Hmm I see it from a different perspective. Both a “forecaster” and a “reactor” is predicting an outcome based upon some data. Both can be compelling. What’s smart is to analyze and test how well your signals predict outcomes before using them.
Reactionary vs Forecasting
- Thread starter MarkBrown
- Start date
You're changing the goalposts more than once here. I believe there's a little value in using past data to determine the trend, but that's not a prediction--it's an assumption the trend will continue or maybe has reached extreme levels and will reverse. There may be a few long-term edges in that--though very little TA has any alpha when it comes to long-term backtesting and real-time continued performance.
That's different than superimposing some sort of cycle, wave, price levels or other patterns and assuming the market will follow your projection in any profitable way. For example, "it will go up another 20% in the next 3 months then reverse for a 40% drop." No one is successful with that other than randomly getting it right every now and then.
Suicide rates are very different than financial markets--the same is true for weather patterns, diseases, etc. Apples and oranges.
No, you're assuming that "prediction" is the only edge in the markets. No need to despair. There are actual edges, though they're not easy to find.
but still i think edges would only have two categories "mostly" which would be to react or to predict.
i think the failure of 99.99999 % of trading techniques can be traced back to a lack of understanding the data being modeled. the structure of the markets is very very complex or very very simple - take your pick but anything in between is a mine field laid to waste.
so i think no matter what you use for a edge it will be simple or super complex with guarantee that with the latter of the two comes along with it any larger profitability for the effort.
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Sounds like a variable change-Monty Hall question on the part of the player/trader in which case reactionary would be better. But the real question is does the market maker know ahead what is his next move in making the price up or down? If he does not know, then it becomes a Monty Fall scenario so staying with the original forecast would be better.
Why do you need to predict a month in the future when you can forecast direction for the next 1/100 of a second or the next 8 min? Also, you don't need to be right 100% of the time to make money, just have a win% 55% or higher.
https://analyzingalpha.com/top-proprietary-trading-firms
I doubt any of these companies even have heard of Elitetrading.com
Also, when I look at a chart it's like seeing the woman in red in the matrix. 10,000 hours allows one to become a master at what they study, but most people are too lazy to study for even a month before trading.
Also, if you are making money doing other things, trading is less emotional.
Finally, if you can't look at a chart and know where you should have placed trades in the past, you should not be trading.
https://analyzingalpha.com/top-proprietary-trading-firms
I doubt any of these companies even have heard of Elitetrading.com
Also, when I look at a chart it's like seeing the woman in red in the matrix. 10,000 hours allows one to become a master at what they study, but most people are too lazy to study for even a month before trading.
Also, if you are making money doing other things, trading is less emotional.
Finally, if you can't look at a chart and know where you should have placed trades in the past, you should not be trading.
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