What is your market/trading paradigm? Some people view the market as lows and highs, zooming between areas of support and resistance. Some view the market as big players/institutions trying crush the little guy. Some view the market as a hunt for liquidity. Some view it as economic data reflected by price. Some view it as a random walk with upward drift. Some view it as making a market around fair value. Some view it as reading order flow. Just some obvious examples. If you don't mind writing a bit about YOUR market paradigm or combinations thereof, and how you like to think of the market you trade, we might have a hope at some interesting conversation.
see the market of one with excess FEAR and GREED. daily i provide to the GREEDY selling them shares they want, and buy from those with excessive FEAR. albiet, price alone for me defines HOW i measure these investor/trader emotions. (aka liquidity provider, I am.) sure does seem to work using a large number of trials/fills.
The stock market provides an infinite opportunities. While a single stock provides a very few opportunities during its life. Be disciplined and patient in the market and be hastened when opportunity arises for a stock.
Your style has been proving to work fine. Be Fearful When Others Are Greedy and Greedy When Others Are Fearfulâ - Warren Buffett
Philosophy threads are rare. Looking at the precursors to modeling and devepment and application is rare. A dichotomous key could be used to reign in the primary considerations and lead the constructer to the details of optimizing through effectiveness and efficiency. The hugeness of the capital pools that form markets more or less dictates that the EMH would not yield much financial gain from looking for anomolies even with the advantage of the huge size. Of the 30 some conventional operating philosphies in practice, tha better opportunity emerges from speculating as a parasite of market price movement. Price movement is the inevitable result of the sway of diverse opinions melting dynamically at all times. This leads to the consideration of taking and how taking is done. Philosophically, only the flow of capital may be considered. The flow is unidirectional; namely out of the hands of the pool operators. I use a hydraulic model for this and I tap into the flow to always extract as much as possible from the flow which I have no power to affect because it is so huge. The development from the model, in today's technological age is at an electronic level and involves up to 70 degrees of freedom. There is no urgency involved since the electronic era affords the speed of light and the hugeness of the pools precludes any surprises. A non stationary window separates the significant data from the historical data and the MODE of the market is always stated as is the Sentiment of the market. These two derivative factors are sufficient to always determing the extraction vector (long or short) and the segments of extraction (timing of segments of extraction for a given vector (trending)). Being parasitic to the pools determines the time rate of change of the capacity of extraction, i. e., the load that the markets can bear in how much per unit time is taken. This is the width of the conveyor belt. The speed of the conveyor belt is also provided and no tempering is required by the trader just as the height of the money on the belt is not temperable. The width is measured in cars and it varies according to the Powers Law; it is not derivable from price. the speed of the belt and height of money is dervable from price and is secondary to the capacity (width). The amount of flow is the product of height and width and the linear speed of the belt. The model is hydraulic and is pool extraction through price movement. The development is to be in the market all of the time (conveyor belt delivering price change); be on the right side of the market all of the time (keep the belt flowing from the market to me at the speed the market wishes to transfer); and to have as many cars in the market as the capacity allows (adjust the width of the belt externally to be able to handle the current opportunity). Three gauges are used to monitor the market. These are not used by the market operators or the talking heads it seems Two gauges determine how the belt is operating: MODE and sentiment. Sentiment measures Long and Short and outputs which of the two is allowing price movement. MODE is used to determine the duration of profit taking segments; It expresses HOLD and Time of end of HOLD (which coincides with beginning of next HOLD). The third gauge is the capacity gauge. During various periods of RTH's the capacity of the market varies. It cannot be exceeded by more than a factor of five or, then, trading will have slippage. This is important since market reversal trades are what are used. Since timing dominates over price and being in line for a trade at a given price is trivial since knowing price in advance is not knowable in trading.
"What is your market/trading paradigm?" The road to success, in a small part, comes from avoiding whatever the previous poster says. For example: <i>...The flow is unidirectional; namely out of the hands of the pool operators. I use a hydraulic model for this and I tap into the flow.... yadadada</i> I think Jack fell in, was floating facedown in his pool, and is now stuck in the intake valve...
I think Jack's splashing around in his own personal cesspool, spattering anyone who comes near with excrement.
Nice thread. My trading praradigm is that the market operates in CYCLES of upwards and downwards movement, or what the brothers call "flow". These CYCLES move in what are known as WAVES. Trading profitably means you have to be able ride the WAVES in a CYCLE successfully. By seeing and riding these waves you are able to achieve in your journey to become a successful trader. If you move against these waves will experience what is known as WIPEOUT ... not the worse thing in the world, but not very desierable in terms of your stated goal, either. Many traders try to catch the turn of one CYCLE as it moves into the next ... but that isn't really necessary for profitable trading.
This view really needs to go as its simply not the way things are if you look at how volume/trade breaks down. I view the market as big players and/or programs/algo/arbs trying to take eachothers money. All the little guys are just in the way, either get squashed or get a free meal. I pretty much trade breakouts entirely, trying to jump on the big guys backs when they decide to move and losing a finger when i'm wrong as opposed to my head.