This is where i disagree, and agree with Jon
Were my system to be based on a new high for example. I didn't/don't predict a new high would come, the market made the new high. I am reacting, my system is reacting to the market making a new high.
This is based on PAST results, not expected future results, which is what my trade outcome is based upon.
Semantics, though I'm sure
definition of reaction:
An action performed or a feeling experienced in response to a situation or event
market makes new high...little trader Malaguti places trade. satisfies my definition of reaction for sure
I agree with this, a reaction to what the market is doing is different to a prediction.
Its all about timeframes and how and what people trade.
A day trader won't care about what the market is doing in a weeks time a months time or even in some cases tomorrow, he will place his trades according to what he sees in the 1 min, 5 min, 10min or whatever timeframe he is trading, on the flip side there are long term or swing traders who wont be looking at anything under the daily, weekly or maybe monthly charts so wont care what the market has done in the last 1 minute 5 minutes or 10 mins.
A scalper wont care what the market is doing in an hour let alone a day.
Trading a system isn't a prediction, far from it, it means you have an entry a target an exit and a stop.
We can all make predictions about the market, trading isn't about predictions, its about systems. Taking trades according to predictions means your system is flawed.
At the moment the market is moving higher, higher highs, higher lows when that changes and we start breaking previous swing lows, and making lower highs, then we can start shorting.
The safest trades at the moment are the dips.
Trying to predict a top is a dangerous game, we know a top will come, we can make a prediction the market will top out, but to trade the next trade as a market top would be suicidal.
The market is moving up on low volume, but its still making higher highs and higher lows.
How long it can continue to push on is dictated by how many people pile on at these highs, when it sells off, it will more then likely sell off big, thats a prediction.
I don't know how big the sell off will be, we have no sell off, we have nothing to go by but we know that markets rising on low volume mean no institutional buyers, less and less takers at these prices, which in turn means sooner or later the market will drop back to a level where people feel there is value, so a pull back, retrace, collapse whatever its going to be will come.
I have made a prediction as to what I think will happen.
Will I base my next trade on that.
No, will I base it on what the chart tells me, yes.
Predictions are predictions, systems are systems every system isn't perfect just like all predictions aren't correct.
If they were we'd all be as rich as Warren Buffet.
:cheesy:
