Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

The Day I Lost a Shit-ton of Money, Part I

ptotrading.blogspot.com

Post reply on HN
Print view View original

151–160 of 169 posts

Re: The Day I Lost a Shit-ton of Money, Part I

#151

Post by quink »

joshu wrote: post #65
jqm wrote: post #63

Earlier quoted context omitted.

If you don't think about technical analysis as charts and lines, but rather patterns or cycles of market (and human) behavior (which is of course what the charts and lines represent) you might see how technical analysis could have some validity. Are there patterns in markets? Are there patterns in crowd behavior? I think so. Others may disagree. Another point... if enough people believe and act on technical analysis…

You're kidding, right?

But Josh, don't you understand that 120 days in a past market is just the same as 120 days in the future market? As we all know the stock market is innately tied to certain magic specific numbers of days that are ever unchanging. Like 14, 30 and 70 will always be relevant when you're RSIing.

Incidentally, your biorhythm cycle may be at a low point atm, so take care. Especially as you were born under the astrological sign of head and shoulders. Meanwhile, however, I've heard about this guy who tells me that at least on the Australian ASX you can't even rely on the number of shorts having been placed to predict whether a stock will go down. But to that I say poppycock, there's no way, after all, that the stock prices reflect the currently public knowledge and thus have already assigned a reasonable price taking into account all that is reasonably known about the future.

Never forget - the average market participant is always smarter than the market and therefore TA works for them /s

Re: The Day I Lost a Shit-ton of Money, Part I

#152

Post by quink »

gws wrote: post #86

Guys, you are missing the mark on technical analysis. It's not about forecasting where the prices are going to be, it's about forcing yourself to follow a set of rules instead of following your emotions. There was an article on HN sometime ago about the practices of some old tribe to choose where to sow the crops for the next year. The practices were totally random, like watching the clouds, where a bird would fly, e…

Except that all TA 'rules' are based essentially based on numerology. The MACD camp worships 12, 26 and 9. RSI does 14, 70 and 30. They all also worship past values that wre present in the market in the past, which apparently have some special significance in the future. For example, they may be connected by a shooting star or a hanging man or three white soldiers. Either that, or they are constellations used in astrology. Same difference.

Re: The Day I Lost a Shit-ton of Money, Part I

#153

Post by quink »

nandemo wrote: post #78
peterkto wrote: post #8

Earlier quoted context omitted.

Hey Jbuzbee, This is what I thought as well when I was initially introduced to the idea of technical analysis and day trading. I was very skeptical. I don't want to call myself a probability expert but after studying poker theory and reading mainstream works like Fooled by Randomness, I bought into the idea that it was just a bunch of a guys throwing darts and the "winners" whom were trying to sell all their BS were…

> Being net positive 80% of all days traded with all your winners and losers falling in a relatively tight distribution -- luck can't create highly specific, repeated outcomes like that. Yes, it can. E.g. you could sell deep out-of-the-money puts and collect a $1 premium day after day, say 99% of all days. Until one day a {terrorist attack in the US, humongous earthquake in Japan} happens and you lose more money than…

But you don't understand. My special variety of the Martignale system works to beat the wheel in the long run. Guaranteed!

Re: The Day I Lost a Shit-ton of Money, Part I

#154

Post by [deleted] »

bdcravens wrote: post #137
jmckib wrote: post #95

Earlier quoted context omitted.

Why are you telling me? I don't post articles about SF real estate or politics, I just like to comment on them. In fact, I haven't posted anything so far :-)

Relevant to your comment: "I guess this is only written for other San Franciscans? I couldn't make much sense of it and got bored pretty fast."

[deleted]

Re: The Day I Lost a Shit-ton of Money, Part I

#155

Post by n72 »

kasey_junk wrote: post #126
porker wrote: post #117

Earlier quoted context omitted.

> Most advisors who know what they are talking about, will tell you to take one of these options (a non-managed index fund, a highly diversified etf) and invest in that. Thanks, do you have any references for this, or more details on such options?

http://www.bogleheads.org/ Also "A Random Walk Down Wall Street" is a central book in this genre. I will say, you can't generally control how your pension is run (and they run the gamut from wonderful to nearly criminal). It's one of the reasons I highly discount pension funds as a benefit.

A Random Walk is great, as is Bill Bernstein's the 4 Pillars of Investment.

Re: The Day I Lost a Shit-ton of Money, Part I

#156

Post by n72 »

porker wrote: post #103
wazoox wrote: post #97

I can't help but think of confidence and the illusion of control: http://www.nytimes.com/2011/10/23/magazine/dont-blink-the-ha... "Mutual funds are run by highly experienced and hard-working professionals who buy and sell stocks to achieve the best possible results for their clients. Nevertheless, the evidence from more than 50 years of research is conclusive: for a large majority of fund managers, the selection of s…

To me this is depressing as my future pension is invested in funds. Given the rest of the comments: how best to invest it for long-term grown above the rate it'd have in a savings account?

1. Minimize fees a. This means staying far away from advisors. Either do it yourself somewhere like Vanguard or let something like betterment.com do it for you. 2. Minimize taxes a. Max out your 401K, make sure you're using your IRA to full advantage 3. Diversify a. Own a domestic and international index and that's it. Don't focus on market sectors. 4. Set it and forget it — namely don't let your emotions make you do stupid things 5. Rebalance every year or so 6. Consider tax loss harvesting each year 7. Perhaps add two types of funds which have a low correlation to stocks - REITS and precious metals. Each should be under 5% of your portfolio, though.

It's all quite easy, actually. For pretty much all you need to know in condensed form read Allan Roth's "How a Second Grader Beats Wallstreet" or Bill Bernstein's "If You Can."

Re: The Day I Lost a Shit-ton of Money, Part I

#157

Post by n72 »

im2w1l wrote: post #129
kasey_junk wrote: post #108

Earlier quoted context omitted.

"Invest directly in stock and bonds." That is pretty much the opposite advice you should take from those findings. In general, investors now have the widest array of low cost, diversified instruments available at any point in history. Most advisors who know what they are talking about, will tell you to take one of these options (a non-managed index fund, a highly diversified etf) and invest in that. Rebalance once a…

Well I do not advocate stock picking to beat the market. Just to construct the index tracker yourself instead of paying a fee for someone else to do it.

The expense ratio of VTSAX is .05%. It's ludicrous at that price to do it yourself.

Re: The Day I Lost a Shit-ton of Money, Part I

#158

Post by kasey_junk »

seanwessmith wrote: post #143
FLUX-YOU wrote: post #116

Earlier quoted context omitted.

Any suggestions for HFT programming reading material and background knowledge for that kind of work?

The book Flash Boys provides a solid understanding of how HFT got started. http://www.amazon.com/Flash-Boys-Michael-Lewis/dp/0393244660

No it doesn't. Everyone I know with HFT industry experience that has read it (including myself) has panned it. It is possibly the worst thing you can read if you are interested in how HFT works. "Dark Pools" has it's own faults but for narrative non-fiction it is the only game in town.

Re: The Day I Lost a Shit-ton of Money, Part I

#159

Post by encoderer »

nandemo wrote: post #78
peterkto wrote: post #8

Earlier quoted context omitted.

Hey Jbuzbee, This is what I thought as well when I was initially introduced to the idea of technical analysis and day trading. I was very skeptical. I don't want to call myself a probability expert but after studying poker theory and reading mainstream works like Fooled by Randomness, I bought into the idea that it was just a bunch of a guys throwing darts and the "winners" whom were trying to sell all their BS were…

> Being net positive 80% of all days traded with all your winners and losers falling in a relatively tight distribution -- luck can't create highly specific, repeated outcomes like that. Yes, it can. E.g. you could sell deep out-of-the-money puts and collect a $1 premium day after day, say 99% of all days. Until one day a {terrorist attack in the US, humongous earthquake in Japan} happens and you lose more money than…

Which is why it's good to have net-short deltas (when beta weighted against the SPY), to protect against tail risk.

It's also why it's important to trade small, and have a large number of uncorrelated positions.

You can go on believing that nobody makes money doing this sort of thing over the long term. That's fine. But it's definitely not true.

Derivatives have no more risk than the underlying. What makes them more risky is the leverage. Selling 1 option w/ a 0.5 delta is no more risky than selling 50 shares of the underlying.

Re: The Day I Lost a Shit-ton of Money, Part I

#160

Post by encoderer »

quink wrote: post #59
notastartup wrote: post #55

Do you think technical analysis works? Look at the mountains, try drawing resistance lines, my god, you are able to predict when the mountain ridges are going to break through right past 9000! Are you Jesus?

Don't forget the magical term 'support'. Or 'Fibonacci levels'. Or 'resistance zones'. If I see another blog post by the brokerage firm I'm with about freaking 'supports' I'm going to hurl. Technical analysis puts everything from astrology through religion on to homeopathy to shame in its bullshittery. The most entertaining part is when they go on about the support levels between the currencies. "NOK-NZD is about to…

But people ARE emotional? So if a stock was trading at a level, then dropped significantly, it makes sense that it sees "resistence" as it climbs back to that level. There are real people there who are happy to be back at $0 or back where they started so they sell.

I believe stock prices are random, but it doesn't mean that market phenomena doesn't exist.

Post reply on HN