This post reads like Shakespeare literature, needs to be added to ET's Hall of Fame.
can price action predict market moves
- Thread starter geth03
- Start date
Let me repeat my previous question, if price action could not predict market moves, then how could there be trends? Nobody canceled market forces of supply and demand. The main issue is risk management, two traders can be given a buy signal, yet one will end up with a winning trade whereas another will throw in the towel.
Why does Russell's bounce coincide with weekly lows in February? You can say it's coincidental, yet something that happens often isn't coincidental. It's because this area is of interest to other market participants. I look for potential areas of confluence and the bigger the chart, the more reliable the validity of levels.
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I’ve seen some market structure exploitation like the order queue and order matching for example.
Mostly inter and intra market correlators.
And just some really talented natural born traders.
Mostly inter and intra market correlators.
And just some really talented natural born traders.
There is autocorrelation in market prices, which drives the momentum risk factor. If you want to invest in the momentum factor, you can do that through an etf. If you plan to trade the momentum factor, you’d better have a robust understanding of momentum, how momentum investors rank and select stocks, and potential drivers of momentum beyond price autocorrelation (because that is your ex-post signal, ex-ante signal of beta, it’s not a prediction that will drive alpha).
Also your comment on risk management doesn’t make sense. Risk management is what forces a trader to fold. You should fold quick and early when you do not have an edge.
Also your comment on risk management doesn’t make sense. Risk management is what forces a trader to fold. You should fold quick and early when you do not have an edge.
Sorry your first part of reply doesn't make sense to me. What are you trying to say?
As far as your second part goes, tell this to Hwang. I personally don't believe that edge's exist, I think it's more of a marketing BS. The only edge is a trader's knowledge/experience and without proper risk management (which includes trade management) this is meaningless.
Let me unpack this for you.
Your edge can be analytical, informational, or logistical. For example, floor traders used to have a logistical advantage (they could make a trade before you could phone your broker) because they could trade ahead of flow. An edge doesn't always exist and even the ones that do can fade, but it's your signal that results in a greater than 50/50 odds of winning a trade. If you are entering trades and losing more than 50% of the time then your current system is worse than a random guess.
You aren't familiar with momentum and autocorrelation?
How much experience do you have on this topic? Your second statement negates the first.
Your edge can be analytical, informational, or logistical. For example, floor traders used to have a logistical advantage (they could make a trade before you could phone your broker) because they could trade ahead of flow. An edge doesn't always exist and even the ones that do can fade, but it's your signal that results in a greater than 50/50 odds of winning a trade. If you are entering trades and losing more than 50% of the time then your current system is worse than a random guess.
Let me unpack this for you.
You aren't familiar with momentum and autocorrelation?
How much experience do you have on this topic? Your second statement negates the first.
Your edge can be analytical, informational, or logistical. For example, floor traders used to have a logistical advantage (they could make a trade before you could phone your broker) because they could trade ahead of flow. An edge doesn't always exist and even the ones that do can fade, but it's your signal that results in a greater than 50/50 odds of winning a trade. If you are entering trades and losing more than 50% of the time then your current system is worse than a random guess.
Why the obsession with high win rate? Are you saying it's not possible to have a profitable low win rate system? Edge is ability to make more $ than lose $. Many can't comprehend this way of thinking.
Many abuse leverage, in fact are leveraged to the hilt and this what makes them lose money. Deleverage and hold position following a predominant trend and then see what happens.
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I am not sure if you comprehend what you are saying. You cannot be profitable with a low win-rate system by definition. Even with risk management you are just bleeding money slowly.
Your edge tells you when to size up on a trade. If you believe that your reward to risk is higher than 1:1 on a trade, then the basis for that belief is your perceived edge.