I am a programmer, and I'm trying to use my competences in the best way to help me for my trading, which is of course coming down with some kind of technical trading system based on analysis by some program. The thing is, I personnaly believe that the most important variable in trading is not the trends in term of stock prices or markets, but rather trends of how people trade... The where, when who and why do people buy this and sell that. If everybody decides they want to buy a certain stock, that stock's gonna skyrocket whatever the company is and what is its financial situation. The people decide, then the prices follow. So obviously I dont want to base all my analysis on predicting prices (the consequence), but rather on predicting people's trends (the cause). But the question is, how can I do that (besides than in my own head)? Unfortunatly, these is no factual data available on this I believe. I would like to get my hands on that kind of info, either if it's via surveys or maybe some report somewhere, please let me know if you know any source of data I could use to tap into the psychology of the market, not just the prices
Welcome to ET, ematters. I was a programmer, actually they called it a software engineer in those days. They gave me a computer and some piece of newly developed networking hardware, and I had to learn C and assembly language and write a driver for that device. Anyhoo, I tried to calculate and program a lot, and I actually focussed on price action. Now I think I might have just as well played MsPacMan instead. The way you learn what motivates buyers and sellers is you sit in front of your computer all day every day and trade. After maybe 100 or 1000 trades, you will find that you tend to buy high and sell low, then you should ask yourself what makes you decide to buy or sell. The same reasons make others decide to buy or sell. Then you should find points in time where you SHOULD HAVE bought or sold and try to remember what you were thinking at that particular moment. Finally, you should start buying and selling in those situations rather than your original entry and exit points. If you go through this whole cycle, you might lose a little less. Then you should go through the same process again. And again. And if you give it enough time, your average loss will become so small that it is actually a gain.
I once had an idea for an indicator that recorded the rapidity of the trades that people made. For example, with the usual price/time chart one would include a dot each time a trade was processed. At the regular pace, a string of dots would be seen across the chart. As trading picked up the dots would move closer together and eventually become a continuous line if the rate continued to increase. If the price was rising the dot would be green and if the price fell the dot would be red. I am not a programmer and so I never could work it out. I told the people at 3d charts about it but nothing ever came of it. But I would bet that you could tell alot about when to enter and exit a trade if you had a chart like this. If you decide this idea is worth while and can work it out, I'ed appreciate it if you would keep me in mind for a copy of the software. regards peter daniels
Peter, that sounds like a simple tick chart. I think this would be easily do-able in eSignal. -FastTrader
It's quite easy and SOP at many places. PM me I will give you several key people who may want to help you out.
Thanks for the answers! Good point, this is actually the reason why I think trading systems work anyways, because people follow them, just like you and I do. So I guess the key is identifying what system are most of them following, and taking action based on that. Many times, just like you said, I found myself having a certain feeling about a stock or situation, and finding a couple days later this feeling gets materialized, probably because many others were thinking the same. Basicly I want my learning to make me feel what the market is going through, and tune my actions according to that. Hopefully the software will help me through that too
Fast Trader If it is easy to do on esignal, would you program my indicator. I have a very strong suspicion that it could be very useful. I don't have access to esignal now and I hate to subscribe to it if it won't do what I want. regards peter daniels
Peter, I'm new to eSignal and still learning it's capabilities, but I'm sure this can be done. eSignal has their own forums at: http://forum.esignalcentral.com and they have a lot of people who will write this EFS for you, if it hasn't been done already. -FastTrader