If someone has 5 ''rare stock picks'' in a 12 month period and they all lose money can you say he's in a losing trend? I cannot ''predict'' what the next ''rare pick'' will do, but I'd put my $ against it.
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I don't see the connection to price patterns. Your example was about access to fundamental information, which in turn gives rise to price patterns and not about price patterns themselves. There is a huge difference. IMO it isn't the patterns that dissappear but their potential to make money. The mechanism behind that is is not due to the actions of some market players but in the long term due to concurrent flow of fundamental information that can invalidate their significance. For example, you see an upside key reversal in bond futures but next morning PPI comes out very strong and prices plunge. The problem was not the pattern. If one buys into a market because of technical considerations when important fundamental information flow is pending the chances become 50/50 rather than the chances of the key reversal pattern because fundmental information is more important than technical. In the long term, there are so many occurrences of fundmental information on top of the key reversal that the central limit theorem takes effect. No way to make money and cover commission and information cost unless you know how to trade. An experienced trader knows when to stay away. If you are a fundamental trader you must stay away from technical markets and if you are a technical trader you must avoid fundamental plays. Regardless, you gave me some good ideas with your example. Bill
for those who believe in trends, may i suggest--- "how markets really work" by l. connors. this research clearly shows that buying new highs or selling new lows--"trend trading--per defined by books on such things" is an inferior strategy. futhermore--"equity markets in action" will clarify the MULTIPLE misunderstandings of markets evidenced in this thread. take the truth, or stay ignorant, its up to you. surf
Trends exist. They exist not because I say they do, but becuase the market says they do. Furthermore, one need not know, in advance how far a particular trend plans to remain intact. One need not even guess or predict. One only needs to recognize the point in time where one trend ends, and another begins. Furtunately, trends have some degree of overlap it turns out. As such, each trend begins as a counter trend move. Each part of a trend has its own characteristics which display on a chart as Price and Volume. These sequences repeat over and over in every trend, on every time frame, all day, every day. Now, you can choose to endlessly debate this topic every time it pops up on ET, or you can decide to think outside the box, and start to learn to trade profitably. You said you trade off intuition. More than likely, you already have a set of fundamental building bloacks loosely organized in your mind. Unfortunately, your bias toward the markets is what is holding you back. Step outside your comfort zone, and see what you can find. - Spydertrader
Lets look at a stock say BDSI. It has traded in a range for many years. However, it recently broke out of the range to the upside before falling back on profit taking. Now, I am sure there were traders that made money both going long and short based on price action or technicals. However, I have bought it due to the fact that we are close to possible FDA approval. Obviously I have not put all of my money into the stock and I am diversified among many stocks awaiting FDA approval since even if just one is approved could make me more money than on 2 that don't get approval. Let's assume for sake of argument that they get approval. This will then create a trend to the upside. This trend is not random noise, it was created by the approval.
This is very interesting and one of the best threads I have seen on here in some time and no one has started to name call and get emotional....That is rare. My questions and interst lies in the time frame you are trading>>>>>>>>>> On one of my auto systems...I am looking at areas of least resistance over the next 15 sec to 3 min. This time frame is quite responsive to volume and where trades are going off....the Bid or ASK and what side is more agresssive. Does your time frame have a impact on the success of your inputs and assumptons? This is not a scalable systems to 500M but in some futures markets you can make some nice coin if you have the modeled correctly. How is this time frame (very short) compared to something on 30 min or daily bars? I think the markets are fractal and will make sence on many time frames but this topic and guassian distribution is interesting and what to discuss if these assumptions by both sides are different based on your time frame? Look at the commodity markets in aggs when they went electronic? Volume exploded and these makets where open to more traders and this caused some interesting changes in this environment over the last year? Was this just foundamental, technical or changed becasue access was opened up to more taders and funds? Why have markets speed up the last 10 years the way price reflect to news and data points? Technology, electronic trading, or a new way to be plugged into this "infomation flow"? The manias of the past will also show up in the future but these events are not what Iam interested in but how the many time frames interact and how the market functions. Trade well....
I did not read any more after this. Surf knows he has been completely wrong. I will give you an example. Why chart reading worked. Back in the days of Vwap. It was not unusual to see double prints for size. When you combine size buyers evertime the stock goes down 25cents guess what happens next. Guys like me back in the 90s tried to buy for size in front of them. What did you get - a trendline up. Games like that go on all day long in the market. However the more derivatives there are - the less true the t/a because the tape readers and floor traders can't figure out the true state of the market. I will bet t/a is just killing it right now in less mature markets.
Any Market. Any Time Frame - provided sufficient liquidity exists. The same sequences which occur on a 5 minute chart, also play out on a daily chart, as well as, on a Tic Chart. - Spydertrader