Hi All, I'm probably going to sit this market out until I figure out who the crowd is, and what the crowd is doing. Since I can't answer that, I suspect that I may be the crowd, and that's not a good place to be. Do you know who the crowd is, and what they're doing? If so, how do you assess this? Happy Trading, Punter
it is probably not a good thing to try to answer this question. Because I suspect your next step will be to guess what the crowd will do next ? 've been there, 'done that. it goes nowhere. predicting the market is a very dangerous thing to attempt. The way to follow the crowd and read them [reacting, not forecasting] is technical analysis. I guess most traders on this board [I mean posting members] use technical analysis or tape reading. Of course, the temptation to guess or predict a direction based on some fundamentals is often there. But on the long run, most would agree that's not the way to make it in the business. Devil's advocate would say that if you know yourself, you know what the crowd is thinking. I remember a stage in my journey to become a trader where I would trade the opposite of what I wanted to do. It worked well since at that time I was wrong most of the time (!). But the internal conflict tortured me. There are better ways : most are systematic and rule based [sometimes enhanced with instinct, which is nothing else than exception handling based on experience]. neo
Actually, what I had in mind was to figure out what strategies the crowd is currently heavily into. For example, if everyone is buying cup with handle breakouts ala Bill O'Neil's CANSLIM methodology, then shorting these breakouts might be a good strategy. So what do you think is the latest in vogue trading strategy of the masses? -- Punter
well, I did not realize you meant the traders crowd I am not sure such a thing exist. This board is a good example. Many different styles, sometimes in opposition, many different markets and strategies. I would not dare to generalize on traders. It is much easier to generalize on the real crowd of institutions and retail investors, because they have volume so you can really know what they do [after the fact]. If I understand it well, you are asking us what we do to play against us ? right? hehehe ! I buy high and sell low... just kidding. neo
As this bear market continues, there will be fewer and fewer retail traders actively involved in the market. The $25,000 SEC rule will only accelerate this trend. That means professionals will be trading against other professionals, making reading the "crowd" a very difficult process. I personally adhere to the belief that the market is the market. This means that rather than attributing stock price movements to the "crowd" simply take the price movements as independent events and learn how predict these movements.
>Do you know who the crowd is, Personally don't care. >and what they're doing? What they are doing is imprinted on the tape and thus the charts. To learn the crowd's personality and behavour, I would concentrate on learning to read those two. It's all there. JB
rather silly question (no offence meant) I find that 90% learning comes from asking the right questions. This is not one of them.
Brutal! Personally I didn't find your response be very helpful from a learning perspective. Perhaps others did, but I did not. No offense meant of course. Ever read the book Advanced Trading Strategies by Laurence Connors and Street Smarts by Laurence Connors and Linda Bradford Raschke (you might have read about her in Market Wizards)? In both books they describe strategies to take advantage of crowd behavior. These strategies seem to make sense to me. Any thoughts from anyone about these sort of crowd behavior setups? -- Punter.
The goal is to not fall asleep at the wheel and to not forget to get off the train when its appropriate for you. Because this train is going where it's going with or without you. When you arrive at your stop GET OFF, you can always hop right back on and take another ride. The crowd is driving and if your not careful, they're more dangerous on the road than a drunk who hasn't slept for three days.
Punter, perhaps I came across as harsh, not my intention. I agree with Turok, Htrader and others that mention that the tape tells you all you need. Spend time reading it and get to know it. It will be all you need coupled with disciplined stop losses. I think by crowd you mean those that are not professional traders. In that case, I would point out that the vast majority of those are no longer in this market (remember the cab driver in the brokerage ad that bought an island?).