Volpri, Although the suggestion that there is no noise in the market doesn't sound quite right to me, your comments regarding market inertia are well put and very important. My main trading strategies depend critically on this Newtonian physics-like phenomenon... "a body in motion will remain in motion...", etc. I primarily swing trade short-term trends on futures daily charts that develop over and over... about half the time I get in and they move forward with enough inertia for me to make a profit. The other half of the time I take a loss or a scratch. Have found that all I need to be successful is to have a 50% win rate along with gains from the high inertia winning trades that are 1.5-2 times more than the losses from the losing trades.
Your posts on this site often are extremely negative about stock valuations and at times not well thought out. Without a strong foundation to trade off of, you are in fact gambling. That bias has to hurt big time in strongly trending bull moves.
Let us not forget he also went broke and bankrupt 4 times “holding”. He was at his best short-term trading scalping the bucket shops. Reading the tape. The short-term “moment by moment” changes in price. The problem was he was cleaning house everywhere he went at those bucket shops and they banned him. He would go incognito and actually lose on purpose so as to not get recognized and ejected. If they would not have been able to stop him by ejecting him he would have made many times over and “kept” what he made instead of what he made and then lost in long-term trading. Let me ask one simple question. When is your money at risk in Wall Street?
First, I don’t know anyone on ET. Secondly, I learned that absolutely nothing will convince non-believers. I was non-believer myself for a long time until I witnessed it. I learned it’s important to have open mind. Personally, I think that people who have not seen what edge looks like are skeptical, and rightfully so, but the ones that had are hooked forever.
The moment you initiate a trade you are at risk, period. As to Jesse Livermore, he died penniless because he lost his discipline and did not respect his own money management rules. He lost the equivalent of $1.5 BILLION in today's money! But still, all my respect to this legendary trend-following trader. "The game of trading is the most uniformly fascinating game in the world. But it is not the game for the stupid, mentally lazy, the person of inferior emotional balance or get-rich-quick adventurer. They will die poor." (Jesse Livermore)
Oh mickey! Cumulatively monthly bars make sense. Ok. Agreed. Now dial down. Cumulatively weekly bars make sense? Agreed. Let’s go lower Cumulatively daily bars make sense? Maybe but questionable per Mickey. But why not step down some more. Cumulatively hourly bars make sense. Let’s get a little smaller. Cumulatively 15 minute bars make sense? Cumulatively 5 minute bars make sense? Cumulatively 1 minute bars makes sense? Anything below a daily TF is an impossibility with Mickey. But the key word here is cumulatively. Then you throw in a “random factor” with an arbitrary declaration that randomness increases with as TF’s become smaller. Is that really true? Stop and think through it. A monthly chart shows a trend. It may be a 40 month i.e. a 40 bar trend. A weekly TF may show a 20 bar trend. A daily can also show a 30 bar trend. A 5 mind chart shows trends too. They can be also a 40, 20, 30, 10, 5 bar trends. All TF’s show trends. If they are random on 5 minute then they are random on monthly. A five bar bear trend on a 5 minute chart is a 25 bar trend on a 1 minute chart. Guaranteed! There may be some PB’s on the 1 minute chart and it may show up as a 2 or 3 legged bear trend but it WILL be a bear trend. The larger 5 minute TF cannot overrule the lower 1 minute TF. A bear is a bear. A bull is a bull. A bull on a monthly time frame will have PB’s that are bearish on say a weekly or daily TF but overall the daily and weekly are bulls too or the monthly could not be bullish as it is composed of the weekly and daily bars, so to speak. Or if you don’t like that “speaking” the monthly chart is composed of all the transaction taking place on a weekly or daily TF. Even It is even composed of all the transactions on a 5 minute TF. Since you threw in a “cumulative factor” (Which is true with the exception of you limiting it to monthly charts) and an erroneous “random factor” I will now throw in what I call an “opportunity factor”. If a bull trend on a monthly chart say renders one trade, on say a good PB, and the investor goes long for 4 months selling his position 4 months later all is well and good and he locks in his profit when the monthly trend ends. Well guess what? On a daily time frame that same exact move, over that same Exact time period, will render MANY MORE opportunities to go long on many more PB’s that are created and then sell those long positions on MANY MORE rallies that are created. Plus many more opportunities to short the declines on the monthly ( i.e. the PB’s) so while the long term investor is “holding” long and perhaps adding (scaling up). The daily TF trader is not only trading many more opportunities, but in addition, he is empowered to trade BOTH sides of the market; long and short. Now a 1 hour trader has MANY MORE opportunities than the daily and monthly trader to do the same. Continue. A 15 minute trader has many more opportunities than a 1 hour trader. Continue. A 5 min trader has many more opportunities than a 15 minute trader. Drop it some more. A 1 min TF trader has many more opportunities than a 5 min TF trader. I like 5 minutes because I am old, not very smart, and it takes me a few minutes to “see” opportunities then run the TE (Traders equation) to structure a good trade. It is harder for me on 1 min TF’s. In summary, the shorter the TF the many more opportunities to make MORE money, not less. J.M. Hurst discusses all this in his book “The Profit Magic of Stock Transaction Timing” The premise that any thing below a daily TF is “noise” or random is total BS and erroneous. All TF’s have the exact same things. Rallies, declines, BO’s, PB’s PA patterns, bear bars and bull bars, support and resistance...etc ad nauseam... All can be capitalized upon for profits. To say that only monthly makes sense is in reality absurd. Granted sub min TF is the domain of HFT‘S (at least in part) and super fast algos. That is why I trade outside the 1 minute TF. I basically do “manual HFT” ROFLMAO. Actually the concepts of noise is total BS. In reality the concept of randomness is BS. Everything that happens happens for a reason. We assign those words when we don’t have access to sufficient knowledge to understand “why” something happens. There is no noise on a 5 min TF. Just like there is none on a monthly time frame. There is NO noise on a SINGLE 5 minute bar. For what is on a single 5 minute bar is a bull trend or a bear trend or a BO or PB or a RANGE on a 1 minute bar. Furthermore, ALL DAY long every minute of the day bullish AND bearish institutions are trading. One side wins for a while then the other side wins. Bullish institution want a bull BO and bearish institutions want a bear BO. The pressures they exert is what moves the market and what forms the PA patterns. They cannot hide their footprint as PA reveals what they are doing. It takes a long time to learn how to read PA pressures and to then be able to structure a successful trade. The primary responsibility of a small trader (or any trader)is to first learn to read the pressures in the market, next structure a trade based upon probability and execute it, third manage that trade dynamically. What would be perhaps more near to random (but even it isn’t there is always a reason) is that as retail traders we cannot know when an institution might enter or exit the market and we may not know who they are or why they did what they did. But we can see their footprints and what their entry or exit did to price and because of inertia we can capitalize on their entry or exit. My 10 or 20 lot doesn’t move the market one tick. Even though it may look like it does it doesn’t. I could not buy 10 lots if an institution was not ready to sell me 10 lots. I could not exit 20 lots if an institution (bearish or bullish) did not make it happen. We mom and pop retail traders don’t move the market. We just pick up the crumbs. Look at the decline of the markets with the “covid effect”. Most mom and pop investors were likely long. If they had sufficient capital they survived. If they didn’t they may be crying. They got real quiet. Now investors are AGAIN touting investing as the only real way to make money as the markets are rebounding. I said dozzu888 would be vindicated and the markets would rebound quickly after the covid scare and they are. But an astute trader plays both side up or down on a weekly.,daily chart, 5 min (whatever) while a long investor was wringing sweat off his hands unless he had sufficient capital to hold and add. But guess what now they are singing again...well whats left of them....