What changes the market ? - Part 1
- Thread starter Joe Ross
- Start date
His point is that the one constant about the market is that it changes, and your job is to identify trends, chop, gaps, etc. Slap on a few moving averages, a couple of bands, add a volume and trend indicator (e.g., ADX), and you're good to go. Doesn't matter which market it is -- just watch and learn.
Always good to stand back and look at the bigger picture of how things have developed. I still find it hard to believe that I payed hundreds of dollars to buy a stock when I made my first investment, then waited for delivery of the stock certificate.
You segmented trading into "trends" and "value".
Interested to see your post on the latter.
And despite the responses in this site that may lead you to believe that you are casting "pearls before swine", there are actually a few experienced traders here who make money and who appreciate an intelligent post now and then.
You segmented trading into "trends" and "value".
Interested to see your post on the latter.
And despite the responses in this site that may lead you to believe that you are casting "pearls before swine", there are actually a few experienced traders here who make money and who appreciate an intelligent post now and then.
I for one enjoyed your post as it was quite a history lesson for me. Thank you for posting it. It is unfortunate that everyone has come out of the woodwork to post their negativity and overly simple aphorisms.
There are always certain areas of the marketplace where the "hot money" gravitates or the "hot game" is being played. Maybe one year it is stat arb, another merger plays, still another IPO's. Each is a specialized opportunity, often arising from some type of larger change, with a limited time frame of outperformance. It is always interesting to me to hear stories of what was hot in the past, how it arose, how long it lasted, and what led to its demise. I believe Mr. Ross's stories fall into that category. I for one am a living example of these types of transient opportunites. I made and lost a small fortune playing pre-issue IPO's in the bubble days. It was insane, buying stock pre-issue at $6, watching it debut at $24, and top $200 in six months time. I was smart enough to capitalize on the hot game of the time, but not smart enough at the time to stop playing. Now I know better. The point is that the more history lessons you can compile, the better you will be at reacting to the next change in the trading landscape.
Pehaps Mr. Ross's best lesson is that the markets behavior is only the sum of its participants behaviors. If everyone is making consistently good money in an area without much additional effort besides being in the right place at the right time you know that is a game that may be prone to end. Check out how strong the returns were for all EM players in the last year. Now do you think those returns could last forever? No, which is probably some of the reason we are seeing downtrends in Russia, China, and India right now. Same goes for this years action in Gold. When your neighbor is telling you how much he made in his gold fund last year do you think the jig is nearly up? Probably. If you can identify what people at large in the market are interested in, what hot areas that have arisen through some type of change that they think can be exploited, and position yourself there for the overreactions on both sides you could be doing yourself a big favor. If you can learn from examples in the past of these types of changes as Mr. Ross was kind enough to give freely then you are definitely ahead.
There are always certain areas of the marketplace where the "hot money" gravitates or the "hot game" is being played. Maybe one year it is stat arb, another merger plays, still another IPO's. Each is a specialized opportunity, often arising from some type of larger change, with a limited time frame of outperformance. It is always interesting to me to hear stories of what was hot in the past, how it arose, how long it lasted, and what led to its demise. I believe Mr. Ross's stories fall into that category. I for one am a living example of these types of transient opportunites. I made and lost a small fortune playing pre-issue IPO's in the bubble days. It was insane, buying stock pre-issue at $6, watching it debut at $24, and top $200 in six months time. I was smart enough to capitalize on the hot game of the time, but not smart enough at the time to stop playing. Now I know better. The point is that the more history lessons you can compile, the better you will be at reacting to the next change in the trading landscape.
Pehaps Mr. Ross's best lesson is that the markets behavior is only the sum of its participants behaviors. If everyone is making consistently good money in an area without much additional effort besides being in the right place at the right time you know that is a game that may be prone to end. Check out how strong the returns were for all EM players in the last year. Now do you think those returns could last forever? No, which is probably some of the reason we are seeing downtrends in Russia, China, and India right now. Same goes for this years action in Gold. When your neighbor is telling you how much he made in his gold fund last year do you think the jig is nearly up? Probably. If you can identify what people at large in the market are interested in, what hot areas that have arisen through some type of change that they think can be exploited, and position yourself there for the overreactions on both sides you could be doing yourself a big favor. If you can learn from examples in the past of these types of changes as Mr. Ross was kind enough to give freely then you are definitely ahead.
Can you describe where you were shile this happened? It sounds first person. Thanks.