Why should the past have the slightest predictive power for the future?

[Jack1960]

Why are you even bothering with this idea? Just follow Reddit and make billions.

 

[kroxobor]

It's not the case for stocks or crypto, assets which exhibit momentum property. That's why its still possible to build winning stuff based on this anomaly however you should clearly determine criteria of a pump or dump which is often based not on price&volume

 

[longandshort]

Asset prices do exhibit a degree of autocorrelation. This is because of the slow diffusion of information, the reliance of investors on heuristics, and investment strategies built off those heuristics.

 

[Laissez Faire]

Why wouldn't it?

 

[Scataphagos]

Because human nature hasn't changed.

Of course. A big part of the market in general is psychological. How can one be involved in the markets in any way let alone trading... if they don't understand that?

 

[Bad_Badness]

There is a big difference between trading based on:

• A Prediction

Versus

• Something that is in front of you, and a Prediction.

A lot of people "predict" too much. They disengage themselves from reality of what is in front of them.

They do this to bolster their "prediction" ego, or are impatient. It is more stress to "trade what is in front of you" and make a prediction in real time, than to just make predictions at your leisure.

 

[deaddog]

Go short some GME, wait for a month.... THEN we can talk...

That's a good plan!! Where would you put your stop?

 

[Nine_Ender]

Good Question D.A.C.
Why should the past have the slightest predictive power for the future?
from
https://www.elitetrader.com/et/thre...enarios-for-back-testing.358699/#post-5385576
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Depends on what you are talking about. Cyclical areas for example often are predictable to some degree based on economic cycles and momentum. Some stocks make decent gains on average every year for decades. You can buy those when the overall market drops and they get dragged down in concert ( eg TD Bank cratered due to Covid; that's an irrational move ).

It's up to traders to recognize all the variables in play and when history may be instructive or not in each situation.

 

[easymon1]

Cyclical areas for example often are predictable to some degree

 

[virtusa]

Why, indeed, if you've drunk a cup of coffee every morning for the past 5 years, should anyone think it's likely you might drink one tomorrow morning?

Because if you would have said after 1 year:"He is drinking a cup of coffee every morning for the past year, he will probably drink one tomorrow morning."

You would be right during 4 years already.

All depends on how you adapt the story to proof you're right.
The only thing that can proof what works and what doesn't is the numbers on your trading account.
I use behavioral finance, so based on past behavior. And the results are clearly consistently above average.