trend following delusion shattered
- Thread starter hank rollins
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The trader arrives at an expectation of near-future price by using a system for that purpose. Without such a system, trading is little more than gambling.
Odd. I am in full-bore outrageous prediction mode. If I am wrong, everybody already knew I was an idiot. If I am right, I become an instant clairvoyant guru. Such gurus have no need to justify themselves with JackaNaperian logic. Besides, the market went up after the last FOMC-up following the double move pattern Jack described. So I'm going for a shocking downer.
darn......I put an R in for an S last week too. The symmetry is right with your numbers.
I know i didn't answer the first q correctly. But I felt answering for his d was better.
Many people will be considering the difference between a "predicted d" (Nickel stuff) and a "market/trader d" (reality stuff)
There are very few successful traders who do the "predicting" thing for any parts of their approaches.
Almost no one uses a mere two points either. Why bother since there are so many points. the candle is an example of using in a period of time four distinct points each of which only occur once to establish the data point. Nickel is hammering himself into the ground bluntly by his aversion to using what is available and I guess getting in his way of making money.
Jack. My reasoning is that Greenie hates bubbles, and we are in the midst of a major bubboil. The euro failed to make a lower low. Oil broke its previous high. Intermediate term rates have crept up far more than one would expect based on a quarter point and are killing bond funds. We are hemorrhaging cash. The strong performance of foreign stocks is drawing capital away. The WSJ a few years ago published a definitive study proving that rates lead the Fed, not the other way round. Hence my belief in a shocker.
Apparently, you are incapable of understanding the terms of the challenge I have put forward.
I actually think both sides are right on this question.
I absolutely agree that on a high level arbitrage is NOT related to trend trading. And the way most people play arbs in practice, there is nothing to do with trends.
For example, take simple M&A arbs. Oracle is buying company XYZ; you simply use fundamentals based on the deal offered as well as the % likelihood of it occurring and you come up with the most likely price for the newly merged company. So you short Oracle and buy XYZ. This has *nothing* to do with trends.. people who play this particular arb could absolutely care less whether Oracle is hitting new highs or lows. They are simply betting on the spread between the two companies as they converge into a single business entity. (Actually this example isn't truly an arb since there is some theoretical uncertainty as to the true % chance of the merger being successful, so the examples of cash versus futures are probably a better one).
That said, I think Lefty is correct as well. He clearly wasn't talking about the high level conceptual aspects; rather he was talking about a very specific cause-effect relationship, namely the impact of M&A arbs on lower-time frame trends, ie an external higher-time frame event and its impact as far as making lower-time frame trends more predictable.
So again I think both are right but you are sort of talking about different things or at least in a different context a little bit.
-Taric
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