What IF 2004 looked like 1976...?

[neutrino]

What IF 2004 looked like 1976... I am not saying that it will but still after such a nice trending 2003, one can expect a little "rinse job" from the market.

So when I look back at 1976, I wonder what would be the best system to trade such market... Take a look at the attachment, it is the Dow in 1976. It is obviously not good for position trading, not good for swing trading... My guess is that if I traded back in 1976 with the same skills and experience I have now, I would have probably made some good money in January but would have lost everything by the end of the year.

May be it would have been wise (in hindsight, he-he to use some chaos trading system or just stay away from the market (for a year!) until it showed some strength and direction.

Once again the purpose of this thread is not to discuss whether 2004 will look like 1976, but what would an experienced trader do if he expects such turbulent and chaotic market.

 

[pspr]

The Dow was much weaker than other indexes that year. The S&P 500 made new highs for the year in September and November then rallied in December to close near the yearly high.

Similar action occurred in the Naz.

 

[Free Thinker]

is there any value in speculation on what if something that happened almost 30 years ago will happen again? every thing has changed since then. they didn't even have computers as we know them back then. information took days to get disseminated.

 

[neutrino]

Quote from vhehn:

is there any value in speculation on what if something that happened almost 30 years ago will happen again? every thing has changed since then. they didn't even have computers as we know them back then. information took days to get disseminated.

I agree that there is no value in speculating how will 2004 look like, based on the history. I gave 1976 as an example of a trendless year (for the Dow). What I am trying to do is to prepare myself for the market once it starts to consolidate (like it always does after it has trended).

 

[ig0r]

Quote from neutrino:

I agree that there is no value in speculating how will 2004 look like, based on the history. I gave 1976 as an example of a trendless year (for the Dow). What I am trying to do is to prepare myself for the market once it starts to consolidate (like it always does after it has trended).

If we experience a market like that, the best strategy will probably be long theta; maybe short iron condors?

 

[lindq]

Quote from neutrino:



Once again the purpose of this thread is not to discuss whether 2004 will look like 1976, but what would an experienced trader do if he expects such turbulent and chaotic market.

An experienced trader would not "expect" anything in particular, as setting up for expectations typically is a waste of time.

 

[neutrino]

Quote from vhehn:

is there any value in speculation on what if something that happened almost 30 years ago will happen again? every thing has changed since then. they didn't even have computers as we know them back then. information took days to get disseminated.

Quote from lindq:

An experienced trader would not "expect" anything in particular, as setting up for expectations typically is a waste of time.

OK, I got it, I will not expect anything, I'll just let it happen and react accordingly AFTER it has happened... I hope that's what you meant. After all, you can't tell till you bet, right

 

[lindq]

Quote from neutrino:

OK, I got it, I will not expect anything, I'll just let it happen and react accordingly AFTER it has happened...

No, you still haven't got it. You don't react AFTER, you react WHILE it's happening. Which is why trying to base trading on predictions of future market activity is foolish. Most of the time you will be wrong, and while you are trying to polish your crystal ball, profitable trades are moving NOW.

This might seem like a small distinction, but it isn't. An amateur will often place a bet on what he thinks (hopes) will happen, then have an emotional reaction when it doesn't, and bail with a loss. A professional will place the bet on what is happening NOW, and position himself accordingly, based on a study of the probabilities.

Most successful systems traders will tell you that thinking, hoping and predicting have cost them a lot of money when they fail to take a trade. Using your head is often not a profitable exercise. I've certainly found that to be true.