Carry on.....you are miles ahead of meYou call it shallow. I call it simple and effective !
“All the great things are simple, and many can be expressed in a single word: freedom, justice, honor, duty, mercy, hope” ― Winston S. Churchill
... and momentum.
Physics Vs Prediction in Trading
- Thread starter rajesheck
- Start date
There are two steps to momentum trading...
First, identify the trend / range.
Second, identify early momentum.
Here is a method to catch momentum within a trend...
https://www.elitetrader.com/et/thre...m-trading-strategy.310899/page-5#post-4482902
First, identify the trend / range.
Second, identify early momentum.
Here is a method to catch momentum within a trend...
https://www.elitetrader.com/et/thre...m-trading-strategy.310899/page-5#post-4482902
No response?
FIRST, there is actually no predictable pattern or stuff like that. Why?
Because price moves by simple trial and error method, nothing less and nothing more. All the bets are tested on real market. And that is why the supports and resistances all over the charts, either intraday or the positional trader's chart.
Price actions are not predictable. No pattern is a predictable pattern, no matter what. No technical charts and their signals going to work to meet any reasonable expectations because they all depend on some secret ingredient : predictable pattern.
SECOND, stoploss is actually a fixed loss, not something that stops loss. Fixed loss is not the wisest idea at all.
THIRD, when i say physics i mean the momentum on the chart. Of course the momentum can take off or die. The beauty is whenever you enter a trade on a fresh momentum it will make an attempt to take off. And then the take off may succeed or die. The dead momentum is mostly above the conventional stoploss.
The dead momentum is a signal to exit the trade with minimal or no loss, unlike the fixed loss by stoploss theory.
FOURTH, this posting basically is about transformation from dead patterns to live momentum. Sounds more practical? Well, its actually a blend of practicality and art. There is some amount of creative imagination needed to choose your momentum.
FIFTH... considering that stock trading is one of the most risky and nasty ruthless business... ROI anything less than 10% per month is not worth it. If someone tell you 2% is a decent one... just kick his ass. This view point gives clue whether we are successful in trading or not. If someone tell you he is a successful trader, ask what is his ROI per month.
SIXTH.....LEARN, UNLEARN and RELEARN. And never stop this learning process. "Let go" OR "Be ego".
(SEVENTH, if you are psychology savvy... the general trading psychology is... "Trial & Error method or approach")
LAST but not least... 99% of traders cannot appreciate this post. That makes me truly Elite. I have no intention to be with the crowd. I will not be surprised if no one likes this post.
Any business (including stock trading) demands two aspects : knowledge and creativity.
In physics, momentum is mass x velocity.
How are you defining and measuring momentum?
Are you saying that trial and error is the only type of problem solving that is being applied to the markets?
You use analogies of ‘live’ and ‘dead’. Are you expressing a belief that the market has characteristics of being organic and ‘alive’?
At the risk of being tangential to the points you are making, there are multiple patterns that shows up everyday as the sun rises, the two most easily discerned are - the catenary and ohlc.
What is your definition of pattern?
From my experience, momentum itself exhibits a pattern. It's symmetrical both long and short.
As for stop loss being a fixed loss, that's true. It also could be considered as a defined max loss prior to entry similar to options. Without a defined loss, while it's possible to wait out a trade to get to positive in any position, that is more a function of account size and conviction than trading skill.
Maybe I'm misunderstanding the points you are making.
%%
Good Wave; turtles move funny until they get in a wave, or Wave.Its not random or a prediction, but a good weather forecaster/seasonals can help. Some may call it weather prediction....... but no weather man or woman does that
LOLI think efficient market theory holds in the long-term. Long-term assets tend to go to their proper value, but short and sometimes medium term fear, greed, and the effects of leverage are much more dominant factors than the fair and unbiased evaluation of value based on all known information. If traders could not trade on margin, I suspect that markets would be more efficient in the short term and also more predictable. However, the cost of capital would also be higher in that case as well. Leverage is the sacrifice of stability with the goal of obtaining higher growth by lowering the cost of capital. Just my speculation...
My understanding is EMH is a perfectionist theory where it assumes the market price is precise leaving no scope for investors to gain edge. Critics says that people like Warren Buffet had already proved this theory is wrong by beating the market or in other words demonstrated that the price is undervalued.
There is always tug off war between perfectionists and creative people. Time and again creativity and innovation wins.
My point is both stock trading and stock investments are businesses and any good business blends technicalities and creativity in a balanced way.
Last edited:
Einstein said time is relative and not fixed. I said stoploss need not be fixed loss.