3-4 days of selling ... fallacy...?

Discussion in 'Trading' started by scriabinop23, Jun 2, 2008.

  1. Reading the Taleb Black Swan book right now, and he goes into great detail to explain how our assumptions of the past lead us to make fallacious assumptions into the future.

    For example, I know this personally happened two weeks ago. I was caught buying the dip in the mkt way too early, and could've saved considerably more if I had waited 2 days to enter. There was something like 4-5 days of straight selling.

    So now (in this bear), I am automatically conditioned to hold off on any buying on my long positions for at least 3-4 days with this recent history in mind. With this logic, lets check back to June 5th-6th and maybe that should be a short term (meaning 1 or 2 week) market low ...

    His example of the turkey getting fed every day is great -- every day that goes on, a turkey's trust in his human caretaker goes up as he doesn't want to 'bite the hand the feeds him.' Inevitably, though, his trust is highest at precisely the most dangerous point, the day before thanksgiving.

    Thought this might make for an interesting discussion, especially considering so much of TA hinges on this past conditioning.