What are your beliefs? What do you think drives markets?

This is a discussion on What are your beliefs? What do you think drives markets? within the General Trading Chat forums, part of the Reception category; Originally Posted by Glenn Markets, just like the weather, are driven by Chaos Theory. Initial conditions spark things off and ...

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Old Aug 13, 2009, 12:39pm   #36
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Originally Posted by Glenn View Post
Markets, just like the weather, are driven by Chaos Theory. Initial conditions spark things off and pre-determine what comes later, and when - The Butterfly Effect. It all appears random but it's not.
This is how I have traded for years. It's hard work and difficult and can't be automated, but it's also totally spooky.
Indicators are useless most of the time. When you can see the next turn coming and look what indicators are saying, you realise that they mostly have no meaning other than being a rear-view mirror.
What people call sentiment, supply and demand, MM behaviour etc are just responses, not causes. The cause for a rally, reversal, gap, acceleration, or consolidation was determined way before it ever started, as was the actual time when it would start and end.
OK I'm sure this sounds like balony, and especially because I'm not about to explain how to do it. You'll just have to believe me and save yourself the effort of looking elsewhere..... or not :-)
I'm not saying this is the only way to trade, of course it isn't, and for those who have a successful method, stick to it, because this way is hard graft and ideally you need two people to do it, but it is what moves the markets.
Glenn
Someone loves Livermore lol
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Old Aug 13, 2009, 12:47pm   #37
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Markets, just like the weather, are driven by Chaos Theory. Initial conditions spark things off and pre-determine what comes later, and when - The Butterfly Effect. It all appears random but it's not.
While I agree that markets are probably best explained by Chaos Theory (among those that I'm aware of currently) you can't actually say the markets are "driven" by Chaos Theory. To quote a professor friend of mine:

"Chaos theory can be used to model and potentially explain markets and market participants, but a theory cannot drive anything -- only replicate and hence explain reality."
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Old Aug 13, 2009, 12:49pm   #38
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Originally Posted by Rhody Trader View Post
While I agree that markets are probably best explained by Chaos Theory (among those that I'm aware of currently) you can't actually say the markets are "driven" by Chaos Theory. To quote a professor friend of mine:

"Chaos theory can be used to model and potentially explain markets and market participants, but a theory cannot drive anything -- only replicate and hence explain reality."
But wouldn't that come full circle when said models are used by institutions?
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Old Aug 13, 2009, 12:58pm   #39
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I think the discussion what drives markets rather than how to interpret the markets? So what drives the markets supply and demand, yes, but also sentiment, trust etc. Pointless tho.
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Old Aug 13, 2009, 1:25pm   #40
 
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what drives markets? Money flow
what drives money flow? Perceived monetary gain/loss.
what drives perceived monetary gain/loss? Sentiment
what drives sentiment? Forecast economic conditions
what drives forecast economic conditions? Economic conditions
what drives economic conditions? Money flow
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Old Aug 13, 2009, 1:34pm   #41
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why didn't you come earlier. I've been waiting for someone who knows what they're talking about to come.

Shut me up anyway.

Is that true of "the markets" on the whole or of an individual market?

Anyway... we come right back to supply and demand with money flow

Last edited by Technically Fundamental; Aug 13, 2009 at 2:07pm.
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Old Aug 13, 2009, 1:35pm   #42
 
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Shadowninja logging into msn, a kid using a sketch, mood, sentiment, offer, demand, liquidity, trends, volumes....

I keep thinking that all those are mere reflections of the real reasons.
And those actual reasons will remain in the shadows, unattainable for us.
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