of course
price, volume and the transient length.

OK, we're up to three inputs...I guarantee you there are more
for stock analysis in general, but for your purposes these MIGHT
suffice (this is now starting to look a little like what technical
analysts call "stochastics" or "oscillators")...

Which is the length
the disturbance driving the system from equilibrium lasts.

"Jack Hershey" used to say that you could detect LACK
of "equilibrium" when trading volume went DOWN (buyers and
sellers could not "agree"); this would signal a turning point in
the trading, and you'd wait for the next move on higher
volume to determine the direction and trade that way...


For a short period at the top or bottom I've seen that many times.
When you see volume drop off to nothing, and in the midst of
an otherwise highly volatile period, which edge states always
are, bird flocking essentially sets in.

Just like a flock gliding along, and the volume steadily declining
to almost nothing, and suddenly some 'whistle' goes off
...say a single large buy or an opening bell, and the flock
turns on a dime and the volume explodes.

But that is called chaos with order, or even a Levy Flight, wildly
bouncing/searching between a rather narrow gap for a short period.
Either way it signals to me that an edge state is AT the transition
point. If it's high then...the bubble bursts. If low, jump on, the rides
about to start.

And this effect makes it hard to stay with a stock for those
two or three days while at the bottom. You see the volume
taper off when you expect it to rebound, and its scary thinking
the bottom is going to drop out. But you have to have faith
in that its signaling what you're really looking for.

A really prime example would be smbl from a couple of weeks
ago. They pre-released some numbers early, ONLY the bad news
ahead of the quarterly ( I love that) that said revenue was way
off, like a 60% drop. Then at the quarterly said it was just a one time
charge and in fact they just had their best year ever, expect
30% growth yada yada.....cha ching.

I bought smbl at 5.1 and sold at 6 the next day, was so proud of myself.
Look at it now...I just want to scream sometimes.



Quote:

Defining the complex realm is highly subjective, as is
complexity science in general.

Oh, I don't like the sound of that, don't like it at all...



I felt the same way, I was brought up with all the same physics
and math as you. Loved it all, but Nature just doesn't let us
see her beauty in that way.

When uncertainty is at a /maximum/ is when nature shows her fundamental
properties.

.......here comes a rant <g>

Objective reductionism is all about the search for ...certainty... in
some way or another. The opposite of what is needed to see
Nature and her universal creative process.

....when any system is persistantly poised at the union or edge between
it's opposite extemes in possibility, then the sytem begins hill climbing
it begins evolving and self organizing. The impetus for spontaneous
order emerges from complete and total system-wide randomness.
Or uncertainty. However you wish to call it. The Second Law provides
the randomness or food for self organization and evolution of BOTH
the physical and living worlds.

This is true for ....

a cloud
neither static or chaotic
neither water or vapor dominates

a society
neither static or chaotic
neither rules or freedom dominates
but an unstable uquilibrium between the two
called the dynamic realm, or simply a fluid.

a market
when neither buyer or seller dominate
the system self tunes to the optimun
as if by magic. With Adam Smith-like
invisible hands which emerge from system
components that act with..'trembling hands'
or edge state uncertainty.

genius
neither static or chaotic
neither knowledge or imagination dominates
but both at simultaneous maximums.

an emotion
neither instinct or senses dominate

a universe
neither static or chaotic attractors dominate
neither gravity or cosmic acceleration.

evolution
neither static/little changing behavior or chaotic/random behavior dominates
neither genetics or natural selection dominates
but both in balance.

wisdom
neither system specific opposite dominates
neither science or religion
but when one can't tell...when both and neither
....then wisdom emerges.

creation
neither male or female
but at the union of opposite extremes.
when two people become one.

And a hundred others....all disciplines in fact.

You see don't you?

All these paradigms describing the ultimate source of our
reality and creation have another more common name.

Love!

The dynamic state called edge of chaos, is responsible for the spontaneous
emergence of all order in the physical, biological and even
intellectual/spiritual realms.

The math is clear on this, Love is the answer, the point at which opposite
extremes
overlap...the complex realm...where uncertainty is at a maximum
defines the solution to any and all real world problems.

Find that transition point, the point of maximum system uncertainty
for any given system, and you've found the ideal system structure
or solution for that system.

Thanks for reading, hope you make money. I'm posting all this
for no other reason that I need some good Karma.





jonathan



s
Bill Reid
Posted: Wed Mar 26, 2008 2:21 am
Guest
jonathan <maatschj@write.instead.net> wrote in message
news:C_iGj.10758$9O.8250@bignews3.bellsouth.net...
Quote:
"Bill Reid" <hormelfree@happyhealthy.net> wrote in message
news:KkPEj.29235$D_3.1584@bgtnsc05-news.ops.worldnet.att.net...

Well, you don't have to worry about me stealing your system, since
I didn't understand it...but then I had the same problem with the "Jack
Hershey" system...anyway...

Which is probably due to my inability to clearly explain it.

Not necessarily...sometimes people's pre-conceived notions
prevent grasping new ideas. I mean, I've spent decades building
a model of the market with the intent of profiting from it, I'm
pretty locked into my thinking on the subject, as are most
people in the "market"...my only saving grace is that I build
from proven correlations only, most people are actually
terrified of rigorous market research because they're afraid
of what it will reveal about their "systems"...

Quote:
"If we have a complex system whose formula is unknown in
detail, one would think it is impossible to determine with any
certainty its ultimate behaviour. However, one of the main
themes within the field of Chaos Theory is the universal behaviour
of complex systems on the edge of chaos where the main
features of the "outward" behaviour are not dependent
on their hidden "inward" mechanism."
http://www.calresco.org/milov/ymtemcss.htm

Yeah, as I've said, I've already incorporated this particular
facet of chaos theory into some of my trading "strategies"...

Quote:
At the edge, we should have very good intermediate term
predictability without relying on any internal variable
details. A way for an outsider to gain the advantage.
And at the edge, the stock should display many of the
other primary properties of edge states.

Yeah, well, that's the dream, the very typical dream, of
almost all market participants. At the risk of polluting YOUR
thinking with one of the most important variables in the
market, most market participants throw out almost all
the data available about the market and the economy by
arbitrarily declaring it "worthless", and then proceed to
trade based on a very limited set of data using completely
untested "systems", or just plain "guess" like hell...

Quote:
3.3 What is the Edge of Chaos?

"For systems on the Edge of Chaos the properties match those
seen in liquid systems, a potential for either solid or gaseous
behaviour, or both."
http://www.calresco.org/sos/sosfaq.htm#3.3

I sometimes like a hydraulics analogy, and much of the
market "lingo" seems to support this comparison, such as
"liquidity", "money flows", etc. But as always, there's only
so far you can take an analogy; everything is actually most
like what it really is, and less like something else (analogies
are most useful for adopting some specific analysis
techniques derived from other fields).

Quote:
OR, where system uncertainty is at an absolute maximum.
As the edge is the region where the system displays both
opposite extremes in possible behavior at once, as in a cloud
standing poised between water and vapor.
Or in the market this point could be considered where one
can no longer tell if it's better to day-trade the thing or
go long. Both camps become out of their element at
the Edge. Fluids have short term order, molecules tend
to drag others along for awhile, combined with long term
unpredictability.

A lot of my "system" depends on varying levels of "disappointment"
versus "success", which is somewhat orthogonal to, but much more
quantitative, than certain "chart/TA" techniques such as "moving
averages", "support and resistance", etc.

Quote:
It's not a coincidence life is associated with fluids.
As an edge state is where systems begin the process
of self organization. They 'take on a life of their own'.

See the ball, be the ball?

Quote:
The idea is to start with a system at equilibrium
that's been suddenly disturbed.

Hmmmm, seemed somebody just brought up something similar
in another thread, but they were going to electrical oscillation
constants
to trade...and there are always people who just buy anything at the
top of the daily losers list, hoping it will "oscillate" up (happens a
lot,
also doesn't happen many times)...

Some do. The ones that display maximum uncertainty in their chart
pattern. The idea is to derive from theory what a chart would look
like if it were at the Edge, or approaching a critical point

So, if we could derive this perfect chart, the one pattern that
/all companies/ would display at maximum uncertainty, we
would have a chart that display universal edge properties..which...

This is not exactly a patented or secret technique, but part of
how I "read" charts algorithmically is to perform a correlation
coefficient of the target time series to a "perfect" reference
chart pattern, after "trapping" a potential target with a "skeleton"
applied as a moving window of varying sizes, and then
transforming the target data to the reference chart size...the
closer to 1.0, the better, but I'm sure a die-hard chartist would
claim I'm not reading them the way a "human" would if they
wanted to apologize for poor results for their "strategy"...

Quote:
1) requires little or no knowledge of internal system details
2) displays the point where volatility and predictability are at
simultaneous maximums.
3) behavior becomes universal, any stock at all could display
this universal pattern which is at the point where uncertainty
overwhelms objective methods.

Uncertainty is almost ALWAYS overwhelming "objective"
methods in the stock market, or so it seems! But actually
there is a predictable range of "volatility" based on the initial
conditions that could be used to predict an investment's
future price; different markets typically have different levels
of "unpredictability", the stock market is just worse than
some...

Quote:
This will be a chart that has a very large change in direction
coming, which it will announce in advance in a very reliable
way. The saying applies that 'one can't know what exactly
will happen at the Edge, only that something interesting
will happen'.

Which is exactly how I make 400%-800% a year trading
options...

Quote:
Which means you can trust the pattern to act in the way
it should. And act big. The transition point always seems
to announce itself somehow, you just have to wait for it
to show. And trust in the pattern to behave as anyone
would expect.

Anyone?

Quote:
Look at the fun I had with asti today. Or fmd last week.
How easy is that bottom to see?

Just about all the charts you've mentioned do indeed have
"self-similarity", or really, just the all look pretty much the
same...

Quote:
It announced itself with
a flippin lightning bolt. How can it be any easier?

By not failing anywhere near as often as it succeeds?

Quote:
They always do that in some way, sometimes
with a drop in volume or some other obvious signal.

Ref: "Jack Hershey" "dry-up volume"...

Quote:
How do you detect the "panic" in the buy or sell? Just by the
size of the move in relation to previous trading?

The same definition as with a cloud. When all the primary
variables reside within the complex realm at the same time.

OK, now THAT was a little vague...

Quote:
For falling stocks

Always at or near 50% off price, and following a slope of
minus one that steadily ...accelerates, and extends over
a 'complex' time frame between day traders and longs, about
ten to twenty days. And one good clue the system is
acting naturally, and not being disguised,

Disguised by what? The "Plunge Protection Team"?

Quote:
is the false
bottom which almost always occurs half way down.

Hmmm, OK, should we count the "false bottom" as a "bonus"
or a "necessity"?

Quote:
When all variables are midway between their opposite extremes
in possible behavior.

These values, and subsequent behavior, are all pyschologically
driven.

For somebody who is trying to avoid understanding of the
internal variables of a system, you keep imputing mental
conditions on market participants...I do too, but then I try
mightily to understand ALL the variables of the system...

Quote:
The news is such that no one can really figure out what
it means, but they know it's important. And voila, the charts
of asti and fmd etc is what you get. Since this is a naturally
evolved or universal pattern, you can learn to trust it to
behave as you expect it too. It shows you the bottom, just
trust it and give it a couple or three days for a fifteen day
pattern. Shorter or longer bottoms are proportional to the
overall pattern length it seem

My motto is "trust but verify"...

Quote:
So, middle of the "trading range"...or not?

Yes, the middle of the practical range as observed
in operation at any given time. Think of it this way.
If the change is so small, or so large, that it gives
us a good idea of the internal situation, then it
is near one extreme or the other and is NOT complex.

OK, that's pretty simple and clear...

Quote:
And this applies even more so to the intangibles like
the news or upcoming events where no quantification
is really possible. With news events and such, average
wouldn't be just another typical news event.
It would be a HUGE event, but one that only introduces
uncertainty so that no one can really tell what the
effect will be, only that it will be large.

I wonder if "JBoatFake" could use this to trade Forex "straddles"...

Quote:
And the panic selling/buying begins.

I only deal with the falling patterns as they typically
act as if everything is halved.

Since your trading career and any and all supporting
data consists of the last three months, I might rudely
suggest you deal only with falling patterns because of
the fairly high degree of individual stock correlation with
the broader market averages, and we all know what the
market has been doing...

Quote:
Panic buying takes the
form of doubling. It's too fast in the upward direction, by
the time you find it, you've missed it.
But the falling ones give you plenty of time to find
them about halfway down and watch them for a while
before they hit the critical 45% percent fall in price.

Once again, for ME to be convinced, I'd have to see how
this works for about 100 years of data for the tens of thousands
of stocks that have come and gone over the decades...

Quote:
In theory it should be 50% plus or minus, but the one
thing the market does best is anticipate. Most
seem to stop just short of 50% fall in price.
The disguised ones often fall to 60% off.
Even then the bounce usually bails you out fine.

So you're "playing" both the fall AND the bounce?

Quote:
Number of iterations, or average lot size is important.

Whoops, you've just introduced another variable...looks
like you're re-inventing "odd-lot" analysis...

Quote:
The more the better. The falling knife patterns are
in every way a sign of a stock about to go belly up.
As the iterations are ususally just a few, giving a
HUGE hint as to who is doing the selling.

Yeah, you're really imputing a whole bunch of motivation
onto these numbers...just like every other market analyst
in history. I myself am not that moved by lot-sizes, but
there are some relationships between volume, tradeable
"float", market cap, etc., that I have found to be very
telling, and not for any particular reason of human behavior,
but like so much of what I look at, simple friggin' math...

Quote:
A large number of iterations means the little guys are
selling I believe.

You and everybody else...

Quote:
That alone is a big clue as to the future
of the company. If only the little guys are shaken out
that means the insiders have decided to stay
even after hearing the news. So the slope and number
of iterations is crucial.

OK, "iterations" are important too, gotcha, didn't get
that the first time...you're aware I've already begun playing
around with these ideas in my trading software simulator/historical
data analysis modules, right?

Quote:
Would you overlay fundamental charts on technical charts?
Or are you talking about some specific representational techniques
from chaos theory? Are you looking at anything more than price
and volume?

Looking at the way price and volume changes after some important
event takes place. Does the effect accelerate over time, snowball, so
that the behavior must find a limit where everyone has sold that's
going to?

Hmmmm, my almost-unshakeable belief is that ALL markets
work at the "margin", a relatively few number of traders at any
given time set the price...

Quote:
The three primary variables of a chart pattern are of course
price, volume and the transient length.

OK, we're up to three inputs...I guarantee you there are more
for stock analysis in general, but for your purposes these MIGHT
suffice (this is now starting to look a little like what technical
analysts call "stochastics" or "oscillators")...

Which is the length
the disturbance driving the system from equilibrium lasts.

"Jack Hershey" used to say that you could detect LACK
of "equilibrium" when trading volume went DOWN (buyers and
sellers could not "agree"); this would signal a turning point in
the trading, and you'd wait for the next move on higher
volume to determine the direction and trade that way...

For a short period at the top or bottom I've seen that many times.

I'm sure "Jack" is feeling quite vindicated right now (and of course,
I've seen the same thing, and I don't mean that in the TOTALLY
sarcastic sense).

Quote:
When you see volume drop off to nothing, and in the midst of
an otherwise highly volatile period, which edge states always
are, bird flocking essentially sets in.

Uh-oh, now we're talking about birds, what happened to water?
Maybe the birds are flocking to the water? I quite often see geese
migrating in a "V" formation roughly following the creek when I'm at
the park...

Quote:
Just like a flock gliding along, and the volume steadily declining
to almost nothing, and suddenly some 'whistle' goes off
..say a single large buy or an opening bell, and the flock
turns on a dime and the volume explodes.

No, they just kind of fly and honk, but sometimes they nest
where I'm running and/or they have bird flu and they are walking
on the trial and chase after me and try to bite me...

Quote:
But that is called chaos with order, or even a Levy Flight, wildly
bouncing/searching between a rather narrow gap for a short period.
Either way it signals to me that an edge state is AT the transition
point. If it's high then...the bubble bursts. If low, jump on, the rides
about to start.

Helter-Ske(a)lter, it's coming down fast!!!

Quote:
And this effect makes it hard to stay with a stock for those
two or three days while at the bottom. You see the volume
taper off when you expect it to rebound, and its scary thinking
the bottom is going to drop out. But you have to have faith
in that its signaling what you're really looking for.

I like the use of the word "faith" here...you are much more
of a typical trader than you could possibly imagine...

Quote:
A really prime example would be smbl from a couple of weeks
ago. They pre-released some numbers early, ONLY the bad news
ahead of the quarterly ( I love that) that said revenue was way
off, like a 60% drop. Then at the quarterly said it was just a one time
charge and in fact they just had their best year ever, expect
30% growth yada yada.....cha ching.

Sounds like a conspiracy to me...welcome to misc.invest.stocks!!!

Quote:
I bought smbl at 5.1 and sold at 6 the next day, was so proud of myself.
Look at it now...I just want to scream sometimes.

YUP, YOU'RE MIS MATERIAL ALLRIGHT, LET THE CRAZY OUT,
DON'T BE SHY!!!

Quote:
Defining the complex realm is highly subjective, as is
complexity science in general.

Oh, I don't like the sound of that, don't like it at all...

I felt the same way, I was brought up with all the same physics
and math as you. Loved it all, but Nature just doesn't let us
see her beauty in that way.

Hmmmm, some of nature can be seen that way, and just
about all of nature can be seen that way when you look at it
in a particular way...but of course that way doesn't allow
prediction of chaotic systems...

Quote:
When uncertainty is at a /maximum/ is when nature shows her fundamental
properties.

......here comes a rant <g

Don't be afraid, you can't possibly frighten the inmates here,
they're "hard-core"...

Quote:
Objective reductionism is all about the search for ...certainty... in
some way or another. The opposite of what is needed to see
Nature and her universal creative process.

...when any system is persistantly poised at the union or edge between
it's opposite extemes in possibility,

Minima and maxima are always zero and infinity, respectively...right?

Quote:
then the sytem begins hill climbing
it begins evolving and self organizing.

Again, I don't necessarily "believe" in a lot of "self-organizing
systems"...

Quote:
The impetus for spontaneous
order emerges from complete and total system-wide randomness.
Or uncertainty. However you wish to call it. The Second Law provides
the randomness or food for self organization and evolution of BOTH
the physical and living worlds.

"Anytime something like that happens, a wizard did it." - "The Simpsons"

Quote:
This is true for ....

a cloud
neither static or chaotic
neither water or vapor dominates

a society
neither static or chaotic
neither rules or freedom dominates
but an unstable uquilibrium between the two
called the dynamic realm, or simply a fluid.

Ever read "The Wanting Seed"?

Quote:
a market
when neither buyer or seller dominate
the system self tunes to the optimun
as if by magic. With Adam Smith-like
invisible hands which emerge from system
components that act with..'trembling hands'
or edge state uncertainty.

Yeah, I'm not real sure about "invisible hands" either...

Quote:
genius
neither static or chaotic
neither knowledge or imagination dominates
but both at simultaneous maximums.

an emotion
neither instinct or senses dominate

Ooooh, I've done a lot of study of psychology, you're playing
with fire bringing up that subject with me...

Quote:
a universe
neither static or chaotic attractors dominate
neither gravity or cosmic acceleration.

evolution
neither static/little changing behavior or chaotic/random behavior
dominates
neither genetics or natural selection dominates
but both in balance.

I actually am more in the "intelligent design" camp myself...we're
at odds, neither agreeing or reaching consensus...

Quote:
wisdom
neither system specific opposite dominates
neither science or religion

Oh man...I'm actually at the point that I feel sorry for people
who think "science" and "religion" are "opposites"...they both
aspects of very similar "human nature"...

Quote:
but when one can't tell...when both and neither
...then wisdom emerges.

Maybe if you do enough "shrooms"...

Quote:
creation
neither male or female
but at the union of opposite extremes.
when two people become one.

Fungi...seven or more freakin' sexes man, what a party...

Quote:
And a hundred others....all disciplines in fact.

Yin and Yang...I used to work with these two guys named
Yin and Yang, they fought all the time, the boss had to fire them
both...

Quote:
You see don't you?

Pass the "shrooms" and I'll get back to you...

Quote:
All these paradigms describing the ultimate source of our
reality and creation have another more common name.

Love!

OK, maybe I was wrong about you being in the right group...

Quote:
The dynamic state called edge of chaos, is responsible for the spontaneous
emergence of all order in the physical, biological and even
intellectual/spiritual realms.

Forget the shrooms, pass the Kool-Aid(TM)...

Quote:
The math is clear on this, Love is the answer,

"Love is all you need" - Eliot Spitzer

Quote:
the point at which opposite
extremes
overlap...the complex realm...where uncertainty is at a maximum
defines the solution to any and all real world problems.

Find that transition point, the point of maximum system uncertainty
for any given system, and you've found the ideal system structure
or solution for that system.

Or you just pass out at the rave and people step on you...

Quote:
Thanks for reading, hope you make money.

Well, I try...as I've said, I've been using some of this stuff
for decades, other stuff I'm actively researching as I am always
doing...

Quote:
I'm posting all this
for no other reason that I need some good Karma.

Hey, here's an idea, find out what "karma" REALLY means,
because if you knew that you'd know you don't want either "good"
or "bad" karma...the middle way, man, the middle way...

---
William Ernest Reid
Post count: (uh-oh, "Lowbrow" was right, I lost count!)
jonathan
Posted: Thu Mar 27, 2008 8:50 pm
Guest
"Bill Reid" <hormelfree@happyhealthy.net> wrote in message
news:VPmGj.42721$D_3.39303@bgtnsc05-news.ops.worldnet.att.net...
Quote:



Sorry, but I snipped most of the arrogant sarcasm.


Quote:

...when any system is persistantly poised at the union or edge between
it's opposite extemes in possibility,

Minima and maxima are always zero and infinity, respectively...right?



As to your question above, that is true only for the Dark Age
mathematics you obviously religiously follow. I feel as though
I'm talking to someone from the eighteenth century.

In the 'real world', not the merely self consistant dream world
of the blackboard, but in nature there are always /two/ minimums
and /one/ maximum. Your mistake couldn't be more basic.

And your instinctive, not rational, search for precision and repeatability
is no more a sign of intelligence than watching a moth fly towards a flame.

Albert Einstein has stated that "as far as the laws of mathematics
refer to reality, they are not certain; and as far as they
are certain, they do not refer to reality."

So of course, even a child could see that your search for certainty
has nothing at all to do with grasping how the real world works.
And in fact defines exactly the wrong way.

You worship what matters the /very least/ in understanding reality.

And for one very simple reason.

Can we agree on one point alone?
That market systems, for instance, seem to have the ability to
self tune. They tend to build all kinds of feedback mechanisms
and so on that cause such a system to move towards efficiency
and creativity over time. As do living systems. They evolve
over time to higher forms given half a chance.

Can we agree on that simple assertion?

The properties that cause such complex systems to evolve to the
optimum are these self tuning feedback mechanisms.
And these properties are....emergent. They only exist as a
collective property, when the system is in motion.

The very minute you stop such a real world system in order to 'detail'
it's components, those ethereal emergent system properties VANISH
into thin air. You cannot detail emergent properties, you cannot
count them, weigh them equate them or even prove they exist.

But we know such collective properties exist. We see them every day.

And more importantly, it's these emergent system properties, such
as evolution and public opinion and ideas and philosophies that
do more to shape our reality than any fundamental force or
equation of state.

Show me the equations that precisely define all those ethereal
market forces everyone talks about. Where can I go buy one
or two of those forces? Show me how large they are.
If I dropped one on my foot, how much would it hurt?

If I write a really good poem, and ten people throw themselves
into a river as a result, show me equations that explain that?
And how the world was changed by that poem, or a good
book or the Mona Lisa. Show me the initial conditions for sadness
or wars. Simplify a sunset. What's the equation for a cloud
....a pedestrian cloud. Which gives and takes life so regularly.

Define God with your exalted mathematics.

Why do your equations work backwards and forwards, as if
time ran in both directions? Show me just once in all the universe
when that happened... even once? Your equations give the very
same answers each and every time. Show me ...just once in the
enture history of the universe where two things or events
exactly repeated itself.

What was the very first life form? Show me the equations
that detail the path from that first living thing to, say, intelligence.


Please, can your faithfully followed mathematics tell
me anything about anything of substance???

You can't even tell me what that cloud over there will look like
a fraction of a second later. Yet you place all your faith in such
impotent and circular methods of understanding.

Just too many variables you might say, too much noise, the
butterfly effect and randomness and so on prevents those solutions
you might insist. That's just the way the world is you might reply.

Our lives, and our future are shaped by forces your science can't
even begin to deal with. You wouldn't know even where to start
with any of the above questions, let alone answer them.

Clerks in counting rooms!

"If a `religion' is defined to be a system of ideas that contains