Quote from jem:
I would like to see a definition of trend. I do not believe a persons inability to profit from a trend mean trends do not exist. Perhaps you believe in sort of a particle vs. beam trend. It will be a trend if you do not put on a trade, but if you do put on a trade with the trend, the trend will end?
Weekly charts of the dow since march. I suspect when we define trend in a dictionary, that chart should appear.
I will try to make my point one more time using different examples.
First of all, definition of the trend is quite simple:
"Trend is the general direction of movement registered from some point in the past till present moment".
It is not a question whether trends could describe movements in observed (historical) data the question is when do you know that the trend has been established and when do you say that the trend is over. When I say trends do not exist I mean that the probability of the trend to continue it self versus the probability of its reversal is still 50/50. You just said your self "Weekly charts of the dow since march â¦" meaning: General direction of the price movement in DOW between March and Now was Up. Please note the word "WAS". Now, tell me what is the probability for DOW to continue this trend for the next 2 weeks? I'll tell you precisely - 50/50. Believe me, I have fell in this trap many times. Everybody is a genius when analysing historical data. Sure you can show me on any historical chart those reversal moments but in real time any prediction that you make will exhibit the probability of 50/50. This is, by the way, the main tool that all the people who sell any technical analysis bullshit use to convince you. Let me expand on that.
There is a very known psychological phenomenon called "positive associative memories". Without going to deep I'll use an example to illustrate it. Let's assume that I have predicted that the price of Gold will go up between now and two months from now. And, miracle, price of gold indeed went $10 up. In this case you will definitely remember my prediction and tell your friends that this guy knew something that we didn't. You will listen to my predictions from now on very carefully because of your "positive associative memories". On another hand, if the price of gold went down you will forget about my prediction and erase me from your memory. So, your memory, for the most part, consists of positive associations that will make you to believe those kinds of predictions over and over again!
I'll tell you more. I have tested over 1000 different technical analysis indicators over more than 20 years of tick-by-tick historical data (for which I paid enormous amount of money). Do you know what was the average objective probability of their accuracy? You guessed it right - 50/50. I have used more computing power to conduct this analysis than you could imagine! So, you would say: "was it a waste of time and money?" No. Although the results were negative I have discovered something that gives us all some hope! That is what I wanted to share with you all in a first place.
400 years ago people were convinced that the Earth was flat and they burned alive whoever thought otherwise (buy the way, it did not interfere with their abilities to grow crop and profit from it). 300 years ago people knew that the smallest animal on earth is Dicopomorpha echmepterygis till sir Van Leeuwenhoek invented the microscope!
2 days ago you knew that trends exist and they have more the 50/50 chance to continue. Imagine what you will know tomorrow!
