Quote from Expect Positive:
Market is never wrong... I don't like that saying. You make money when the market is wrong. When you make a positive risk-adjusted return over a large sample of trades, you were right when the mark was wrong.
well, I do like that saying. matter of personal choice.
Whenever a drawdown occurs, we ask the obvious questions: is it me, or is it the market?
So lescor (and many others) struggles thru the first three weeks of January. Is there anything unusual that took place, aka outlier in the market? Or is it simply a random outlier of system(s) performance? Normal drawdown, or abnormal market circumstances?
Statistical fact: average daily range for stock index markets from Dec 2010 thru Jan 2011 has been lowest levels since the 1980s. Twenty-plus years, two decades extreme.
Electronic markets did not exist back then... the ES had not been invented, let alone NQ - ER2(TF) - YM to follow. Grains were not electronic. How could they be? There was no internet, no online trading.
So considering the fact that VIX levels were hovering near 16 and intraday ranges were smallest since before the advent of internet online trading, could we assume market conditions are the variable in this equation?
Hence the term, "markets are wrong" means they are abnormal, extreme, bastardized, etc. Pick your term, it's merely semantics. Meaning is all the same.
Stock markets are abnormal to twenty-year extremes. Perhaps Friday's engulfing bar that erased ten of the last eleven dead-drift sessions higher marks an end to those doldrums. Time will tell, and soon.
