You guys stop deluding yourselfs. Almost LMAO when a guy posted he went from a predicting to a non-predicting modus operandi. Really? You buy, you predict an up move. You sell, you predict a down move. You buy the bid, sell the ask - you predict you will get a fill on both ends. You let the autobot trade and you predict that real time results will match backtested results. You see a pattern and you trade it and you predict it will continue. You see a pattern change and you trade it and you predict the changed pattern will continue. Predicting isn't a dirty word an I don't know why its so looked down upon in trading. All of applicable science is based on predicting once the theory its based on is proven. Get real.
Everyone speaks for themselves. For you prediction is unavoidable. The traditions of the financial industry are repleat with the statement that you make. The position you enjoy and advocate is the point of departure mostly everyone uses for making money. This pervasive viewpoint has come to constitute the basis for most of the corrolaries of the core of the conventiional orthodoxy. It is so pervasive that it is most often accepted by people as a necessary truth for investing and trading. My viewpoint is that this concept is the most pervasive single thing that prevents people from considering any alternatives. It is an excellent idea for any person who is trying to improve their perfomance to face the music regarding this concept regarding prediction overt or otherwise. The binary notion of market price movement is outside of the box for what you are advocating.
Most of us predict, but it's the trade management afterwards that really matters. A 50/50 win rate can be extremely profitable if your wins are 2-3 times your losses.
For a non arbitrageur where his money is made instantly, this is probably the single most importatnt insight to trading to get right. You are not quite there though, but you are thinking along the right lines. Let me give you an example. Do options market makers predict direction? When you see all those people on the MERC floor or CBOE with headsets, what do you think they are doing? What does an option market maker do the instant he fills in the pit? He hedges. So how does he make money if he hedges instantly? Prediction is necessary, but it is not always direction that you are predicting. The more abstract you can make prediction the closer you are to understanding how to make money trading. nitro
I may predict what I think what will happen, but I never trade off it. I do it just for fun. I trade what the chart says, that's all.
Actually, not true. When I buy 1000 shares... I automatically short 1000 shares of something very similar. I almost NEVER make a directional bet. That is for amateurs who do not understand the mathematics of trading.
Okay so you're putting on a pair trade. I assume that you expect the spread on the trade to go one way or another - is that not prediction? If you expect the spread to narrow or expand in a particular direction - then is that not a directional trade - betting on the direction of the spread. If I buy a stock - then you can think of that as a pair trade too --> I'm long the stock and short USD as I think the stock will outperform USD for whatever timeframe I intend to hold.
You're method is ultimate prediction Jack - I know because I traded it today. I saw an FTT on the YM this morning (on a 5 day chart) and I expected the RTL to break so I got long *predicting* a BO after the FTT on the LTL and I flipped it for 72 points.