What happens to a market when everyone is long?

Discussion in 'Trading' started by flipflopper, Sep 10, 2009.

  1. romik

    romik

    Whatever happens, if you empty your cache, you are fucked.

     
    #11     Sep 10, 2009
  2. haha exactly... a little mean for your friend though..

    1200 ES!

     
    #12     Sep 10, 2009
  3. FB123

    FB123

    He's never traded before, and thinks he knows what he is doing. Doesn't want to listen to my advice, when I told him how hard it was going to be. He went short at 965 and again at 995... has to learn the hard way I guess!
     
    #13     Sep 10, 2009
  4. you are forgetting about the stocks.

     
    #14     Sep 10, 2009
  5. These are things gurus will tell us, so it must be right.

    market is overbought

    most retail long

    shorts squeezed

    ----------------

    here are the things gurus really have NO clue about.

    what overbought means and how to make money off this non-sense

    what any retail trader is doing, and how to make money off it

    and the true % short and how to make money off it.

    -------------------------

    here is what I know.

    words like overbought and sold are worthless.

    so quit being a vacuum behind your computer and admit you really don't know anything.
     
    #15     Sep 10, 2009
  6. FB123

    FB123

    I agree. Overbought and oversold are generally used in technical analysis in the context of oscillators, like stochastics. So when the stochastics reach the upper end of their range, you can say that the market is "overbought", and vice-versa. In a range-bound market, this means there's a short-term top or bottom and it's safe play a reversal.

    The only problem is, oscillators don't work at all in a trend. In a trend, oscillators will get overbought and stay overbought for a long time. In fact, in a trend, "overbought" is often a good time to go long for some more upside. (There is even a trading method that uses this phenomenon, called a stochastic pop.)

    What's funny is that the time when the words "overbought" and "oversold" are most often used in the media is when the market has already moved some distance in a trend - precisely the moment when those terms don't work and are misleading.

    These words have no use at all in the context in which they are most often employed and are therefore best ignored.
     
    #16     Sep 10, 2009
  7. I saved this from a website in 2006, funny:

    Old Hong Kong sardine dodge. (During a famine in China, a Hong Kong merchant sold a sardine can filled with mud to another merchant, who sold it at a profit to a third merchant who sold it at a profit to a fourth. When merchant No. 5 discovered the fraud and complained, No. 4 had a comeback: "Why did you open the can?")".
     
    #17     Sep 10, 2009