Quote from austinp:
Markets aren't "ruined" per se... but they are nowhere near bountiful as before
Price movement has changed dramatically in several ways. First of all, average daily ranges have contracted to half or less from years past. That's one major difference now than before... overall intraday ranges are much smaller, so average potential profit is likewise much less.
Secondly, price swings cover more sideways distance thru these contracted ranges. Some call it "chop". Whatever the label, price action moves against longs or shorts far enough to take out stops repeatedly, but does not move far enough in favor to reach profit objectives nearly as often.
So now more than in the past, stop loss orders are harder to hold while profitable trades are fewer than before. Skews the win/loss ratio against traders relative to large-range, higher volume markets.
With low-volume price movement, the directional turns are much more rapid and abrupt. Because there is no density of resting orders in the market, a price peak at highs or lows tend to v-turn and fire off the opposite direction now.
In the past, price turns would unfold in more deliberate rounding tops or bottoms, double tops or bottoms, 1-2-3 swings. Now it is much more "traps" and "springs" in rapid v-turn fashion. That makes it tougher to change directions with deliberation because one minute price is going one way, two minutes later it is flying the opposite direction.
Lastly, all markets tend to make zero to two directional swings per session and then shut right down into dead consolidation. Years past when volatility was high, price action swung around numerous times all day long more than not. Now that is a rarity of all-day opportunity.
Anyone who has been around for years can easily see the difference in price movement now versus times of higher volume and volatility. But all anyone needs to do is ask the big six and seven-figures annual traders archived in older P&L threads here.
Ask lescor and red-ink and szeven and reardon metal and dustin and others if this year was a record-profits producer for them. I already know what the collective answer is... that is plain and obvious.
Financial markets are still tradable, but not nearly in the same manner as years past. It is a different game now, and it will be different still in the years to come. It always is
My thoughts exactly.
