Do you fully appreciate the complexity of the markets?

[NZDSPeCIALISt]

Quote from steenbab:

Of the consistent multi-million dollar earners I have personally known (and verified their performance), none of have been scalpers and all but one has employed strategies that I would describe as complex. By that, I mean that they are looking analytically at multiple markets, forming ideas based on that analysis, etc. They are not just trading off charts or simple indicators.
Brett

If someone is managing big amounts, circumstances would dictate that they will trade in this way. If they consistently make 30% a year they are god.

Give that same person a $10 000 account to manage (and tell that person their only income is 90% of the profits) and I guarantee you they'll be scalping/swinging for every pip/point they can scrape using price action/indicators only.

Anyways, have been a big fan of your work for a long time, thanks for your contributions, they have been an inspiration. Keep it up!

 

[nbates]

...a big fan of your work for a long time, thanks for your contributions, they have been an inspiration. Keep it up!

Brett...ditto, thanks!

 

[FaderTrader]

Quote from steenbab:

Hello All,

I appreciate the thread. Perhaps I can offer a small example.

Hot weather in the midwest is threatening the corn crop. The U.S. is the world's largest exporter of corn, making up 70% of the world's exports.

At the same time that we might have a diminished corn crop, the U.S. demand for ethanol has resulted in a situation in which--for the first time--more corn is being diverted for use as fuel than as food.

In the futures markets, corn is up around 20% since May, having recently broken to multi-month highs.

For the first time, we're seeing farmers forego planting of other food crops in order to grow the sugar, corn, and other crops needed for ethanol.

How will this affect inflation? Interest rates? Fed policy?

How will this affect countries dependent upon the U.S. for their foodstuffs?

How will this affect our own agricultural markets?

IMHO, these are the complexities that underlie new market trends.

Brett Steenbarger

More important and meaningful to me is the elegance of the math. I've yet to come across or hear of a strategy that works everytime. Stat Arb is probably the closest thing to a perfect strategy and look at how crowded that space has become. I agree with Brett (above) that the market's discounting mechanism is an complex web, but what's always struck me as awesome is the elegance of the math. Take any short-term strategy and apply it over time and 99% of the time there will be a greater than average amount of randomness.

That's why much of trading comes down to talent, intuition, decisiveness, and discipline.

And of course, this will garner the normal response from those who think that they are Albert Einstien's grandson and are going to invent the ultimate trading system. To them I'll say: Fat chance. Bottom line is you don't even know if it's possible.

 

[Batterup]

Mkts are not complex. The interactions among the different macro economic data and interpretations of that data as it relates to expectations and DESIRES within the mkt players positions might make the mkt seem complex as positions and thoughts are in constant flux................KISS still works, always has...........Always will.