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-- How many people does it need ??? (http://www.elitetrader.com/vb/showthread.php?threadid=235199)
Posted by HATEtheRisk on 01-23-12 07:46 AM:
How many people does it need ???
Hello community,
i am wondering myself about thought i have a long time and i want to know what other traders think about this.
I asking myself:
How many people does it need, who know perfect money making strategies that are easy to trade, that the strategies stop to work ???
Example:
A successfull trader, writes a book and give all his strategies to the public. Then logical they should stop working, or not ???
What do you think about this ???
If 30% of all market participants would do the same, would it change the markets ?
Can it only work, if 10% do the right thing, and 90% do another thing ???
But, what if this strategies have worked for the last 50 years ?
Thank you for your opinions.
Posted by HATEtheRisk on 01-23-12 12:29 PM:
http://www.stockexchangesecrets.com...eginners-1.html
Quote:
Second realisation is this ... It isn't easy for beginners to make money on the stock exchange . If everyone could become a billionaire by investing, Warren Buffett would not be famous. It takes time, study and effort and most importantly - independent thought. Not everyone has the will or stamina to carry that through. I know that mine wavers from time to time. Who doesn't suffer setbacks and confidence knocks?
---------------
Yes, who cares about my question ? This will never happen anyways.
If something works it will work forever, doesnt it ?
The mass of the people are too stupid to trade correctly.
Thats incredible fantastic for successfull traders.
We need this fucking idiots, without them donkeys nothing would work. And i thought stupid people suck......
Man, was i wrong........
Posted by lucky lucille on 01-23-12 12:41 PM:
The more that utilize a strategy the greater the impetus that drives it to further success. Right?
Pump & Dump works well this way for example.
What ruins it are those inevitables that must try to tweak it or "make it better" the strategy change it in some way to "enhance" entry, exit & profit.
If all follow the EXACT rules of entry & exit the symbiosis would propel the strategy to even greater success. I think
Posted by HATEtheRisk on 01-23-12 12:54 PM:
Quote from lucky lucille:
The more that utilize a strategy the greater the impetus that drives it to further success. Right?
Pump & Dump works well this way for example.
What ruins it are those inevitables that must try to tweak it or "make it better" the strategy change it in some way to "enhance" entry, exit & profit.
If all follow the EXACT rules of entry & exit the symbiosis would propel the strategy to even greater success. I think
hmm....???
interesting......
But you must not forget, that the market is not driven by the number of people who do the same thing, but by the money which goes in the same direction.
The big money rules the price and that big money can come from the mass of people (mostly in a panic sell off scenario) or mostly from a few bankers and hedge fund guys.
So, i think your statement may not be 100% correct ???
Second is that you always need someone to lose on the other side, if you want to win, the coin always have two sides, and the money should be theoretical equal for winners and losers.
But the fact is that the winners are a few bankers and hedgy fundys and other big companies, like insurancies or what ever....and the losers are the stupid common sheep citizien.
So, if we take this as an fact, your statement would be much worse than before it. Dont you think.
I believe, the more money does the same thing, at somepoint, there must be a crash point, where the rules must change and that would decide the bankers, like in a new world order manner, top secret of course........
hmm.......
Posted by HATEtheRisk on 01-23-12 01:29 PM:
Who have more money, the mass of private investors/traders or the banks ???
Should be the banks, they borrow it all the time from the central bank to be liquid in their trades.
So, that means, if theoretically that situation appears that the mass of private people know the rules how to trade, the bankers must change the rules of the game.
Only so they can keep the balance even, how it should be. The mass loses and the bankers win. 90% to 10%. or worse.
Besides that the banks trade against each other between themselfs.
Would be a bad scenario for banks.
Fazit: They would must borrow more money from their central banks and trade more agressive, because if they change the rules in common, they couldnt do business between each other anymore.
Is that right, so far.
Need help, any economist, here ???
Thanx you
Posted by nutmeg on 01-23-12 02:10 PM:
Re: How many people does it need ???
Quote from HATEtheRisk:
:
How many people does it need, who know perfect money making strategies that are easy to trade, that the strategies stop to work ???
Thank you for your opinions.
I've use the poker strategy for this (whether it is right or wrong, it's the only analogy I have, hence it's a game changer for me when this happens.) Maybe a card player could comment.
If 5 poker players all have the perfect money making stratgy and they all play together every week.Everyone knows everyone, and everyone knows each other various methods of play.
What would change the card game is if you introduce a new player or an existing player leaves. The dynamics of the game has changed.
I have sort of checked this out with regards to instituional holders of equites. One sells out, why? New one moves in.The remaining holders begin to question the others motives and the consequent psych behaviour of each other against each other. Usually whatever worked in the past no longer applies.
Posted by spindr0 on 01-23-12 07:27 PM:
Quote from lucky lucille:
The more that utilize a strategy the greater the impetus that drives it to further success. Right?
If all follow the EXACT rules of entry & exit the symbiosis would propel the strategy to even greater success. I think
I would imagine that it works the other way as well. More people chasing the same opportunity reduces the number of opportunities per, thereby diminishing one's success.
The nature of the market also affects the success of a strategy. That's highly significant with options. You can also see it with hindsight TA indicators.
Posted by uexkuell on 01-23-12 08:56 PM:
Re: How many people does it need ???
Quote from HATEtheRisk:
How many people does it need, who know perfect money making strategies that are easy to trade, that the strategies stop to work ???
It takes one player with deep pockets to make an existing strategy stop working.
Why are big players entering the market at all?
They want to make money.
In order to achieve this they have to take it from other (preferrably smaller) players.
If a true big player spots a strategy that is consistently followed by people with small pockets he will act as follows:
- Wait until small players have taken positions
- Initialize movement against their positions / scare them out
- Profit from the additional momentum that comes from stop losses that get hit
Posted by HATEtheRisk on 01-23-12 09:18 PM:
Re: Re: How many people does it need ???
Quote from uexkuell:
It takes one player with deep pockets to make an existing strategy stop working.
Why are big players entering the market at all?
They want to make money.
In order to achieve this they have to take it from other (preferrably smaller) players.
If a true big player spots a strategy that is consistently followed by people with small pockets he will act as follows:
- Wait until small players have taken positions
- Initialize movement against their positions / scare them out
- Profit from the additional momentum that comes from stop losses that get hit
Yes i know what you are talking about, this happens all the time in Daytrading.
Market moves to a certain point, where then it looks clear to enter, but right after that, price turns to the opposite and makes a strong move - i lost money with this a lot of times, before i understood to only trade much more perfect setups - since then, that never happened again.
-----------------------------------------------
But until now, i found not any satisfied answer here for this question.
One player with big money, no i dont think so.
Look, my strategies are worked for the last 30 years, i dont have more data, and thats enough - you see my point......
These strategies are the common business of proffessional traders, because in some sense we all do the same, you know what i mean, otherwhise, it wouldnt work - its a self fullfilling prophecy.
Now imagin, i write a book, a huge book, with all i now, so easy how it is possible and i give it for free, in books and the internet, so that everyone can do it exaclty this way, how it should be.
Of course there would be some idiots, who are too stupid to follow easy rules, but the rest will make money ---------------------------> And here is the problem, its just not possible that that strategies will continue to work then anymore, and that would change the markets completly, because i almost trade every big possible move what exist in the markets, and that are not so much you know.......
You see my point ???
That idea with this poker players, was interesting, but we are talking here about the theoretically situation, that the puplic mass knows what the instituitonals know, that would change someting, i think.........
Posted by Wide Tailz on 01-24-12 04:43 AM:
The signal in the market is caused by more than just other traders. Hedgers, company stock issues and purchases, The Bernanke, and Mutual Fund Mondays being a few examples.
Noise, on the other hand.........
Posted by goodgoing on 01-24-12 09:12 AM:
Re: How many people does it need ???
Quote from HATEtheRisk:
A successfull trader, writes a book and give all his strategies to the public. Then logical they should stop working, or not ???
This is a good question. Actually very good an one I have tried to find an answer to. IMO it depends how good and robust the strategy is. If it is a good startegy, it will take much longer for it to fade. Most of what you find in books doesn't work from the start. It is stuff for losers because the authors are losers and their strategies do not worth the paper they are printed on. I have found only one multi-year evaluation of startegies published in a book here http://bit.ly/yVzz8s.
Posted by uexkuell on 01-24-12 09:53 AM:
Re: Re: Re: How many people does it need ???
Quote from HATEtheRisk:
Look, my strategies are worked for the last 30 years
Congratulations. Sincerely.
Quote from HATEtheRisk:
One player with big money, no i dont think so.
If this opinion shall be tested that's easy: Give GS a call and tell them about the successfull strategy.
Then wait a week and see whether it is still working.
But perhaps with the question ("how many people does it need ...") you were up to something else?
The main problem with this discussion is possibly that there are two (in my view) incompatible ways of thinking behind the argumentation lines:
1. There are underlying eternal principles in the ways price moves that cannot be changed
2. There are no eternal laws in the market just the main principle that players want to take money from the others at any cost
I don't see a reason why 1. should be true.
If players see opportunities they will take them.
Posted by wrbtrader on 01-24-12 10:37 AM:
Re: How many people does it need ???
Quote from HATEtheRisk:
Hello community,
i am wondering myself about thought i have a long time and i want to know what other traders think about this.
I asking myself:
How many people does it need, who know perfect money making strategies that are easy to trade, that the strategies stop to work ???
Example:
A successfull trader, writes a book and give all his strategies to the public. Then logical they should stop working, or not ???
What do you think about this ???
If 30% of all market participants would do the same, would it change the markets ?
Can it only work, if 10% do the right thing, and 90% do another thing ???
But, what if this strategies have worked for the last 50 years ?
Thank you for your opinions.
Yes, logically if its a profitable automated trading system it should stop working IF everybody was using it. Yet, what are the odds that everybody will use that one particular profitable automated trading system and not some other profitable automated trading system that exploits a different edge...I would say the odds are ZERO of everybody using that one particular automated trading method eventhough in theory it could happen.
In contrast, if it's not automated (as in discretionary)...the odds are even lower than an automated trading system. Thus, a profitable discretionary trading method will continue being profitable for those that are already profitable "after" the method is shared...same is true for those losing via the same discretionary method.
Simply, the odds of everybody using the same book and the odds of everybody trading the exact same trading instrument as if trading stops in all other trading instruments...
ZERO such can occur (seriously if you use logic). 
Yet, if the profitable method is not automated and was on the best sellers list, promoted on all major financial networks, given to every university in the world, handed out freely at every grocery store in the world...
Some will be profitable and some will not be profitable due to that simple fact most think differently than the next person they're sitting next too.
How many users of a profitable automated trading system would it take for the method to stop working ??? It greatly depends on what exactly is the edge and capital required and I won't even bother with trying to determine an answer for those using discretionary trade methods.
It's just one of those old lady myths floating around in the markets that if you share your profitable method...everybody will use it exactly the same way you do. The possibility of every trader in the world thinking exactly the same on every trade every trading day is ZERO.
If there was ONLY one trading instrument in the world along with other variables that limits how traders can apply it in their own personal way...the theory of sharing and the method losing its edge may then have some merit amongst "retail traders".
As for big boys (e.g. institutions), those are usually different types of edges involving large capital that us retail folks don't have access too.__________________
If you're reading my profile...do not contact me nor reply to me if you're a troll, pretender, liar or believe nobody is profitable in trading.
Posted by HATEtheRisk on 01-24-12 11:20 PM:
Re: Re: How many people does it need ???
Quote from wrbtrader:
Yes, logically if its a profitable automated trading system it should stop working IF everybody was using it. Yet, what are the odds that everybody will use that one particular profitable automated trading system and not some other profitable automated trading system that exploits a different edge...I would say the odds are ZERO of everybody using that one particular automated trading method eventhough in theory it could happen.
In contrast, if it's not automated (as in discretionary)...the odds are even lower than an automated trading system. Thus, a profitable discretionary trading method will continue being profitable for those that are already profitable "after" the method is shared...same is true for those losing via the same discretionary method.
Simply, the odds of everybody using the same book and the odds of everybody trading the exact same trading instrument as if trading stops in all other trading instruments...
ZERO such can occur (seriously if you use logic).
Yet, if the profitable method is not automated and was on the best sellers list, promoted on all major financial networks, given to every university in the world, handed out freely at every grocery store in the world...
Some will be profitable and some will not be profitable due to that simple fact most think differently than the next person they're sitting next too.
How many users of a profitable automated trading system would it take for the method to stop working ??? It greatly depends on what exactly is the edge and capital required and I won't even bother with trying to determine an answer for those using discretionary trade methods.
It's just one of those old lady myths floating around in the markets that if you share your profitable method...everybody will use it exactly the same way you do. The possibility of every trader in the world thinking exactly the same on every trade every trading day is ZERO.
If there was ONLY one trading instrument in the world along with other variables that limits how traders can apply it in their own personal way...the theory of sharing and the method losing its edge may then have some merit amongst "retail traders".
As for big boys (e.g. institutions), those are usually different types of edges involving large capital that us retail folks don't have access too.
Thank you, this is a good post.
I agree with almost all you have said.
I was talking only about manuall (discretionary) methods.
This methods are so complicated in some way, that you cant computersize them to automatically ones - but thats offtopic...
So the happy trader, who have found that kind of master strategies, could be pretty happy, that doesnt matter, how much other persons would know them and trade them, they would never stop working............ Because the common human is an idiot and can not follow easy rules, is that what you meant in simple words........??? So, its just a legend and nothing more....
Posted by HATEtheRisk on 01-24-12 11:28 PM:
Re: Re: Re: Re: How many people does it need ???
Quote from uexkuell:
If this opinion shall be tested that's easy: Give GS a call and tell them about the successfull strategy.
Then wait a week and see whether it is still working.
[QUOTE] [/B]
Nothing would happen, because they cant manupulate all markets. And they would be pretty pissed off, that i know what they know, without a college master bachelor in finance and ass kissing politics.......... LOL
Quote from uexkuell:
[QUOTE]
The main problem with this discussion is possibly that there are two (in my view) incompatible ways of thinking behind the argumentation lines:
1. There are underlying eternal principles in the ways price moves that cannot be changed
2. There are no eternal laws in the market just the main principle that players want to take money from the others at any cost
I don't see a reason why 1. should be true.
If players see opportunities they will take them. [/B]
I think, both are correct.
Of course there are eternal principles, after fighting out where to go the price moves and you can spot that before it moves and before it ends, that - thats the basic of trading, isnt it........
All moves and setups are basically the same, nothing could change that, no, really not ??? That was my question at all.
So, nothing will stop the price from moving strong up and down, without spikes every 4 hours. There will always be calm in order moving market, ruled by the rules of itself, so how it always was.
I think the discussion is over here, nothing more to say.
Posted by uexkuell on 01-25-12 07:11 AM:
Re: Re: Re: Re: Re: How many people does it need ???
Quote from HATEtheRisk:
I think the discussion is over here, nothing more to say.
Yes, obviously.
It's just overwhelming how easy it is for human beings to ignore rational argumentation and think only in the lines of preconceived opinions.
Posted by ronblack on 01-25-12 02:04 PM:
Re: Re: Re: Re: Re: Re: How many people does it need ???
Quote from uexkuell:
Yes, obviously.
It's just overwhelming how easy it is for human beings to ignore rational argumentation and think only in the lines of preconceived opinions.
Are you surprised? Why? Human belief systems existed long before Aristotle invented categorical logic. They will exist after logic dies because logic is in the process of dying not because it is wrong but because beliefs are more important than rationality in a world where the average IQ is 92.
I hope none of these surprise you otherwise you are in for big surprises in the future.
Posted by HATEtheRisk on 01-25-12 02:47 PM:
Re: Re: Re: Re: Re: Re: How many people does it need ???
Quote from uexkuell:
Yes, obviously.
It's just overwhelming how easy it is for human beings to ignore rational argumentation and think only in the lines of preconceived opinions.
My question is still not be answered.
What is more rational, that it could really happen or that the most people are really dumbasses and too stupid to follow easy rules.
Maybe not all, but lets say 70% of the mass does the right thing, so will it change the laws of trading ???
I just made that point, to find some peace for myself, because i want preconceived opinions, because i dont have any, thats why i am questioning here. LOL
I cant find an logical answer alone, there are just too many factors, playing into this unique theoretical situation.
So, please post something useful.
A economist must know such a thing, but here on ET are none of them, only wannabe economists, isnt that a fact.
Teach me please the opposite.
I am looking forward to learn something new.
Thanx you
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