The only CTA's that are making money using purely price based indicators are the diversified, long-term trend followers. All the other profitable ones that I've looked at are using something else in addition to price. I know you hear a lot about intraday, priced-based "scalping" on ET, but I can't think of any CTA's doing this. My guess is that it isn't profitable in the long run -- too little signal, too much transaction costs.
Sentiment indicators show what the market participants expect will happen. Put/call ratio, implied volatility, price of gold & crude, hi-yield/treasury spread, the yield curve, cover of magazines, etc. And the study of behavioral finance is the study of human weaknesses and irrationalities in investing. Behavioral finance will help you look at the sentiment indicators and see irrational, unlikely expectations and take the opposite position. The "new contrarian" you might say.
Hi, Aaron You were talking about "Sentiment indicators show what the market participants expect will happen. Put/call ratio, implied volatility, price of gold & crude, hi-yield/treasury spread, the yield curve, cover of magazines, etc. And the study of behavioral finance is the study of human weaknesses and irrationalities in investing. Behavioral finance will help you look at the sentiment indicators and see irrational, unlikely expectations and take the opposite position. The "new contrarian" you might say." I'm very much interested in what you're talking about and wanting to look into this much more. Do you have any particular resources you've found useful in this regard? Thanks.
Perhaps this is in the wrong thread, and we can start a new one, but in regard to behavioral finance just started to look into this more and did find a few links in case anyone's interested. http://www.investorhome.com/psych.htm http://groups.yahoo.com/group/Behavioral-Finance/ http://www.richard.peterson.net/buyontherumor10.html http://faculty.haas.berkeley.edu/odean/ and http://faculty.haas.berkeley.edu/odean/papers/overconf/DoInvestors.pdf http://poweradz.investopedia.com/articles/02/112502.asp http://gsbwww.uchicago.edu/fac/nicholas.barberis/research/bf5b.pdf http://www.futurespartners.com/articles/traders/pruden.html PS This is why my trading stinks. Staying up too late to research things like this. Kidding.
Just started a new Behavioral Finance thread http://www.elitetrader.com/vb/showthread.php?threadid=11583 in case anyone's interested in discussing this more.
Are Toby Crabels trading methods really that great that such a high price can be demanded for his book? The book might be copyrighted but I wouldn't think that his trading methods are copyrighted. Are there any books out there that tell about a similar trading system? Is his system summarized somewhere on the net? Why doesn't someone write a book telling about the system if they can get $500 a copy?