market is (almost) always wrong

Discussion in 'Psychology' started by dozu888, Mar 31, 2009.

  1. dozu888


    To the 99% of the ETers who are still looking for the holy grail.. here it is.

    Where is value? There is no way for the market to know exactly where value is as a collective whole, there are billions of a-holes in the world just as there are billions of opinions in the market.

    So, you've got a few scenarios -

    1. volatility is low, the crowd generally has an idea where value is, the time of mean reversion, difficult trading environment

    2. volatility is medium to high, the crowd has no idea where the value is, they over shoot to one extreme, reverse, hesitate, over shoot to the other extreme, repeats over and over and over... good crowd participation, ideal environment to trade.

    3. volatility is extremely high - the crowd actually knows the value is far away! everybody tries to go thru the door at the same time, spreads very high. tradeable maybe, but takes adjustment on size and stops/targets.

    All behaviors are right there on the screen.... it's like playing poker on a table with a billion seats... look at the cards they play.... the holy grail is right there in front of you.
  2. Molec


    I agree that it is pretty obvious what is happening

    but not to you

    let me explain

    you make it sound that when VIX is high I should follow trend and when VIX is low I should fade

    when volatility is low, there is no more mean reversion than when VIX is high

    take a look at charts when VIX was 10, and zoom in

    can you tell the difference

    I am assuming you are keeping with volatility and changing size etc

    if you are not, you have no business trading
  3. Rex84


    The market is never wrong, it is only you who is wrong
  4. eagle


    My name is Market. Please see the thread title for identity confirmation. :D