From a very non altruistic point of view part of me wants to encourage this
Show HN: Read the Tape – Wordle for daytrading, five blind S&P 500 charts a day
31–40 of 49 posts
Re: Show HN: Read the Tape – Wordle for daytrading, five blind S&P 500 charts a day
#32Earlier quoted context omitted.
Thinking there are straightforward, simple algorithmic strategies to beat the market requires one to also believe that the billions of dollars behind large investments for some reason doesn’t care about using these same strategies to make money. “They have different goals”, I hear. Literally nobody’s investment strategy involves passing up above-average returns for low risk.
There are plenty of known effects that are relatively simple to automate Holding overnight risk yields superior risk-adjusted returns. Buying end of month and dumping few days into new month. There are dozens of such effects These have mechanical reasons for their outperformance - overnight risk has to do with how borrow interest rates for equity markets are calculated and firms unwilling to hold unhedged exposure ov…
You cannot in the same breath argue that there are simple market strategies that offer superior risk-adjusted returns, and then claim that big money won’t go after it because they can’t get out.
There are more actors in the market than just Citadel. For starters there are day traders at virtually every wealth level and with every level of risk tolerance. Someone—or more accurately, many someones—with more money, better information, and better market access is going to claim that free alpha until there’s none left. The notion that there’s so much free, obvious, and reliable market edge simply lying there for the taking by any shmuck with $100 to put into Robinhood is farcical and flies in the face of quite literally all empirical data we’ve collected on the performance of active market participants.
Every single time this kind of discussion happens on the Internet, people inevitably rush to the comments to say that they know the magic strategy that beats the passive indexes. And yet every single study to date has shown that active market participants perform worse than chance and there is zero correlation between those who beat the indexes one year and those who do so the next.
> As an individual investor you actually have a huge advantage over large institutions in that your portfolio is nimble and easy to get out of.
This is a joke. By the time you or I can act on market information, those same big players have known for a comparative eon; more than long enough to change the price of those investments enough to remove any edge.
Re: Show HN: Read the Tape – Wordle for daytrading, five blind S&P 500 charts a day
#33Earlier quoted context omitted.
Yes I think you're right, it's unclear. I'm hopeful the first reveal explains the dynamic as the player goes. Maybe something like- each chart shows 60 daily candles of a real S&P 500 stock, a past window with the ticker and dates hidden, you call if the stock closes higher or lower 5 days later?
It would find it clearer if: - “up” and “down” was explained. If I bet “down” I’m betting my stock will underperform the monkey index? And if I am correct, I will make money (short the asset) or simply loose less than if I’d invested in monkey? - loosing less money was green (win) when monkey is down even more.
I also was confused by this and the usage of the term bet for low/med/high risk. Are up and down supposed to model buying calls/puts? Or buying the stock itself? Wagering 8800 USD of 10000 on high to get 115 USD return was pointing at stocks (rather than options).
Re: Show HN: Read the Tape – Wordle for daytrading, five blind S&P 500 charts a day
#34Love how you implement bet sizing, this is a signature of professional traders. How did you come up with the idea?
You mentioned stocks are "seeded random draw", but professionals don't trade random stocks - there is no edge there, price movements are mostly noise. You want stocks-in-play, stocks with heightened interest from investors on that day.
My suggestion is to manually pick interesting stocks each day and ask players what happens next. Don't hide names, so that players can asses market strength and group strength - 75% of success comes from these factors, and only 25% from individual stock selection.
Re: Show HN: Read the Tape – Wordle for daytrading, five blind S&P 500 charts a day
#35Love how you implement bet sizing, this is a signature of professional traders. How did you come up with the idea? You mentioned stocks are "seeded random draw", but professionals don't trade random stocks - there is no edge there, price movements are mostly noise. You want stocks-in-play, stocks with heightened interest from investors on that day. My suggestion is to manually pick interesting stocks each day and ask…
Thanks. My original idea was some kind of 'Duolingo for TA'. Your suggestion would definitely be very relevant to a less gamey, more serious product. great thought.
Re: Show HN: Read the Tape – Wordle for daytrading, five blind S&P 500 charts a day
#36Love how you implement bet sizing, this is a signature of professional traders. How did you come up with the idea? You mentioned stocks are "seeded random draw", but professionals don't trade random stocks - there is no edge there, price movements are mostly noise. You want stocks-in-play, stocks with heightened interest from investors on that day. My suggestion is to manually pick interesting stocks each day and ask…
Thanks. My original idea was some kind of 'Duolingo for TA'. Your suggestion would definitely be very relevant to a less gamey, more serious product. great thought.
Would love to use 'Duolingo for breakouts' for studying how stocks behaved just before they went on a 50%+ move. Successful traders spend thousands of hours studying these to build pattern recognition.
Re: Show HN: Read the Tape – Wordle for daytrading, five blind S&P 500 charts a day
#37Technical analysis is astrology for boys.
If a big enough proportion of the market is also following the same technical analysis strategies as you, it will predict the market. There doesn't have to be anything actually correct about the analysis.
In reality I don't think a big enough proportion of investors are reading tea leaves for this to be true.
Re: Show HN: Read the Tape – Wordle for daytrading, five blind S&P 500 charts a day
#38This is fascinating. That said, if it's possible to do better than random guessing, then does this reflect the fact that the five charts are presumably hand-selected to be "interesting"? My naive guess, and I'd be very curious to learn if this were wrong, is that something very close to the efficient market hypothesis is true; that, if it were possible to beat the monkeys on randomly chosen stocks on random dates, th…
> That said, if it's possible to do better than random guessing
Yes - by always picking Up.
Random stock on a random day has 53-55% chance of closing higher. Over 5 days, you will be right ~60%
1996–2016: 53.3% of days were positive. 2016–2021: 54.9% of days saw gains.
Re: Show HN: Read the Tape – Wordle for daytrading, five blind S&P 500 charts a day
#39It’s a fun game and it throws funny shade for getting the answers wrong, but who would have guessed and sized these answers right based on this sparse data without any additional context? There’s barely enough data in the charts to do TA properly.
If I was going to add 3 more indicators, what should they be? And/or more history?
200 day, ATR, ATR extension from the 50
Re: Show HN: Read the Tape – Wordle for daytrading, five blind S&P 500 charts a day
#40I 100% think you are going to harvest these decisions to train an ML model to do the inverse.