Predicting The Market

[Trader333]

When a position is held for several hours, waiting for price to reach a certain s/r level, is this not a prediction of the market as such?

What happens in the event that the market starts to go up to your expected s/r level but only moves about 20% towards it and then suddenly reverses ? and goes back through your entry and you are now in loss ?

Do you wait and think to yourself that your prediction still stands ?
Do you close the trade and accept a loss ?
If you think your prediction is still valid how long do you wait ?
If the market moves against you, then how far against you before you close your trade ?

Markets rarely go straight up (or down) to s/r levels and there is a great deal of in between scenarios that need to be determined in advance as to how you will act if you encounter them.


Paul

 

[Paul71]

Markets rarely go straight up (or down) to s/r levels and there is a great deal of in between scenarios that need to be determined in advance as to how you will act if you encounter them.


Paul

Absolutely spot on, Sir!

We all see S/R, on all timeframes, it's when the market is inbetween, that's what kills traders off. IMHO, of course.

 

[new_trader]

For every buyer there has to be a seller. .

This can't be right. You would need 100 retail investors selling 1000 shares for an Instituational investor to acquire 100,000 shares wouldn't you? That means for 1 buyer there are 100 sellers. 100 retail sellers isn't as signigificant as an 1 institutional buyer.

 

[Profitaker]

This can't be right. You would need 100 retail investors selling 1000 shares for an Instituational investor to acquire 100,000 shares wouldn't you? That means for 1 buyer there are 100 sellers. 100 retail sellers isn't as signigificant as an 1 institutional buyer.

Does it matter whether it took 1 or 1000 stockholders to provide 100,000 shares ?

"100 retail sellers isn't as signigificant as an 1 institutional buyer." and I agree entirely.

It is a fact that if an institution wants to buy 100,000 shares, it cannot do so unless there are 100,000 shares willing to be sold.

 

[Crap Buddist]

I know ( I face it alot) this one because I often trade & reverse . This is how I approach it, its right for me but it fits in with the method approach used. Based on my approach to session trend trading.


What happens in the event that the market starts to go up to your expected s/r level but only moves about 20% towards it and then suddenly reverses ? and goes back through your entry and you are now in loss ?

Do you wait and think to yourself that your prediction still stands ?

Has the market (*tide) changed.? If no its a shake / Fake out and they really want to send it in your direction.HOLD , also *query entry improvement.

Do you close the trade and accept a loss ?

If the market (tide) has changed and the observed force of the wave is going with the new tide . *Yes. (look for favourable exit) . Then consider entry for the markets new direction.

If you think your prediction is still valid how long do you wait ?

Until the market (tide) changes, or you close a profit on a peak, for other reasons like being knackered, take what you have.. Why lose (stop) the position if its the correct one to be holding?

If the market moves against you, then how far against you before you close your trade ?

Again I think has the market (tide) changed, if not hold, again query your entry for improvement, if it has, look for a favourable exit.


*Tied into this one I would also set a disaster stop, a point at which you will just close it.
Market wizards, the trader had a trade that was going against, he didnt panick and was looking, waiting for an out. BUT. it didnt come back, he lost a stack so we have to factor a cut point. The more expertise we gather the less and less we should encounter these situations.

*Query entry. Reason for & price ,after market, analysis. why did you enter here?
*tides, read market Intent.

 

[Trader333]

This can't be right.

If there is not a seller for every buyer, then who is selling to the buyers when they buy ? It is not possible to buy something that no one is selling ?


Paul

 

[roguetrader]

I keep reading on these boards and some websites that no one can predict the market. I would like to open this up for discussion if i may.

When you say you cannot predict the market, what EXACTLY do you mean?

Are you saying that it is impossible to know which direction the market will go to?
Or what price the market will go to?
How do you differentiate between forecasting and predicting ?
How and why do you enter a trade if you have not made some sort of prediction about price?

Is the word predict in need of a clerer definition when referring to the markets.


I raise this question because i was reading a post on this board about a ftse strategy. It began with the line that no one can predict which way the FTSE will go. That being the case, you would trade the FTSE with a PROBABILITY based system, maybe looking for indicators to give bias to your decision .

Isn't that a bit like tossing a coin ?

Comments appreciated.

I would respectfully suggest that the statement "No-one can predict the market." is erroneous

Much of this derives from how and what you view prediction to be imho.

Predict = Suggest what may happen based on available information.

This is by no means the only definition of prediction, but it is one. Based on this I would tend to turn the whole discussion on its head and say that anyone can predict the market to some degree. Now in order to separate prediction from simple guesswork/coin flip, it must be based on something, some hypothesis or other, derived from 'available information'
The accuracy of prediction will now depend upon the predictors ability to accurately interpret the available information, and the likelihood of said information changing during the duration of the prediction.
Another thing to note is that 'prediction' and '100%' do not belong in the same sentence, prediction suggests a degree of uncertainty. 100% does not, in fact quite the opposite, ergo 'prediction' should not lead to a 'mindset problem' such a problem will only occur when one confuses prediction with certainty.

 

[SOCRATES]

And I...am enjoying all of this enormously...

 

[roguetrader]

It is also worth noting that when a buyer and seller come together it does not necessarily follow that one must be right and the other wrong, a scalper may be exiting a profitable trade that has served it's purpose whilst a swing trader is entering the same stock, that will ultimately also serve his purpose, it is not necessarily so black and white, rather many shades of grey.

 

[Paul71]

If there is not a seller for every buyer, then who is selling to the buyers when they buy ? It is not possible to buy something that no one is selling ?


Paul

Hi, T333.

I mean this next question in all sincerity, ask profittaker.

What creates stock value?

The 'every buyer for every seller' statement, suggests a neutral state for single stock value.

Hope this makes sense.

Edit: The question is open to anyone and not just, T333.

 

[Citizen2007]

And I...am enjoying all of this enormously...

Can you please elaborate.



Thank you

 

[Citizen2007]

I would respectfully suggest that the statement "No-one can predict the market." is erroneous

Much of this derives from how and what you view prediction to be imho.

Predict = Suggest what may happen based on available information.

This is by no means the only definition of prediction, but it is one. Based on this I would tend to turn the whole discussion on its head and say that anyone can predict the market to some degree. Now in order to separate prediction from simple guesswork/coin flip, it must be based on something, some hypothesis or other, derived from 'available information'
The accuracy of prediction will now depend upon the predictors ability to accurately interpret the available information, and the likelihood of said information changing during the duration of the prediction.
Another thing to note is that 'prediction' and '100%' do not belong in the same sentence, prediction suggests a degree of uncertainty. 100% does not, in fact quite the opposite, ergo 'prediction' should not lead to a 'mindset problem' such a problem will only occur when one confuses prediction with certainty.

Yes. I do like that.

Thank you

 

[SOCRATES]

Can you please elaborate.



Thank you

I regret not, because it would involve the destruction of precious innocense.. ;-)

 

[Trader333]

Hi, T333.

I mean this next question in all sincerity, ask profittaker.

What creates stock value?

The 'every buyer for every seller' statement, suggests a neutral state for single stock value.

Hope this makes sense.

I take your point however in my view stock value (or any instrument value) is only real at the point when the buyer and seller transact. If there is no transaction then the value quoted is not realisable until they do. By this I mean that you could have an instrument that has seen transactions at say $28 then MM or others could manipulate the bid or ask to $100 but if no one is willing to transact at that price then the value is not real.


Paul

 

[Paul71]

I regret not, because it would involve the destruction of precious innocense.. ;-)

That is so true, it's the truest statement you have made in a long while, and you more or less took the words out of my mouth, Soccy.

You are here because you have fleeced, conned and taken to the cleaners all your flock.

You don't even find them interesting, do you?

You only wanted thier money!

How many phone calls and PMs did it take for you and Bully, to strike up a deal?

400?

Have a nice day!

 

[new_trader]

If there is not a seller for every buyer, then who is selling to the buyers when they buy ? It is not possible to buy something that no one is selling ?


Paul

It’s in the semantics. I’m saying that there is NOT always 1 buyer for every 1 seller. There can't be.

 

[new_trader]

Does it matter whether it took 1 or 1000 stockholders to provide 100,000 shares ?

Yes.

 

[Profitaker]

Hi, T333.

I mean this next question in all sincerity, ask profittaker.

What creates stock value?

The 'every buyer for every seller' statement, suggests a neutral state for single stock value.

Hope this makes sense.

Edit: The question is open to anyone and not just, T333.

Your sincerity is unquestionable

If BP closed at 600 on Friday, and tomorrow one of their oil refineries exploded, I doubt there would be many willing buyers at 600 on Monday, but plenty of sellers. Similarly, if a take-over bid materialised of the weekend you wouldn't find any willing sellers at 600 on Monday, but plenty of willing buyers.

It's the price at which buyers are willing to buy and sellers are willing to sell that create (or destroy) value. I think this is what you're asking. You can see the prices of buyer / seller willingness every day level 2.

Anyone any good at predicting oil refinery explosions ? Or a take-over approaches ?

p.s. I see the purpler has spotted the thread. 95% probability it will be destroyed within 2 weeks and closed after 4.

 

[new_trader]

Or a take-over approaches ?

People in the right circles know and some can't resist leaking that information and/or taking advantage. The markets aren't as random as some explosions.

 

[new_trader]

That is so true, it's the truest statement you have made in a long while, and you more or less took the words out of my mouth, Soccy.

You are here because you have fleeced, conned and taken to the cleaners all your flock.

You don't even find them interesting, do you?

You only wanted thier money!

How many phone calls and PMs did it take for you and Bully, to strike up a deal?

400?

Have a nice day!

Give it a rest!