I'm hardly an "emh believer", but what I said is not the basis of EMH. I said that the news was already in the chart. Many times it will be in the chart weeks before the news becomes known to the likes of Pabst et al. EMH, on the other hand, postulates that all market participants receive and act on all relevant information as soon as it becomes available. This, again, is not the same thing. For one thing, as you probably well know, not all market participants will receive the "relevant information" at the same time. And even if they did, there's no way in hell that they would all act on it the same way. So why do stocks or other instruments rise? Because somebody thinks that they're worth more than the asking price. Why do they go down? Because somebody thinks they're worth less. (This, incidentally, is the problem with basing trading decisions on earnings; professional money is valuating stocks not on what earnings are or have been but on what it thinks earnings are going to be.) And, of course, stocks sometimes go up and down due to anticipation of events that never take place. Do traders make rational decisions based on information at every price point? Of course not. Nearly all of them make decisions based on doubt, anxiety, fear, greed, hope, and a variety of other non-productive emotions. Even a cursory skimming of ET posts should verify that. How do trends persist if everything is in the chart? Because nearly everybody likes to believe that they're smarter than everybody else and know more than everybody else (this also helps to account for the adolescent fascination with "calls"). They alone know what the stock is "worth". Therefore, they tap into the seemingly inexhaustible supply of greater fools. At least until the supply is exhausted. But I've read a lot of your posts and you know all of this, unless I've misinterpreted what I've read of yours. If that's the case, don't be shy.
Sure they do, but not everybody trades off charts. And even those who do trade off charts rarely look at the same thing. But if one does trade off a chart, making a profit by doing so is no more complicated than finding an edge, putting together a system which exploits that edge, then flawlessly executing that system. I've seen any number of perfectly fine systems here, yet so few people are able to execute them. Read the recent journals if you require evidence of that. Read the whine threads in Trading. Pattern recognition plays? Maybe. I haven't seen it myself since so many of the hobby traders have left. But creating a good system and flawlessly executing it is not much different from going to an ATM. Bro.
I agree 100% that _what_ the news _is_ is critical to being able to gauge the move, and a chartists is going to get plastered if all he is doing is gaging the move based strictly on the chart. Support/Resistance, moving averages, stochastics. MACD, RSI, etc - all meaningless in these cases... I cannot tell you how many times a news item comes out, the spoos react, and later do a 100% turn around when traders read the fine print. No system on this planet that I have ever seen reacts correctly to these exogenous shocks without getting creamed. The key is to know what events are likely to be misinterpreted, which news items are already llikely mostly priced in the market, etc. I have heard of news traders before. There are even some on this board that make a killer living doing nothing else. It is a skill I would like to master one day...Today was the first time I made decent money off a news item "MMM 3M Company declares 2-for-1 split - 141.00 +1.05 - Co also maintains Q3 outlook" From the chat log: ===== ..... nitro (Aug 11, 2003 3:03:28 PM) MMM 2:1 SPLIT!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! nitro (Aug 11, 2003 3:03:30 PM) watch out nitro (Aug 11, 2003 3:03:35 PM) that will lift spoos ! WDGann (Aug 11, 2003 3:03:41 PM) Shlong amilian (Aug 11, 2003 3:03:41 PM) L 79.50 WDGann (Aug 11, 2003 3:03:46 PM) 9.50 .... facultus (Aug 11, 2003 3:04:37 PM) oh man........... WDGann (Aug 11, 2003 3:04:39 PM) Out ES 9.50 BE losloslos (Aug 11, 2003 3:04:40 PM) 79S nitro (Aug 11, 2003 3:05:09 PM) look at MMM go!!!!!!!!!!!!!!!!!!!!!!! ... ==== nitro
I own a thesauruses. You implied in an earlier post that a system/edge was integral. I'm grasping here. What is this mythical yet often fleeting "edge" that I hear so much about. Is it a hard edge like buying the bid or selling the offer, is it transactional i.e. low commissions, is it informational (oops we're back to news again), is it superior tape reading skills, or is it a mechanical Black Box with a genie inside. Could it not be that Hawker, when he started this thread thought that his "edge" might be informational and hence his quest for a comprehensive news service?
Nitro two things about you impress. One how the fuck can you trade and type as fast as you do?! But more importantly of late, I see a true yearning to expand your knowledge (Treasuries, options fundamentals). Your interest in becoming a consumate trader is commendable. As of course too is your willingness to share.
Just a quick comment on news. News is an important 'indicator' to me. Not for the specific news per se, but more in the reaction to the news. Alot of ways this can play out. But perhaps the classic is the negative news item that is ignored. This is the best 'buy' signal you will ever receive. Vastly superior to all those canned software indicators that you may currently use. A news item that is ignored is typically one where the crowd is positioned in the direction. For instance, a negative news item comes out, traders are short, and therefore, after a quick, kneejerk response, the market moves up, ingnoring the news. Surprise news is what creates gaps...where the market is caught off balance. The news on DNA was a good example of this. This gap used to be called a 'momentum' gap...one which will likely not be filled, and is simple a sign that the upmove (or downmove) is underway. Look at DNA for an example. In any case, not knowing the news, or not knowing whether the news is better or worse than expected, is losing an important tool in my opinion...one that can certainly aid with the interpretation of your chart. OldTrader
Pabst, Thanks for the kind words. I use homegrown software that is constantly putting orders to buy and sell simultaneously _away_ from the market in the spoos (I do not need it for equities.) At some point, if they have not been canceled, they get executed. The entry/exit system constantly has orders at every "level" away from the market. These orders are constantly following the bid/ask of the ES and NQ. Once a trade has executed, all orders 1 handle in the same direction of the trade I took are canceled, but the ones beyond that remain (for tactical reasons). The one last entered in the other direction now becomes my P/T. That is why you will see me type in + 3/4 in ES or + 1 1/2 in NQ - those are where my software had the entries to take trades in the other direction when the opposite trade was executed. I do not turn this software on when numbers are coming out for obvious reasons. I can cancel any number of orders on either side of the bid/ask one or more "level(s)" with two keystrokes, and that is most of my work when I am not in a trade. In essence, all I have to do is cancel entries at levels as the bid/ask gets close to my entries if I do not want to take the trade. Notice that CANCELING potential trades is my function, not executing trades. Also note that this is just software that aids me in entering trades - it is not a "system" as I am essentially a discretionary trader. The entry is automatic, and once executed, I log the entry in the chatroom. The rest is almost as automatic, take profits, take loss (discretionary,) or reenter in the same direction at a better price, or cancel all orders in the direction of the last trade until I turn it on again. I am a sponge for knowledge and have always been. I feel like I am beginning to see the forrest from the trees and the way the market weaves itself into a whole, and the other way around. It is really beginning to gel in my mind over vast scales (MACRO...) nitro