Markets and mysticysm

[andycan]

Andy

It is news (either on a macro or micro level) that drives a stock price up or down, and everything is correlated.

Your belief of personal predictability is typical of the majority.

i missed this one
profitaker i trade US Bonds do you know how many times the fed intervens?
do you know how many times the news comes out with figures allows the market to do what it was going to do and then a week later retract the figures and give the new adjustments.
its almost laughable what they do with the news,
here is another example
Morgan Stanley upgrades such and such a stock, up it goes for a few days then oh dear down it goes for a very long time mmmh maybe a legal manipulation
but one has to approach the market and the information they receive in the way they see fit, im not here to teach or show anyone what i do im here to express a point of view and tell those that not everything is black and white on the knowledge front

 

[andycan]

Andy

Well, if it works for you then who am I to knock it !

I would point out however, that just about any methodology has worked at some point in the past, and no methodology works all the time, and it's very easy (and expensive) to be folled by randomness.

profitaker

you are absolutely right
but from what i have seen markets have got faster but the general methodolgy of making money in the market has not changed
sure there are different approaches for different markets
also different approaches when a bear to a bull but in general its the same ol same ol

regards

 

[Profitaker]

Rhody

"Feel" is a bit subjective, in the eye of the beholder, and dare I say, if it can't be articulated it's probably random success.

Perhaps we can agree on one thing.....if there really is a holy grail in predicting future asset prices it won't be written up on an internet BB ?

 

[Paul71]

Why does the market ignore news, sometimes? Is it because fundamentally the market is not running on news, at least not a one day announcement telling us all consumer spending has dropped by X%.

Money is the only thing that drives markets, and time.

I don't think anybody could say the markets are uninteresting, and the resources to keep the markets alive and kicking globally are phenomenal.

Interesting reading,

Thanks.

 

[timm]

Nobody "drives" news. News is the name given to communicating events or situations which affect the future profitability of the stock, either on a macro or micro level.

Anybody that claims to be able to predict the market by inference also claims they can predict future news and events. Maybe they can, I've just never seen it.

But what's news to one person is not news to another. No two people will have the same level of knowledge about the market. Your efficient market theory can only work if the everybody values stocks according to what they know and their influence on the price is in proportion to the accuracy of their knowledge.

However, if market participants value stocks according to how they feel, or bias their valuations with their predictions of the future, then the efficiency of the market is broken and we can start to predict their actions. We don't need to predict the news, we just need to predict emotions and guess how others might predict the future.

 

[Rhody Trader]

Perhaps we can agree on one thing.....if there really is a holy grail in predicting future asset prices it won't be written up on an internet BB ?

I agree that no one is going to be able to make a statement like "XYZ is going to rally to 100 today" repeatedly with 100% accuracy. Inevitably, something will happen that trips them up. If you are playing a set of odds that are in your favor, though, you'll do just fine for yourself.

 

[Rhody Trader]

Money is the only thing that drives markets, and time.

Money put in to action certainly moves markets. I would argue that time does not, at least not directly.

 

[Paul71]

Money put in to action certainly moves markets. I would argue that time does not, at least not directly.

Yeh, i agree with your sentiment. I probably should not have mentioned the 'T' word, i meant it in the context of that it, time, moves the markets into the future and whatever that may bring.

The markets bring money values into alignment across the board and values give the markets it's characteristic 'pulsating' looks. I used to be quite cynical about it all, i know for a fact that my cynicism is due to my lack of real understanding.

 

[rols]

Ah, Efficient Market Theory.

There'sa reason that's a minority view. It's crap. Even the academics who have clung to it for decades are starting to let it go.

There is absolutely no way that all available information is reflected in prices for the simple reason that not everyone who would base trading decisions on the information has it. For example, I might find it very important information to know that Buffett is buying ABC stock, but unless I'm actually in a position to see Buffett doing the buying, I won't know about it until after the fact. There's just way too much information out there that traders don't know at any given time. Keep in mind that the forecasts and expectations of other traders must be included in the mix of avialable information and there's no way we can know all that.

I will certainly admit that markets, especially the most actively traded ones, are mostly efficient. People, though, do not always react rationally even when they have all the available information, which is another breakdown in the efficiency theory.

To me it is more correct to say that prices reflect the aggregated actions, to date, of market participants as they interpret the information they have received and make decisions.

Excuse me!

Please remove the 'quote from rols'

These are not my words!

 

[Rhody Trader]

Excuse me!

Please remove the 'quote from rols'

These are not my words!

Ooooo! Very strange. Not sure what happened there. All fixed.

 

[Profitaker]

Another thread about to be destroyed and closed - see above.

Why do you post here ? Why don't you do us all a favour and **** off ?

 

[Paul71]

Another thread about to be destroyed and closed - see above.

Why do you post here ? Why don't you do us all a favour and **** off ?

I agree, i've reported the post. The guy is a complete w...

 

[grantx]

NT,

I would suggest it is the random nature of the market which makes it impossible to predict. However, if you hold that predictability is a feature of the market, then presumably randomness wouldn’t be apparent.

Perhaps you could explain via “reason, logic and simple arithmetic” why markets are predictable.

Rols,

Care to make a prediction?

Timm,

“No two people will have the same level of knowledge about the market.”

But the majority of the major players will, unless Morgan Stanley relies only on teletext, for example.

“predict emotions and guess how others might predict the future.” That’s one tall order.

Socrates,

Yes, fkuc off.


Grant.

 

[Paul71]

Market predictability?

If you had to take all your money right now and invest it in any market, could you get a return on it, given a 12 month time limit?

Would you have the same sense/level of confidence given a one day time limit?

The time frames and values are governed by different laws, but they both obey the law of money flows.

Mundane stuff i know, just thought i would try to get the thread on track again. Maybe it was in vain.


Edit: you beat me to it, Grant. I'm glad you did though.

 

[Charlton]

naturally that would be your opinion as its the majority thought
the markets are not random they are structured in such a way as to appear random
my statement was expressing a point as you see it and the final point was as i see it do you see now

Andy

I agree with this view. I would prefer to use the term "chaotic" rather than random. This means that they may be difficult to predict, but that there are patterns or geometry underlying the behaviour of the market.

We can all glimpse some of the patterns frequently, otherwise we would not be able to recognise trends, S/R levels and certain formations. However, as Trendie said, the problem is making this tradeable.

As we look deeper we may begin to make out some of the underlying patterns, but it takes time, development of skills and patience.

http://www.youtube.com/watch?v=kb9dcv1xDiY

Charlton

 

[new_trader]

NT,

I would suggest it is the random nature of the market which makes it impossible to predict. However, if you hold that predictability is a feature of the market, then presumably randomness wouldn’t be apparent.

Perhaps you could explain via “reason, logic and simple arithmetic” why markets are predictable.

Grant,

I rationalise it this way:

1) Do you think that someone investing $10 Million in a company is basing his/her decision on the same news and information as someone investing $1000?

2) When I look at the average number of ES contracts traded in a day the traditional (conventional?) buyer/seller model of how the market works doesn't really seem to fit.

3) Look at the ES charts and juxtapose it with high impact news announcements and see if you can find a correlation between the two. ie/ Does good news always make the market move up and vice versa. If not, why?

What am I trying to say...it's like a football game, you can't predict what the final score will be before the game starts. But, after watching for a few minutes, you will get a good idea of which direction the ball will head when certain players are in control.

PS: Grant, I'm am trying to learn just like you.

 

[grantx]

Paul71,

“the law of money flows”

An article in the International Herald Tribune a few weeks ago reported fund managers as saying they have enormous sums of uninvested funds because the markets lack the capacity to absorb them.

This week a survey (reported in IHT) in China revealed that an ever-increasing number of people intended to invest in the markets. I suspect this will be repeated in many countries. So, do we have a one-way trip?

Grant.

 

[Glenn]

NT,

I would suggest it is the random nature of the market which makes it impossible to predict. However, if you hold that predictability is a feature of the market, then presumably randomness wouldn’t be apparent.

<Snip>

Grant.

Grant
The markets are not random, although they may appear to be. They are Chaotic which is very different in the scientific meaning of the word.

Glenn

 

[new_trader]

Grant
The markets are not random, although they may appear to be. They are Chaotic which is very different in the scientific meaning of the word.

Glenn

Yes, I agree. Disorder within Order.

 

[Rhody Trader]

I would suggest it is the random nature of the market which makes it impossible to predict. However, if you hold that predictability is a feature of the market, then presumably randomness wouldn’t be apparent.

Perhaps you could explain via “reason, logic and simple arithmetic” why markets are predictable.

I think at this point you need to define what you mean when you say "the random nature of the market". My guess is you are referring to prices, and not the actual structure of the market itself.

The other point I would make in this regard is that non-predictability and randomness are not necessarily the same thing. You seem to be equating them. I don't think most folks would call weather random, but those forecasters with all their models certainly have a hard time predicting it.

Timm,

“No two people will have the same level of knowledge about the market.”

But the majority of the major players will, unless Morgan Stanley relies only on teletext, for example.

I definitely disagree. Consider the diversity of experience levels (meaning years of time in the market) alone that differentiates traders. Toss in different approaches to trading. Now mix in different timeframes. Then add differing access to information resources. When you blend that all together you get a lot of diversity in terms of what informaton people get, when they get it, and how they perceive and thus react to it.