Quote from NoDoji:
Yes. Consistently profitable trading based on easily exploitable repeating patterns feels so counter-intuitive at the hard right edge to most retail traders that they can't bring themselves to trade a plan based on these patterns even when they've seen with their own eyes that it works over and over again.
The average retail trader is a gambler trading without a plan, afraid of losses and constantly wanting a way to ensure the certainty of the outcome of individual trades. This is why you read so many comments on forums about how easily exploitable patterns fail. Of course they fail! There'd be no market if there was a pattern that always resulted in a specific price follow-through.
A properly researched and well-defined trading plan demonstrates how to exploit the repeating patterns for net profits over series' of trades, not how to guarantee that every appearance of such patterns will result in a profit.
HFTs trying to front run big orders for fractions of cents all day long are not what creates large price moves. Institutional traders and investors deploying capital in ways that benefit from longer-term moves (or relieve risk during times of fear and uncertainty) create trends and wide ranges in longer time windows than a day or a week.
If an institutional investor wants to position itself for a multi-month or multi-year swing in the price of something (currency, commodity, stock index, individual stock, etc.) based on a long-term fundamental or technical outlook, it will be accumulating or distributing much larger positions than a retail day trader or short term swinger, and certain price action footprints (patterns) left behind when this happens repeat again and again because basic human nature hasn't changed much at all throughout recorded history. Basic human nature has remained pretty much the same despite small incremental changes in how people manage themselves in groups.
You seem a profitable mechanic. So, say, you've set up your workshop in a shed (or in your studio as the case may be. Whatever). You proceeded to professionally develop your strategies on your $2k commercial software, work for which you are rightly proud, after all you were tooling away in that shed for months, interminable sessions, sweaty coveralls, greasy hands and all. Then you take your new toy to the market.
But in the market there are machines far, far, superior to yours. Surely you cannot ignore that there are thousands of entities with vastly superior resources and experience than you.
Don't you think these operators fully understand the edge you use and they see it perfectly. Do you really think you are in any way better than they are?!
The large positions you mentioned are not unloaded half haphazardly; they are handled by experienced traders getting paid to do it at the most favorable prices. And HFTs play a different sport.
If mechanics and automatons make money (and you know if you do) then, I ask again, how can that possibly be?
Shouldn't such opportunities disappear due to the counter action of more professional, higher capital, better equipped, quicker, market participants?
Or, were those to be inescapable consequences of price dynamics, shouldn't they be acted upon more quickly than possible to small retails, thereby cutting them out?
- ras72
(yes I'm being facetious) get paid for?
