How to stop picking tops or bottoms

FIB, your points as NODoji point our reflect tremendous experience but I must ask this once again, and maybe this is the last time...

The Nasdaq will soon double from the march lows. DOUBLE.

And in the context of earnings, and going back to the basics of what share prices must reflect, i.e. a discounted value of potential future earnings, and given that the economy has shrunken in size, debt burdened consumer has stepped back, and therefore sales of retailers have declined, so have earnings, etc.

You seem to express in your comments that this doesnt matter, or that at least the market (or this market anyway) doenst give a rats ass about this, since you say that this may go on up forever, Dow to 30,000, etc.

Or, are you implying that given the 6 month advance discount nature of the market, that this market is already behaving like 2010 growth will resume and everything is OK and we're back to normal?

Sorry to change slightly topics here from TA to fundamentals, I had to ask since this has to do with part of the psychology behind picking tops, at least for me.

thanks
J
 
Quote from jr07:

FIB, your points as NODoji point our reflect tremendous experience but I must ask this once again, and maybe this is the last time...

The Nasdaq will soon double from the march lows. DOUBLE.

And in the context of earnings, and going back to the basics of what share prices must reflect, i.e. a discounted value of potential future earnings, and given that the economy has shrunken in size, debt burdened consumer has stepped back, and therefore sales of retailers have declined, so have earnings, etc.

You seem to express in your comments that this doesnt matter, or that at least the market (or this market anyway) doenst give a rats ass about this, since you say that this may go on up forever, Dow to 30,000, etc.

Or, are you implying that given the 6 month advance discount nature of the market, that this market is already behaving like 2010 growth will resume and everything is OK and we're back to normal?

Sorry to change slightly topics here from TA to fundamentals, I had to ask since this has to do with part of the psychology behind picking tops, at least for me.

thanks
J
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The DOW wouldn't get to 30,000 without massive inflation. It won't get to 2000 without massive deflation and huge economic problems. Can you say for sure which one is going to happen? I have listened to and read a number of economic predictions lately from a large amount of people - hedge fund managers, economists, and so on... and the one thing I have noted is that none of them can seem to agree. In fact, I have never seen such huge dissonance and diversity in predictions. Normally economists are all more or less saying the same thing, with minor differences - but right now they are offering wildly different opinions, which shows me one thing - NOBODY KNOWS.

Some people are calling for a massive inflationary spike, some people are calling for a depression, some people are calling for a "muddle-through" situation. Can you say for sure which is going to happen? I can't. Nobody can.

Therefore, truthfully I have absolutely no idea whatsoever whether the DOW is going to end up at 4000 or 20000. Neither scenario would be a surprise, and in either one, SOMEONE would be crowing about how they were "right". But they won't be "right", because there is no such thing as "right" in this type of call.

Economic projections are WAY too complicated and subjective to trade off of with any reliability, which is why anyone who tries to do that to make money is making a huge mistake. Economists are generally not billionaires... if they really knew where the market was going, they'd be a lot richer, wouldn't they?

The chart, on the other hand, IS reliable. We might not agree on where the economy is going to be a year from now, but we can ALL agree that we're in an uptrend right now, and that is information you can trade off of. You don't need to know WHY it's going up or how long it will go up for, you just need to know that it IS.

So to answer your question, it doesn't mean that just because the NASDAQ has doubled, it won't double again. That could happen as you see inflation hit, and then after the fact you can go "Ohhhh.... so THAT'S why it was going up!" - but by then it will be too late to make money off it. Just trade the chart and forget about what you think the economy will do. If world-class economists can't agree on where we're going to be, my opinion and your opinion are even more worthless.

Trade off of the information that you can trust, not the information that requires interpretation, projection, and guesswork.
 
Quote from NoDoji:

Today I watched ES spike hard to 1072 on the Philly Fed, and sell off within seconds. Was this nothing more than amateurs trying to be "first", or was this price action indicative of a strong resistance level, since the "good news" never prompted the market to come close to retesting that level?
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Exactly. Every support and resistance level is like this.... you don't know until after the fact how "real" it is, but by then you can't make money off of it. The reasons for things only become apparent after things have already developed in the market. Reasons don't put food on your table. :)
 
AUDJPYH1.png

While in the process of developing my own tactics, strategies, and techniques for trading financial instruments online, I often read that it is impossible to pick tops and bottoms, and that any attempt to do so is pure folly.

Yet I still went ahead and attempted to catch a falling knife on more than one occasion, and it goes without saying that I suffered a number of cuts because of it.

Nonetheless, I continue to disagree with the contention that any system which attempts to detect when price is finished rising or falling is doomed to utter failure. My subsequent experience has convinced me that there is indeed certain information which can go a long way toward empowering traders to know when this is happening.

Such data is incorporated in the Numerical Price Prediction (NPP) system that I essentially finalized within the last couple of months, and it is based on these forecast models that I am planning to enter long positions with respect to AUDJPY and/or USDJPY.

These two pairs are testing the limits of their typical price ranges. So even though they are bearish, I plan to buy one or both of them when the forecast models begin sounding alarms alerting me to the possibility that they have ceased falling, and in fact, are in all probability initiating at least a temporary jaunt to the north.

These will be aggressive trades, made prior to receiving confirmation, validation, or permission from my primary trigger line, partly due to the extensive amount of deviation the pairs have already experienced, but mainly out of curiosity to see if such aggressive trades will be successful.
 
I have witnessed the first signs that AUDJPY might be ready to initiate a trip north...if only temporarily. I am planning to make an aggressive trade, so I will not be waiting for permission from my primary trigger line, but I am nonetheless debating whether to hold off until I have corroborating signals from my secondary trigger line. I fear that opting not to do so COULD very well turn out to be a mistake, but I have not yet made a final decision.

Yes I have. I’m going to go ahead and pull the trigger now, buying AUDJPY at 78.94.

AUDJPYH1.png
 
expiated said:
I am nonetheless debating whether to hold off until I have corroborating signals from my secondary trigger line. I fear that opting not to do so COULD very well turn out to be a mistake, but I have not yet made a final decision.
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Yes, not holding off until I had corroborating signals from my secondary trigger line did indeed turn out to be a mistake, but I committed the cardinal sin of lowering my stop loss, given that I do not wish to be stopped out of this trade due to my conviction that this pair IS going to eventually head back toward 70.12.

Accordingly, I will enter a NZDJPY long position upon THAT asset's crossing above my secondary trigger line.
 
AUDJPY has now made contact with my secondary trigger line, so at this point I will be watching to see how long it takes for the pair to form a candlestick above it, and how long it takes for the trigger line to hook to the north—the most conservative manner in which to employ this indicator.

UPDATE: So it turns out that I entered this trade 60 minutes earlier than I should have based on its relationship with the above cited moving average. After making contact with the secondary trigger line it took the candlesticks another twenty to twenty-five minutes to form a candle above the indicator, and another twenty minutes after that for the line to begin forming an upward hook.

Candlesticks are now beginning to form above my NZDJPY secondary trigger line as well.
 
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expiated said:
Candlesticks are now beginning to form above my NZDJPY secondary trigger line as well.
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I set my take-profit target at 10 pips, so I already banked a gain from this pair, but because the asset has dropped all the way back down to 72.57, I have entered a long position a second time.
 
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