deciding which markets to trade

G

Gordon Gekko

say you've been around a while and you know you know more than the average guy with an etrade account. wouldn't you want to trade the market most traded by people who don't know what they're doing? i'd bet most inexperienced traders trade individual stocks like INTC, DELL, MSFT, etc (that's how i got started!). i don't think most newbs are trading eminis.

so my point is, when deciding what you want to trade, should you take into consideration who you will be playing with? i understand pros will be trading all the markets, but why not trade the market with the most losers?
 
Originally posted by Gordon Gekko
say you've been around a while and you know you know more than the average guy with an etrade account. wouldn't you want to trade the market most traded by people who don't know what they're doing? i'd bet most inexperienced traders trade individual stocks like INTC, DELL, MSFT, etc (that's how i got started!). i don't think most newbs are trading eminis.

so my point is, when deciding what you want to trade, should you take into consideration who you will be playing with? i understand pros will be trading all the markets, but why not trade the market with the most losers?
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So what's harder, trying to figure out the psychology of the broad based market, or focusing on a single issue, where there may be an institution with an axe to grind, a MM with an axe to grind, an insider with an axe to grind, some news lurking around but unannounced......
 
Have you ever played poker at a table where a drunk is also playing. Sounds counterintuitive - but you won't necessarily be more profitable.
 
Well ... Why would you choose a market based upon your assumption - that there are more inexperienced traders ? How could you know the exact composition of a particular market: Where would you get that type of information ?

I would have to disagree with your implied thesis: institutions own the equities you mention. At any given moment what type of entity holds the bulk of these shares ? Small traders, individuals, large funds ?

No particular fund or trading entity that I know of chooses the mix of instruments that they trade based upon a thesis that the other side is "inexperienced". They may decide based upon factors like the parameters of the instruments market, the amount of capital they have, the size of position they may hold and the duration of the positions, as well as things like which derivitive or other instrument they will hedge with etc. .....
 
Gordon, from your recent threads I get the feeling you are trying to outsmart the market. Hopefully you are just bored and not really trying all of these new strategies.
I do believe in your theory of making money off of people who do not know what they are doing, but you are looking on the wrong end of the spectrum. Stocks like MSFT and INTC are not going to be effected by small traders.

If you are looking to capitalize off less informed traders watch for lesser known stocks which gap on news which on the surface appears substantial, but in reality will have no effect on the fundamentals of the company.

There are many instances where a company will tout some amazing new product causing an unsustainable run up in the stock. When the biotechs were in a freefalll several months ago, every other day it appeared some company would brag about a new drug, causing a short term spike and an excellent shorting opportunity.
 
Originally posted by JORGE
Gordon, from your recent threads I get the feeling you are trying to outsmart the market. Hopefully you are just bored and not really trying all of these new strategies.
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heh..like i said in another post, i'm currently sick with a cold. so, i have a lot of time on my hands lately. :)

i wouldn't say i'm trying to outsmart the market, more like, trying to get the most odds in my favor.....if possible. but like i've said before, i'm just throwing out ideas..i'm not necessarily saying this is the best way to trade.
 
Sorry to hear about the cold, always tougher to trade when sick.

I guess my comment had more to do with all of the strategies I see being thrown around on these boards. I think RS7 had the right idea when he started a thread called Keep it simple.

The majority of my trades involve stocks which are moving on recent news, many times this involves trading the stock in the opposite direction in which the average retail investor would trade. This is why you have the right idea when you are looking to trade stocks in which the dumb money is responsible for a large percentage of the volume. I have no predetermined system for doing this, it is based mostly on instincts I have developed from spending way too much time watching the market. While I use simple charts to have an idea of support and resistance, I have no clue what most of the technicians on this board are talking about.

While I am sure there are many successful traders out there using complicated strategies, it is definitely possible to make a decent living just by simply reading the tape and taking note of how stocks are reacting in different market conditions.

Good luck in finding something that suits you.
 
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