Serious question

[pinetboltz]

a savvy person once told me that it can be just as useful to observe what "consistently wrong" traders are doing, as it is to follow consistently right ones..

if you know someone's market call (publicly released version anyway) is likely going to be wrong (>>55% likelihood?), it makes sense to fade them?

going by this logic, is now the time to stay bearish /or at least, avoid going long on commodities (in anticipation of further price declines)??

i ask because GS just recommended being overweight commodities http://www.cnbc.com/2016/11/22/goldman-says-buy-oil-other-commodities-on-rising-inflation.html

& for whatever it's worth, a recap of their (public) calls that would be familiar to readers of Zerohedge
- http://www.zerohedge.com/news/2016-...-closes-out-five-its-six-top-trades-2016-loss
- On gold: http://www.zerohedge.com/news/2016-03-10/goldman-about-be-stopped-out-its-gold-short
- On Brexit:http://www.zerohedge.com/news/2016-06-11/goldman-warns-upward-shock-rates-hints-massive-losses
- On presidential elections: http://www.zerohedge.com/news/2016-11-02/goldman-sachs-still-expects-hillary-win-election

given this, perhaps the cynical question to ask is around the timing of the call (ie. just when commodities have recovered enough to seem 'safe' for retail money to chase the trade). thus, is the correct thing to do simply to remain bearish / stay away from long positions in commodities, waiting for the 'true bottom' after further price declines & retail capitulation ahead?

 

[java]

Market calls are right 50% of the time. You only hear about the really right ones or the really wrong ones. I would not fade GS commodities, they can really move an otherwise thin mkt with pure money. Their power is in selling a customer on the idea of going long some commodity. But I certainly wouldn't buy or sell based on what or who they are trying to sell.

 

[trdes]

Market calls are right 50% of the time. You only hear about the really right ones or the really wrong ones. I would not fade GS commodities, they can really move an otherwise thin mkt with pure money. Their power is in selling a customer on the idea of going long some commodity. But I certainly wouldn't buy or sell based on what or who they are trying to sell.

I am not trying to get back into this conversation again, but not all market calls are 50%, otherwise it wouldn't be possible with people to have 10+ years of different strategies, some with 60% some with 70% win rate. Not saying it's common, but it without a doubt exist.

Not saying win rate is all that important either, as you can have 40% win rate and still have a very positive profit factor, but just saying it's not always a flip of the coin.

 

[kent]

Donot know about equities but in forex, I used to observe there is smart money and sheep money. If you look at oanda's (major forex broker) open positions, you could see most of the traders are wrong most of the time in their long/short on ccy pairs.

https://www.oanda.com/forex-trading/analysis/open-position-ratios

In this chart you could see 80%+ positions are long on gold and I have observed that most of the time the majority (is wrong) assuming it is sheep money. Smart money/traders mostly ahead or opposite of sheep/herd traders. (no disrespect to anyone - just using the terminology I have known).

 

[pinetboltz]

https://www.oanda.com/forex-trading/analysis/open-position-ratios

In this chart you could see 80%+ positions are long on gold and I have observed that most of the time the majority (is wrong) assuming it is sheep money.

cool graphic, didn't know oanda gives this transparency into their clients' holdings..

i guess when the market trades to a point where it's flipped, eg. 80%+ retail are short on gold, that's when it's good for a long?

if there's a historical archive of this, would make for some interesting backtests

 

[kent]

quantconnect.com and quantopia.com have historical data I believe. I have not traded based on these charts but it is interesting that how most are wrong when the market changes from long to short or vice versa.

 

[Handle123]

There a number of ways to find the consistently wrong, follow Woodie's group, make friends at expo's, basically new traders who won't take advise of the older traders like take 1-3 years off and study charts, they are like roadmaps, once you have them down extremely well, only then add 1 or 2 indicators to help faster to identify possibilities.

I remember like some 14 years ago, I would listen to Woodie's group to confirm trades or direction as I was making an Anti-Woodie system, be surprised how off Woodie was/is, I don't know anyone who did well on CCI, patterns on it is like throwing 19 darts at the wall, something will be right.

Percentages are funny, I see it like Black Friday, selling 16 60" TV's for $250 as an example, 15 people have 100% chance of going to register to pay for it, store will be selling 15 TV's which gives them 100%, but from the front door to where the TV's are way in the back, 8 doors will be available to go in, you have 20 guys that are built like refrigerators and they look like they belong to a gang have muscled their way to front of the line. Doors are open they pushed some down so there are people getting trampled, half the TV's are snatched by the frig's, and those who think they have theirs are bruised and thumped on till they let go of their TVs, and all 15 go out the door, never went through register cause several EMS are working on all the injured people, no one notices TVs leaving the building cause all the people are milling around bleeding.

Retail is the crowd of people who think they have a chance, Frig's are Commercials, Producers, Banks and Brokerage who have done the same thing over and over, they have well designed plan of attack, they have muscle, money, they have covered all the bases, they are READY and they willing to do it outside the norm and whatever it takes to get what they want. Retail only thinks about making money, Big Business thinks first of Risk and how to sqeeze it to make smaller. Retail thinks about high winning rates, Big Business thinks about low losing percentages, Retail thinks about making the big profits, Big Business thinks about consistent profits that are attainable. So to stand out from retail, had someone from store mark on a TV "hold for repairs" day before for me to pick up when buddy work his shift in evening. Ahh, out smarted Frig's!!!

Nothing changes as far as charting, if you think it is new, it is new to you, if you saw charts from the 1890s, they could be like todays. Back test, Back test, Back test, learn about risk-get losing percentages as low as you can for intraday trading, longer trading is about staying in as long as possible using weekly charts, collect dividends-play options around position.

But the idea of following bad traders, they will have winning times as well, so if don't know how to trade and think this is viable way to do better, send me your trades before you do them so I can confirm mine going the other way, ROFLMAO.

 

[drcha]

I do find it useful to study stuff that doesn't work. After you get the hang of what kind of stuff does not work, you can tell pretty quickly when you are nosing around in something that's useless.

 

[comagnum]

Although I agree with the premise of not following what the masses do like trying to day trade tiny moves for example I think the novice crowd always doubts a strong market and is always trying to short the market where pros wait for the market to first make a down leg than they will short the counter rally if it can't take out the former highs. Pros will buy the highs and short the lows - novices are always standing in front of the train.