Trading. The big picture.

C

CoralReef

I'm just sitting here thinking about trading from a macro perspective...

I assume there are many firms, hedge funds, etc. out there with vast resources including money, technology and highly educated brainiacs crunching vast amounts of data then executing various automated strategies with lightning speed.

Take for example some type of mean reverting, stat arb strategy. Don't you think there are many firms doing very similar or exact type of strategy? Then you may have other firms that realize this so they take the opposite trade thinking the original system is going to break down because everybody is doing it.

I guess what I'm saying is, with intra day traders, so much of the same things are being done and everybody is competing for the same shares. Wouldn't this create a chaotic market from a micro perspective?

Still we have many traders on this sight making great money, year in and year out without access to all these great wonderful resources that the goldmans of the world have. Is it all about letting your trade/plan play out, which it will eventually because all this chaos will get you the shares you want, just be patient?

So basically.. I don't get it. Its hard to wrap your head around all this from a big picture point of view.
 
Quote from CoralReef:

So basically.. I don't get it. Its hard to wrap your head around all this from a big picture point of view.
More...
For a retail day-trader the process is one of determining whether the market(s) is/(are) in a state Accummulation or Distribution.

Nothing more, nothing less.

Regards,

JJ
 
the edge boils down to trending human emotion, the dynamics of the weakest and strongest player, and how they interact in the market place with each other.

the strongest player -

1) underleveraged
2) trending trader with break of support or resistance
3) countertrending with support or resistance holding

the weakest player -

1) overleveraged
2) trending trader with support or resistance holding
3) countertrending with support or resistance failing
 
the big picture is your account, everything else is a the smaller picture, this is how the large corporations were built and run, the bottom line is the money at the end of the day
 
Quote from CoralReef:

Then you may have other firms that realize this so they take the opposite trade thinking the original system is going to break down because everybody is doing it.
More...

Many traders breakeven with trading gains/losses but lose money from commissions and fees on the trades. Doing the "opposite trade" from them would produce the same losing result.
 
Quote from nazzdack:

Many traders breakeven with trading gains/losses but lose money from commissions and fees on the trades. Doing the "opposite trade" from them would produce the same losing result.
More...

True. I backtested some simple strategies at stockfetcher.com. Simple stuff like MACD crossovers. It produced losses.

So i retested it using the opposite position (switch short/long). It still lost.

Makes you think.
 
Quote from IronFist:

True. I backtested some simple strategies at stockfetcher.com. Simple stuff like MACD crossovers. It produced losses.

So i retested it using the opposite position (switch short/long). It still lost.

Makes you think.
More...

Most traders lose on commissions in the end, its impossible to overcome frictional costs without a decent edge. Most traders think they have an edge, but they really don't.
 
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