Every move in the market explained in 2 sentences

[JigsawTrading]

Two people making a bet on the market direction and one of them is wrong.

Bingo.

A lot of people are missing the point. You nailed it there. There is no "the market".

Or another way to put it - "trading is like taming a lion". You are the trainer, the market is the lion. People see the market as something separate and different from themselves.

But there is no lion. Only lion tamers.

 

[JigsawTrading]

This might be true in many cases, but certainly not a general rule. Pump and Dump schemes don't follow this rule. In a typical pump & dump, a group of large stock operators accumulate stock, mark it up, distribute, then mark it down.

Yes they do - because they believe other trades will react. But they are cheating and cheating based on their understanding of human behavior. Lock 'em up.

If you think about their intention at the beginning, they were not expecting the next trader to do anything, they were just executing their plan.

Activist Investors also don't care about the next trader actions. They are buying the stock for a strategic reason, i.e. to gain enough control to put them on the board of the company and effectively enforce the company management to change some or all of their actions. The ultimate goal of course is to make money, but they want to participate directly in creating the shareholders' value (And this might or might not be related to the stock price), sometimes activists want to force the company to start paying dividends (Because they have a pile of cash and they are not effectively using it), sometimes they want to force the company to merge with another, sometimes they want to enforce an acquisition or sale of some unuseful assets and distribute a one time special dividend form the proceeds of the assets, etc...

I agree with that. I need to mull that over because this sort of activity is not charitable, right?

Like Bill Ackman buying Valeant shares as part of a plan to wrestle control. It lost him close to $4bn - and that was when four billion was a lot of money.

I presume that to gain control to make a change like that still involves getting a return overall.

 

[themickey]

Bingo.

A lot of people are missing the point. You nailed it there. There is no "the market".

Or another way to put it - "trading is like taming a lion". You are the trainer, the market is the lion. People see the market as something separate and different from themselves.

But there is no lion. Only lion tamers.

There appears to be a lot of resistance from ET traders that trading is gambling.
Look, I've been doing trading over 30 years.
There is not a day goes by I'm not delving into the mechanics of trading and markets, 7 days a week.
Most days I place at least one trade.
Every time, to me, it's a gamble, I don't know how when or why anything is going to rise or fall.
Every day my portfolio will shift either up or down in the four or five figures range.
I bet on direction and haven't a clue on the outcome, except hoping it will go my way, and when it doesn't am not surprised.
That's the reality.
Placing large bets because I'm overly optimistics mostly bites me in the ass.

Edit: Highly confident in my methods and pull in more money than I've ever done working for the boss.

 

[padutrader]

You are so wrong.

sorry my bad

i did not explain it properly

it is easy to see trend up or down

what is not easy...is to see the change of trend: what ever traders make by being in the trend, many not all , lose all when the trend changes; it does not change at a point..... from up to down.

it changes very gradually with the result that about 2-5 stops or may be more , are hit before it is realized what is going on.

any way any trader who has traded more than a few days knows it is far more complicated than just following the trend

 

[smallfil]

am i?
95 % of traders cannot do it.

the emotionally easy trade is the opposite. and a loser

i do not think you understand what i am saying...

trend following may make you big money but it is not easy

That is why you need to take emotion out of your trading. The moment emotion takes a hold of you, you are done, kaput. A mechanical trading system where you take emotion out of it, is very easy to do when you are trend following. You can have a day job, spent maybe, 30 minutes a day to place your trades, set your stop losses and leave it. With the proviso that you do not risk more than 2% of your capital on each trade and limit yourself to 5 positions open. Your maximum risk on a worst case scenario is 10% assuming you lose all 5 trades. Chances are good you will not lose all your 5 trades or even lose 2% when you have losing trades. Your upside is several multiples of that.

 

[padutrader]

even lose 2% when you have losing trades.

95% of us cannot have a capital of 100000 usd.....you forgot to mention that.........

i mean to make a living...

then you can risk 1% to make 3%-15%

this is rich man's game.....

not a game to become rich

use leverage and the broker become rich

 

[smallfil]

95% of us cannot have a capital of 100000 usd.....you forgot to mention that.........

then you can risk 1% to make 3%-15%

this is rich man's game.....

not a game to become rich

use leverage and the broker become rich

The 2% applies no matter what capital you have even just $1,000 or $2,000. What you are doing is position trading by following the trend. I traded my friend's small account in 2020. Her return after one year was 70.7%. So, do not tell me it cannot be done. Using the above example a $1,000 capital would have become $1,707 after 1 year and that is not even risking the whole $1,000. Of course, your 2% at risk grows as your capital grows. It gives you a chance to earn more and grow your capital without taking huge, unnecessary risks. Everyone wants to be a millionaire overnight is the problem.

 

[deaddog]

Bingo.


But there is no lion. Only lion tamers.

Tell that to the unsuccessful lion tamers if they are still alive!

 

[pureequity964]

I think the basic aim of trading is to give empowerment to the people, because if these markets don’t exist, how these companies would exist in the market without the revenue. They are filling the gap.