Nothing at all wrong with predicting. Nothing. The problem comes when either the ego, stubborn mindset, fear, etc. gets in the way of admitting the prediction was wrong...of course, that is making another prediction that you won't be right after all if you hold on long enough...
It's clear that people mean different things when they say "prediction", so there's a lot of talking past each other in this thread. If I may be so bold: Just for the sake of discussion, in this post I use prediction to mean "any statement about the future that involves uncertainty". You don't have to agree with that definition, just understand that's what it means in this post. So if I say "the sun will rise tomorrow", to some of you that may be a prediction but here it isn't because the uncertainty is completely negligible. Because uncertainty is involved in all predictions, we can then consider whether the prediction is likely (probability is >50%) or unlikely ( <50%). I think that's where much of the disagreement in this thread comes from. Making a trade in the direction price is already going (trend following) is much more probable than trying to pick tops and bottoms ("be a hero"). Both involve uncertainty but one is less uncertain (more probable) than the other. Most trend-following trades start out in the right direction (accurate prediction), but most of the losing trades come from not being able to get out before the unpredicted reversal (plus commissions) eats up the trade gain. Given the fascination with prediction, I wonder how many of these fascinated traders actually know the probability of their system's predictions. I don't mean overall winning and losing trades per se, just the probability of actually being right on those system components which involve prediction. I'm not saying that information is undoubtedly useful, but it might be for the individual trader.
Traders with a high number of profitable trades are predictors. Traders with a low number of profitable trades are gamblers.
================ Its an important difference; and snake oil sellers specialze in ''predictions'' also.
Murray, I think you will agree that predicting is sporting but trading a prediction is about making money. Predictions that are tradeable have four basic components: 1.) direction, 2.) trade duration, 3.) bet size, 4.) time to enter. Without all four, market prediction is like predicting "the sun will rise in the east sometime soon." Our group predicts market turns each day. We are day traders and scalpers. Our journal is at: Survey: W. B. Busin's Survey Timing Market Turns â The Journal: W. B. Busin's Journal Good Trading and God bless. W. B. Busin
We are <b>very</b> bullish now - till late spring 2006. We expect a strong sustained rally across the stock indexes. Good trading and god bless. W. B. Busin
Predictions, all this is hogwash, face it, we are making bets based on our past experiances with the mkt. Semantics, thats what it sounds to me. Just make your best assumptions and pull the trigger, place the stop and watch the mkt action. What else is there? These will not help either, hope, wishing, praying, walking away from the screen and peeking around the corner at it, going to confession or yelling at the kids and or your wife.....
trading involves prediction, one's belief in the probability of something happening as a result of something. anything else is a form of neurosis or emotional instability. those who have higher levels of perception are often the trendsetters and sometimes considered psychic or can "predict the vast future". put simply, they just perceive subtle things that the masses don't. be it in vision, hearing, etc, some people experience an acute sense of perception. some people have pilots vision. some people are more artistic or have higher cognitive functions. you have 4 types: trendsetters. early adopters bandwagoners bagholders. all 4 PREDICT the future with varying result, from meat to scraps. statistical median is at bandwagoner. most people's call in life is to be a bandwagoner. bandwagoners can profit as evidenced by richard dennis by following some disciplined system. bandwagoners can PREDICT the immediate future. a trained chimpanzee can even trade for profit albeit a fraction of the trendsetter. but predicting longer term wave is a different story.. maybe difference between a trader and long term speculator/investor
also, market rewards short term trader and his predictions.. aka the bandwagoner as they provide liquidity.