Using history is bunk

Quote from Zentrickster:

if it does repeat it repeats randomly with the illusion of otherwise. Otherwise the market couldn't function as repeatable patterns are exploitable untill the market is cornered. Therefore the repetative patterns are random and not exploitable by default. This very illusion keeps the market active. You people are quite naive
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In the words of some smart bastard, somewhere.....
"history does not often repeat itself, but it frequently talks in rhyme"


so...... look carefully - and listen for the rhymes
:)
 
I find this amusing, every so often, I read from a post about how technology has changed the market place, more information, quicker information that allows the quicker trader to take advantage. It is all very funny.

I have charts of Wheat going back to 1860's to present, if one takes away the prices, you can't tell if it is from one hundred years ago or last Friday. Yep, we have so much data now, but I believe that more data does not mean you will profit from it, nor will quicker data. Chart patterns that work now, worked 140 years ago.

The bottom line is if you can trade, doesn't matter if you don't have all the latest information, nor the fastest cable speed, or fastest computer. You learn from the past how to adapt to the present.
 
Quote from Handle123:

I find this amusing, every so often, I read from a post about how technology has changed the market place, more information, quicker information that allows the quicker trader to take advantage. It is all very funny.

I have charts of Wheat going back to 1860's to present, if one takes away the prices, you can't tell if it is from one hundred years ago or last Friday. Yep, we have so much data now, but I believe that more data does not mean you will profit from it, nor will quicker data. Chart patterns that work now, worked 140 years ago.

The bottom line is if you can trade, doesn't matter if you don't have all the latest information, nor the fastest cable speed, or fastest computer. You learn from the past how to adapt to the present.
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seems like you have a good handle on it :)

i have said on several occasions that history does indeed repeat itself - but in one respect the OP is correct as something that has already happened can not happen again - it is not possible

however, similar events can of course occur at any time in the future, as we humans tend to think in circles and actually live our lives in little circles - some might call it a habit!

we will never really know why the human mind operates like this and why we always keep doing things the same - until of course some major event happens in our life which kicks us out of the circle we are in and into another little circle - which is why i prefer to call it....The Circle of Life

the reason the 200 day ma works is because every major pension fund manager has all his little boys watching it on the radar screen - change what they are watching and that will then work

what i do find a bit silly though is the degree of analysis some people put into chart reading - some use so many ratios and inverse ratios that they are bound to hit a few of them - it is like gann lines and the little square boxes - draw enough of them on a chart and the price will eventually hit them, and then the trader thinks he has found something that allows him to work out what way people will think by using maths - to me this is the silly bit as a simple straight line will do just fine and the only maths that i think are required are addition and subtraction!!
 
Quote from garfangle:

I believe that over reliance on historical patterns and market moves is bunk and should not be considered an important indicator of future trends. Market commentary and analysis, esp. in the financial press and TV, unfortunately gravitates to this thinking because they need some reference to anchor their opinions and using historical markers makes you seem like a serious person whereas those who say "I don't know what the future will behold" are dismissed or marginalized.

Many bulls point to the early 1980s or the 1990s and therefore believe the market has further upside. Conversely, many bears point to 1930 or post-bubble Japan as indicators of the trouble we will face and therefore you should either stay on the sidelines or short an already frothy market.

However, both sides are wrong. History doesn't repeat itself and therefore it cannot be used as guide to what may happen in the future. Although you might think that some can predict the future and know what will happen, this is merely an artifact of survivorship bias. The ones who got it "right" are the ones you remember and the ones who got it wrong fad away. These supposed seers attract a lot of press and attention until their predictions turn out wrong. Then we move onto a new set of "experts". Rinse and repeat.

Moreover, the markets have changed considerably from past reference points. Trading is driven by technology and the number of participants is only increasing, reducing any edge traders once had. Concepts like mean reversion and other arbitrage strategies like pairs trading are nice in theory and as academic papers, but are flawed as actionable investments. What once might have worked using backtesting doesn't mean it will perform as expected in real time.
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i have read your post again and i must now agree with what you have said as it makes perfect sense to me

new technology has indeed changed the market place and if i am to believe some of what i read then the level of automated trading has increased tremendously and continues to do so on a daily basis - mostly due to people being lazy but that is another discussion topic :)

i was looking at cnbc some weeks ago and this nice looking girl with long black hair and glasses was showing a chart from one of the big trading houses - he was their leading TA analyst - and she was explaining how the head and shoulders was now in place on the S&P and how the market was now going to drop

at last i said to myself - this is my confirmation of what i have just seen on the monthly chart - BUY NOW

boy was i right and it has not been the first time :)

i will be watching your posts from now on:cool:

actually it was bloomberg not cnbc - i don't look at that one anymore as bloomberg is much better:D

just gave it a 5 star rating but it deserves 100:)
 
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