Thanks for all the responses on this thread; I had to do the day job today, so only just got back to this in the last hour or so. It’s a shame tradex has ducked out, as in general his comments matched my confirmation bias, although with some caveats. I can see that some market edges might disappear over time, as mentioned by ValeryN, MrRenev, ducatista and others, particularly things like arbitrage, or those based in some way on the mechanics of the market and regulations which might change over time. Also the early options traders seemed to have had more or less free money available to them as zghorner mentions above. Also the more commonplace TA setups and indicators are probably of little use now as they have probably been flattened out by overuse. But I am still unconvinced that markets as a whole change that much in their behaviour, and that a robust system that works now, would not probably also have worked 50 years ago. I get that volatility changes, and markets move from bearish to bullish, but I would hope a decent system would cope with that. My own system, that has taken ages to develop as I started from zero knowledge 5 years or so ago, is very much a work in progress, but relies to some extent on repeating price action, but esoteric stuff that is nothing to do with traditional TA. For reasons some have gone into in this thread, I can’t really see how all the standard TA patterns and indicators can give an edge, unless they are combined in some way into a unique system. Otherwise surely they would be too predictable to work (for example, stops just below a fairly obvious ‘resistance’ level are surely going to often be hit by professional traders?). And the problem with combining lots of factors is that you may end up curve fitting a back test, and producing a system which only works in the past. Still having said that, I daresay there are people on hear using TA to make money. “The markets are the same now as they were five to ten years ago because they keep changing - just like they did then” is a good quote. But I’m not sure it gets us much nearer an understanding of what changes apart from the things mentioned above. tommcginnis and Nobert – sorry, I couldn’t really see what you were getting at. d08 – they were interesting comments, especially about the strategy that stopped working after 20 years. That sounds like something has happened to change things, but I suppose it’s hard to work out what. Also a pity about the battle over trend following which seems to get onto loads of threads. I am not particularly a trend follower, but as a simple man, surely ultimately all systems make money from trend following of some sort, as the price has to move in your direction to make a profit? I must have got that wrong though…
Always ... always ... define your terms before making assertions pro or con. The very first response to an assertion that "The markets don't/do change!!" should be: "How, exactly, are you defining 'change?'" Otherwise, the answer is usually: "it depends."
Yes you are right userque, though I covered it to some extent in the original post "clearly the market is sometimes going up, sometimes going down, and sometimes going sideways; is sometimes volatile and sometimes not; but is there more to it than that?" The responses have been informative though. The answer to most questions about trading seems to be 'it depends' of course.
Sometimes markets are stronger than at other times or more choppy, but ultimately they don't change, as said the Trader loses confidence, gets greedy and tries to make more and messes up there profitable system. Been trading for a lot of years, can't see any change myself.
Your original post is well written, imo. "...but is there more to it than that?" Yes. Especially since the distribution is not random/uniform; past data is relevant. All indicators use some past data. The robustness of all indicators/strategies depends upon the repeatability of past data relations. For example, a RSI(2) crossing above, then below, a certain value may usually lead to a certain price action (fall?). That "more to it" is when past patterns change going forward. For example, a RSI(2) crossing above, then below, a certain value now will suddenly continue in the original direction. All strategies rely on patterns (repeating price actions, etc.), whether the authors realize that or not. What kills strategies is when the patterns changes. "Going up, down, sideways," doesn't change ... the sequence in which this happens does. In my mind, a trading system consists of multiple trading strategies. The system decides which strategy is currently applicable to the current markets. How to create such a system is the real question--not which strategy to create. Imagine all manner of price - moving average crossover strategies. One in that bunch will always be a perfect fit to the current market. So if you can devise a system to flow between such simple strategies, perfectly, you'd be golden. Everyone is concentrating on predicting* velocity, when they should be also trying to predict acceleration, and even the third derivative (the change in acceleration). ___________________________ * Mostly all trading involves predicting. Those that say that they are reacting, and not predicting, current price action; but are still expecting a certain direction is more likely than the other--are predicting. There are options strategies, however, that don't rely on a bias in direction ... they don't rely on a prediction in price direction. But they do rely on a prediction in volatility (price movement distance).
My brain wants to hang itself and I lose a neuron each time I hear mouth breathers complain that their dumb idiotic shitsystems "do not always work". They think there is an edge that any mouth breather can exploit? How big of Dunning-Kruger is that? And they look for really obvious shit in the market which makes no sense. Also makes me smile sometimes, like when hundreds of thousands of dum dums see Oil at $0.15 and it doesn't even cross their mind there is a reason for that so their reptilian brains get all excited and they rush in like the idiots they are and then get rekt . Then after getting slapped they come up with the dumbest excuses and often go file lawsuit ask for reparations and someone else to be held responsible for their stupidity... losers.
The market expresses itself in many shades. No method will work all the time. Often, we know little and think we are right but not knowing enough to know we are wrong. In this business, knowing we are wrong can save us and enable us to be in the business tomorrow. Trend following does work albeit not all the time. Here are 2 charts to show often trend works in unison.
Yes,and they range 70% of the time but traders don't want to trade ranges as they call ranges noise or chop. There is no noise in the markets. They are missing out on many opportunities.
Yes of course. Livermore had a period of several years where he made no money while stocks were ranging and he said there were no opportunities, but somehow you know how to make money speculatively you're just that good! Better than Soros, better than Livermore, better than Buffett, and so on. Some fucking random nobody brainlet. Can anyone spell delusional? *Edit: If you mean selling ootm options betting on volatility staying low then say it... But that isn't what you mean right?