Why trend trading does not work?
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The market is a product of the human condition. To say the market does not trend is to say that the collective human condition is completely irrational all the time.
Sure, I'd say most of the time we're bumbling around randomly. But when the same idea begins to reach the minds of people, a trend will emerge.
Just because you do not have the foresight to see trends, doesn't mean trend trading is unprofitable. The hardest part is separating the wheat from the chaff.
Sure, I'd say most of the time we're bumbling around randomly. But when the same idea begins to reach the minds of people, a trend will emerge.
Just because you do not have the foresight to see trends, doesn't mean trend trading is unprofitable. The hardest part is separating the wheat from the chaff.
1. In terms of risk, over a nineteen year career I can count on one hand the number of times I have seen a spread market have a greater trading range than the flat price for one of the individual leg components - each of those instances was in Natural Gas.
2. On a conceptual level, spreads with a positive correlation > 90% behave nothing like short option wings. In other words, every spread that an exchange is willing to give you SPAN margin credit for.
3. Given your posts here as of late regarding spread markets, I do not think you have an earthly clue WTF you are talking about. Really, dude. You are sounding very creepy. Implusive nonsense.
1. If I understand you, you are saying there are markets that one should not spread (similar to what people say about options of biotech and in earnings?). What was the effect if you included leverage in calculating the damage?
In addition what guarantees one has if in the future some instrument did not behave (as in the case of natural gas example)?
2. When correlation stops working is that not the "black swan" in the world of spreads (when leverage is included)?
3. You are not good at assumptions.
If you think your posts were good and my posts were not, why are posting in this thread then? In addition why did you not start successful threads of your own? One needs new ideas if one has to keep people reading.
I can start plenty of threads that would attract a lot of readers. Why you do not show us that you can?
I will give the thread a break, and also let others share answers. I have my answer which I can share with you in PM. Let me know if you want that I PM it.
I suggest you refrain from assinging geometrical terms to souls. Not recommended for credibility purposes.
If you do not agree, just say so. Let souls alone. Especially when nobody knows what a soul is. It may be a dangerous thing for you to mention souls.
You've convinced me that had you been born a native American Indian your given name would most likely have been "two dogs fucking".
The market is not a simple flip of a coin. That might be typically what somebody without a strategy sees, but that is not what a professional sees. This analogy is not conducive to explaining trends in price charts. Using price physics or any strategy for that matter can predict probabilistically where the market is <i>likely</i> to move to, not that it is an absolute that it will. Probabilistic games with price charts are easy with consistent theories to explain the movement of the market, particularly in futures, but it applies to individual stocks and other securities as well. Many without quantitative definitions may as well flip their coin at the start of the day, but that is not the same thing when you use analysis, technical or otherwise, to predict swings in the market.
The lower high at 2375 on NQ looked like a plum time to short the market, and I expect another lower high to come below that level soon, setting up a trade with the bear trending futures despite what is likely to be a brief rally from 2336 to somewhere below 2375.
If you aren't selling when the market is rising, or buying when the market is falling <b>then you are not trading correctly.</b> Any analysis of strategies that do not follow these rules are substantially less robust than the ones that do. At least, in my experience taking a trade in the same direction as the most recent price move generally has less profitability, but if you take a trade against where the market moved, generally you will have better results. This is not a coin flip. If the market rose, we became more overvalued, if the market fell, we became more undervalued relatively speaking.
Timing trading strategies also, are a lot different than allocating capital with the CAPM or efficient frontier, but you should hire a professional to do both of these for you. Unless he is a total moron, there should be at least some opinion of short term direction to time longer term entries, however, statistically in an allocation timing matters very little in the overall results of the investment as in allocating capital to ETF portfolios or any stock or commodity for long term investment rather than for trading short term price swings. Most professionals are not allowed to make these decisions, even though they should. Compliance departments nearly always disallow this, but in the intial stages of investing, it's important to time the long term entries with pull backs, preferably large ones.
I agree with you on this point. Nicely stated. This is not trend trading.
Surf