Wall Street = Casino. Minus Sum Game.

This is a discussion on Wall Street = Casino. Minus Sum Game. within the General Trading Chat forums, part of the Reception category; Originally Posted by Splitlink I didn't use discretion this morning. Pure TA. Lost 30 points. Thats completely irrelevant, but tell ...

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Old Jan 25, 2010, 11:57pm   #191
 
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Re: Wall Street = Casino. Minus Sum Game.

Quote:
Originally Posted by Splitlink View Post
I didn't use discretion this morning. Pure TA. Lost 30 points.
Thats completely irrelevant, but tell yourself your one trade closer to a win if it helps
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Old Jan 26, 2010, 12:57am   #192
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Re: Wall Street = Casino. Minus Sum Game.

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Originally Posted by DionysusToast View Post
One interesting point.

TA purists say that everything is built into price.
They will then say that of course you stand aside during earnings & economic announcements.
But apart from that - everthing is built into price.
Not correct - Efficient Market Theory, not TA.... states that all known information at any given time is built into price.... if this held through, then TA would be negated as it would be impossible to beat the market..

http://www.investopedia.com/terms/e/...hypothesis.asp

TA purists say that TA can pick up events which are not yet public knowledge such as upcoming positive news, insider buying , good earnings etc

Of course we're not talking in absolute terms ......not "always"....
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Old Jan 26, 2010, 1:20am   #193
 
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Re: Wall Street = Casino. Minus Sum Game.

DionysusToast started this thread The whole point of this thread is that there is an entire industry out there 'teaching' you how to trade/encouraging you to trade too much. The industry consists ALMOST entirely of people that can't trade. It's an industry designed to suck money out of investors/traders.

With that in mind - why would I pay attention to anything on Investopedia which is a part of that industry ? Do we think it's run by people who trade succesfully every day ?

Also - if only technicals are needed - why are people so keen to tell me I can't be using Fundamentals (i.e. non technical data) properly because it doesn't fit some internet definition ? It's all outside of technicals and therefore it's all useless in the eyes of someone taking a dogmatic technical approach. Still - is it that if I don't follow one religion, I need to follow the other ?

How would we consider the weather as a piece of tradeable information ? Again, I'd say it's fundamentals but again doesn't fit that Investopedia approach (not that I read it).

It's pure dogmatism. It's bordering on religion.

Can't I be a Muslim & a Christian ? You know - eat a bacon sandwich on Christmas morning but still have 4 wives ?

Seems I'm also being accused of using Witchcraft too !
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Old Jan 26, 2010, 2:45am   #194
 
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Re: Wall Street = Casino. Minus Sum Game.

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Originally Posted by Prawnsandwich View Post
DT was talking about stock markets - thats why I was referring to stock markets....
In his first posting to this thread, he was talking about "The Financial Industry", and gave examples, e.g. IPOs, then Mutual Funds, and then went on to talk about brokers, training courses, etc. I assumed his argument was the gamut of trading that tends to get talked about on T2W, a lot of which has little directly to do with stocks.
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Old Jan 26, 2010, 3:26am   #195
 
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Re: Wall Street = Casino. Minus Sum Game.

DionysusToast started this thread
Quote:
Originally Posted by montmorencyt2w View Post
In his first posting to this thread, he was talking about "The Financial Industry", and gave examples, e.g. IPOs, then Mutual Funds, and then went on to talk about brokers, training courses, etc. I assumed his argument was the gamut of trading that tends to get talked about on T2W, a lot of which has little directly to do with stocks.
Indeed - it's really one and the same issue.

Think of the financial services industry (I'm not allowed to call it Wall St because of the anal retentives) as a bucket of water.

Now think of who's putting in all the water. The financial services industry keeps scooping bits of water out and having a drink whilst telling us that at the end of the year there will be more water for everyone.

Now - when you get into the teachings of "McGraw Hill", "Wiley", your brokers web site, investopedia, web sites, dodgy vendors etc. you have to remember that they are there to take a little water out of the bucket for themselves with the promise that YOU, YES YOU will have more water at the end of the year whilst all the other schmucks go home thirsty.

In these teachings, there is a common thread. That is to put nice, safe boundaries around a topic. This gives you a finite amount of things to learn and which to use to make a decision. This in turn gets you filling up the bucket sooner.

With this in mind, I see my view of fundamental analysis as good as anyone else's because I don't see things as having to be finite/mathematical. I guess it's the difference between wanting hard science to trade off as opposed to developing the skill to treat every scenario differently.

So - when a company spins off a subsiduary, loading it up with debt yet still keeping a large share for themselves and their C-level execs, on the surface the leveraging make it appear a bad deal. On the other hand, the parent company retaining a large ownership means they have a vested interest in it and this warrants more investigation that many won't do because the debt scares them off. This is fundamental analysis. It involves looking at a balance sheet (actually an SEC Form 10 and a pro-forma balance sheet/P&L) but it also involves looking for spin-offs, understanding some very basic info about SEC filings. It involves considering what the institutions holding the parent company will do with the new shares in the spin off they will be given.

Now - of course, this is not in investopedias definition of Fundamental Analysis and you know what - that suits me just fine. Maybe you want to call it 'opportunity analysis' or 'investment analysis'. It's just a little niche corner of the market. I think it's probably easier for someone totally new to learn something like this than to go through all that TA crap.

The problem is - if it's the labels people are hung up on... they may want to go back to the bucket analogy and understand who labels the bucket.
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Old Jan 26, 2010, 11:53am   #196
 
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Re: Wall Street = Casino. Minus Sum Game.

Chosen more or less at random from another thread:

http://www.trade2win.com/boards/fore...ml#post1039960

Quote:
Don't know what he's said yet but it looks like it went down well

So many times you sit and wait for the perfect entry on the technicals, and that was a good spot, then the news comes and messes it up. Good if you get in. Bad if you don't, or get slipped.

Point is, if you are looking at more than just the technicals, and have one eye on the calendar, you know that something is going to happen. You may not know for certain which way it is going to go, but you can have a bias based on wider knowledge.

As for "avoiding the news...", well there are data releases almost every day, or events of note. I don't think you can avoid the news, except perhaps by avoiding trading altogether.
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Old Jan 26, 2010, 12:30pm   #197
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Re: Wall Street = Casino. Minus Sum Game.

If the market was efficient then why do economic releases spike prices or cause a shift in direction/momentum.
LTCM anyone.

Admittedly I'm just a learner but as far as I can see the only thing efficiently priced into the market is current sentiment and not any economic reality etc and sentiment can change at any given moment. Black swan this, black swan that... Obama took 500 points off the Dow with some smack talk the other day and everyone should have seen that coming.

Then again I lose money so I'm not really the guy to listen to.
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Old Jan 26, 2010, 12:43pm   #198
 
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Re: Wall Street = Casino. Minus Sum Game.

Sometimes news increases volatility as people try to trade the news for a quick profit and afterwards it settles down, usually back to where it started.

Other times there is a genuine correction of price based upon the market believing that the fundamental value of the security has changed. Value traders get in first to exploit the change and then others follow suit and momentum builds up.

So it is efficient. You just need to evaluate over what timeframe it is efficient and whether you can take advantage of this.
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Old Jan 26, 2010, 1:08pm   #199
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Re: Wall Street = Casino. Minus Sum Game.

Hmm I see what you mean. I think I've been thinking of an efficient market as comparable to a supercomputer, like it should smooth out things like corrections etc through pricing in all possible outcomes through all markets and derivatives. I tend to over think things sometimes lol.

As for what you're saying I can how it is efficient it is in terms present/market value but efficient in pricing in true economic reality over the beliefs/actions of the larger participant... not so sure.

Think I might find a book on this... quite interesting. Will probably be hard to find one that just states facts rather than just preaching the author's dogmatic views lol.
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Old Jan 26, 2010, 1:16pm   #200
 
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Re: Wall Street = Casino. Minus Sum Game.

Somebody posted up here recently that in the short terms it is a voting machine but in the long term it is a weighing machine. I thought this was a very succinct way of describing markets and their behaviour.
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