Better to Predict...or React?

Discussion in 'Psychology' started by dac8555, Nov 22, 2005.

  1. dac8555


    i will say it, at this moment, i am a bear, a newbie....and i am in cash (due to being stopped out). My current strategy is to try to find weak stocks and short them.

    the last 3 weeks have been VERY unsuccessful.

    I continue to looks for shorts mainly the the homebuilding sector....But i think my doomsday predections are really hampering my success. The last few weeks homebuilders have rallied, and i have not participated even though i watch them like a hawk.

    today for instance i SHOULD have made about $3000 as i saw TOL skyrocket on the FED news...but i am a bear on TOL, i want it to go down.

    the question is this:

    do you try to predict what will happen (like i predict hombulders around $5 in 2 years) you go with the flow even if it is against your general feeling on homebulders rallying today?
  2. I personally try to keep any directional bias out of my mind... I let the market tell me what I should be doing. Keep in mind, it's always right.

    Good Trading
  3. dac8555


    overall i agree with you. But, I have an image stuck in my mind of a job interview i did several years ago for position as an FX trader...The guy interviewing me did pretty well...about $600k per year. had about 15 years under his belt.

    In the interview, he said "how do you trade" I said, "the idea is not to try to predict the future, but to be a part of it"

    he replied "like hell you're not trying to predict the future!!!", and the interview was over right there...i didnt get the job.

    so now i look for furute trends, and now the housing market is going against the overall i am out, instead of being a hypocrite.
  4. Hello,

    Definately predict.

    Reaction is too slow.

    What you need to do is this:

    1) Know your prediction, know where your trading instrument is going to move

    2) If it goes your way, it works, trade works

    3) If it doesn't go your way, reverse your trade

    4) Know what it means when it doesn't go your way.

    Every single trade I go into , I have a very good idea where the market will be in the next 2 hours.

    Very good. If it doesn't go there, no biggie, Do nothing or reverse if at important areas.

    You don't have to be in every trade.
  5. Cheese


    I agree.
    I use a predictive trading model.
  6. ============
    Study both reactions & probabilities/anticipation myself ;
    & very seldom make a prediction, but i will predict you better find more than one sector to be a bear on.

    Dont know why anybody wants to be long TOL now;
    & was long when they were strong, not now.

    Predicting 2 years in advance seems counterproductive to me;
    even with TOL a weakling

    Usually longest strongest, not underperformers like TOL;
    to find better downtrending sectors , seek /you will find .

  7. It is great to be reactive than predictive in the market...Market is always right it is opinion that is often wrong
  8. You didnt get the job you say?
    The main thing is to predict your reactions, not the market.
  9. basically you need to understand correlations in the market and then act upon changes in the marketplace like an emotionless robot. today, i bot hgx the moment i heard the fed's concern on possibly overshooting rates hikes too far. i didn't think twice, i just started clicking away.

    problem with predicting on something that alot of traders are looking at is that since there are so many players, sentiment can change on a dime. predictions work better when nobody is interested in what you're looking at. cnbc talks about housing bubbles what seems like every 10 minutes.

  10. My (current) trading strategy revolves around analyzing (predicting) the accuracy of EPS estimates before announcment. This would be the only case that I could think of where it is better/more rewarding to predict than to react.

    So is it right to predict that the EPS "prediction" is wrong, since prediction is often wrong? stupid paradox, i know.. lol
    #10     Nov 22, 2005