Market Cognition Plus Tune-able Systems

Back to the concept of market cognition, I haven't precisely defined it. I think the best explanation though would be an understanding of the meta-factors. These meta-factors that drive markets and the other traders and their intent and positions. As for the market-wide cognition, I think it is also an evolving process. In other words, … Continue reading Market Cognition Plus Tune-able Systems

Question From a Reader on WFA

A reader, Z.S has a question on WFA. His question and my response follows: I struggling with WFO similarly to you in your article: Despite the fact WFO should bring verification to the development process it rather yields more uncertainty. Simply changing WFO insample and outsample periods or fitness functions the outsample changes wildly, … Continue reading Question From a Reader on WFA

Market Cognition: The Solution To The No Solution Problem

Backtesting has many inherent limitations. The chief among them is that backtesting can only eliminate systems that did not work in the past. In fact, it cannot even do that fully. It can only eliminate a specific form of proposition which is based on the form of "Doing X was profitable in the past and … Continue reading Market Cognition: The Solution To The No Solution Problem

Better Systems, Better Discretionary Trading

This blog is dedicated to exploring the concept and ideas of graybox trading. Some traders are excellent at reading and predicting markets. These traders make use of primarily two specific skills that help explain much of their abilities: implicit learning or pattern recognition and market cognition which can be summarized as either (1) understanding how … Continue reading Better Systems, Better Discretionary Trading

Bitcoin skyrocketing because of limited supply?

There are some suspect arguments regarding why Bitcoin must rally or must not rally that I'd thought I'd address below: Argument: Bitcoin must rally because the supply is limited. Counter: The problem with this argument is that it is known and has been known since inception that the supply is limited. Markets are forward looking. … Continue reading Bitcoin skyrocketing because of limited supply?

Productive vs Non Productive Discretionary

I wanted to share some observations I've made regarding when discretionary input can help or hurt the performance of a systematic strategy and in specifically what ways it is likely to do so. First, fear based decision making is most-likely to hurt the performance of your systems. A typical fear based decision is when something … Continue reading Productive vs Non Productive Discretionary

Simulation: Beyond Backtesting

One problem with traditional backtesting is that it relies on the presupposition that there are repeating predictive patterns in the market. In fact, most trading methodologies rely on this assumption. And ¬†yet, we know the disclaimer that past performance is not indicative of future results. And, yet backtesting largely assumes that the future will be … Continue reading Simulation: Beyond Backtesting