I think you are right 100%. I was just inquiring to see if there is any documented studies. it's a pretty good deduction. also based on the fact that 90% of businesses go broke in the first 5 years (substantiated) and that here in California 2 out of 3 marriages fail. people are losers - few can change. I was one of the biggest losers. I changed! *beams*
I find that i can predict markets in very short term. But go out more than a day and it gets tough. For example, if price of oil is down $1.50 when the market opens tomorrow, i can correctly predict that any oil stock that barely opens down will be a good short. However if i try to predict where that oil stock will be in 3 days i probably have no clue. As I have no way of knowing crude and SPX in 3 days. The nice thing about day trading is that you can get in and out of your trade without the reason for the trade changing on you. However, when you try to predict what will be good for the next month, a million things can turn against you and you pretty much become at the mercy of the market. i believe that there are multi day setups that work, and i'm sure that there are traders out there that can consistently find these. However, it seems much harder and riskier than if your time frame is less than 4 hours. And it may be better to take your multi day bias and day trade with it. Often you can get back in your position the next day at a better price anyway, and with much less risk.
I agree that some short term price moves can be predictable (different than predicted). example: I once realized the EUR/USD was going tumble based on the outcome of a G7 meeting. So I desperately emailed my broker 15 times asking that they get me a short position opened on EUR/USD with 100,000 units! sure enough, just as I figured, when the market opened a red streak starting forming well over 100 points down.... next day, however, they emailed me back and told me they didn't make the trade. reason: "You first need to fund your account."
15% of what? You have to be very specific when you talk about returns, or you'd be comparing apples to oranges. I'm a day trader that makes a very comfortable living. My cap at risk is only $5k. So I can say my annual return is well over 2,000%. Now let's talk about return in absolute dollar amount, it's only in the $100k and $200K range. And my return is not scalable, meaning whether with $5k or $5Mil, my absolute return in dollar amount stays in the $100k and $200K because of my trading style (rapid fire day trading). Now comes along a trader who can make 15% of everything you give to him. He's much less of a trader than me when his risk capital is less a $1 million, whether you measure returns in percentage or dollar amount. Nonetheless, once his risk capital rises above $1.5 million, he beats me handsomely. He is the big swinging D*** everyone looks up to. Trading is never easy but it IS easier to make big percentage returns with little money consistently than to make respectable percentage returns with big money. But I'd rather be the guy who can make 10% returns with $10 Billion than a daytrader who makes 10,000% with $30K. Regarding predicting the market, I do agree with some of the previous posts, only partially though. When you daytrade (or any short term trading style) , it's easy to react to than predict the market and make a nice profit consistently. That's what I and a lot of successful daytraders do. But we are small fries who don't and can't move the market. Big money managers have to somehow predict market moves simply because one simply can't move tens of millions or more in and out of the market and not cause and adverse market reactions. But we do have to admit that only a handful fund managers/traders can consistently make a decent profit. Most fund managers are scammers who don't know shit and simply make a good living off management fees off investors who are too dumb or lazy to invest themselves.
Nice Post. The next step is to grow your operation by adding other strategies. For example ** Options ** Bonds ** Swing Plays ** Currencies/Commodities ** Manage other peoples money. ** Long Term Investments ** System Automation and so on. Hit the market on all fronts. If you have a solid base you can build on it. ozzy P.S if you get to this point its probably a good idea to hire a few ppl to help out.
It is a very very subtle thing. I happen to agree with you that we all predict, as in anything that is not random there is causation and effect. However, imo what people usually mean by predicting is they don't anticipate/predict things like the top/bottom, they react to a turn _after_ it does with a stop loss a tick above/below the top/bottom, or for example, they may react to a Bollinger Band penetration contrary to the trend only on a reentry back into the bands in the direction of the trend. Subtle... nitro
How diversified was your stuff? You only were able to turn maybe 15% per year PAPER TRADING??? I thought everyone made stacks paper trading! :eek:
When you decide to take action, and the action appears to be correct, it is a kind of prediction. Because you did what you did based on your opinion about the future. If you are correct every now and then, it is more like guessing or gambling; if you are right most of the time it is rather predicting. For me it is for 100% clear that the future can be predicted. The accuracy and the lenght of time of the prediction can vary depending on the analysis that were made; sometimes things are very clear, sometimes things are troubled. But by analyzing the incoming data only, one can make profitable predictions. All you need are quotes. To me predicting is analyzing the mass behaviour in reaction to what the quotes do. So in fact you have to predict the behaviour of human beings. Therefore prices are never at random, but based on this mass behaviour. I read a few weeks ago an article about sheeps that wanted to jump over a ravine. Alomst 400 sheeps fell in the ravine because of mass behaviour. Over 100 were dead and absorbed the chock for the others. So when the first sheeps jumped in the depth it was already clear that all the others would follow. It was possible to make a prediction. The same thing apllies to the financial markets.
To make profits you need to be trading something with an inefficiency of some kind that always you to get a legitimate economic edge. For example, during the dotcom boom you had lots of retail traders who were sitting ducks for anyone with level II; you also had momentum funds that created predictable intraday trends. Usually there are at least some assets that are "in play" i.e. the focus of speculative activity and/or major economic reevaluation. IMO these are the best places to look for edges.