The Web Site of
Victor Niederhoffer & Laurel Kenner
the scientific method, free markets, deflating ballyhoo, creating value, and
laughter; a forum for us to use our meager abilities to make the world of
specinvestments a better place.
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Philosophy of Counting by
A few recommendations regarding counting:
- I think looking at long term data is educational but not
necessarily applicable to trading.
- Over any long period of time (5-10+ yrs) it is better to
use percents rather than points. 3 points when the s&p is at
300 is 1%. When the s&p is at 1200 3 points only means .25%.
Using percents keeps things in relative perspective.
- The ONLY way to make money in the market is to use inside
information. Using corporate inside information is illegal
so forget that. But information based on superior analysis
known only to you is quite legal. That's what counting is
all about - how to generate superior information known only
- The problem with all of the PhD papers and books is that
once they are published you can assume that they are known
to the market. Thus they will no longer work after
- Given the above, a trader must endeavor to discover a
workable trading system based on a sufficient amount of data
so as to establish statistical significance. On the other
hand the data should not go back so far in time that it may
be dominated by old stale data which no longer applies.
Obviously it's a Goldilocks standard - not too new and not
too old, but just right.
Hopefully this helps some Specs with the philosophy of