Wall Street = Casino. Minus Sum Game.

[DionysusToast]

Right GladiatorX - did you keep an eye on XLNX & KMP yesterday as I said ?

Do you see how the earnings went the opposite way to the markets expectation ? I'm not talking about the earnings vs expected earnings but earnings vs price move prior to the earnings.

Both were tradeable but XLNX more than KMP. Some of course, will be better than others. I got a bit out of XLNX but not all of it. I am happy with a nibble though ;-)

I don't see how TA alone would have alerted you to either of these before the market opened. These were sustained moves & not just stocks that got marked up/down at the open leaving nothing for us peasants.

Of course, if someone takes the time, they'll be able to put on a few indicators to retroactively prove that TA would have predicted this - after all, a few oscillators, play with the lookback periods etc - you can make ANY move look like it would have been predicted. 20:20 hindsight is a wondrous thing.

Of course seeing the price run up/down prior to earnings is TA. Earnings themselves are fundamental.

Now - Queue a bunch of people telling me I am only trashing this ****ty industry because I am so unhappy that it's beaten me up so much

 

[GladiatorX]

Right GladiatorX - did you keep an eye on XLNX & KMP yesterday as I said ?

Do you see how the earnings went the opposite way to the markets expectation ? I'm not talking about the earnings vs expected earnings but earnings vs price move prior to the earnings.

Both were tradeable but XLNX more than KMP. Some of course, will be better than others. I got a bit out of XLNX but not all of it. I am happy with a nibble though ;-)

I don't see how TA alone would have alerted you to either of these before the market opened. These were sustained moves & not just stocks that got marked up/down at the open leaving nothing for us peasants.

Of course, if someone takes the time, they'll be able to put on a few indicators to retroactively prove that TA would have predicted this - after all, a few oscillators, play with the lookback periods etc - you can make ANY move look like it would have been predicted. 20:20 hindsight is a wondrous thing.

Of course seeing the price run up/down prior to earnings is TA. Earnings themselves are fundamental.

Now - Queue a bunch of people telling me I am only trashing this ****ty industry because I am so unhappy that it's beaten me up so much

Thanks; i'm not aruging that TA is better or that fundamentals are unimportant or anything so you don't need to persuade me I'm more interested in learning from people who have my respect, whatever they teach.

I think what you've pointed out here is very interesting; i think your main point is that comparing fundamental aspects of the market to the movement of price can give valuable conclusions ... I've always thought this; the idea of identifying a move that has a 'weighting' behind it.

The market fell before earnings; suggesting that the market 'bet on bad earnings' and they were incorrect, this has a snow-ball affect of changing price from which day traders can profit on the momentum.

Is my interpretation correct?

 

[Benton D Struckcheon]

Markets are subject to reversal, at all times.
I've always thought the real trick is to figure out when that reversal is going to take place. I've always made my best money taking the other side of the market on a Fed day (a day when the Federal Reserve makes its decision on interest rates; they're a lot less important now, unfortunately): sell when it went up prior to 2:15 EST, buy if it went down prior, stand pat if it's indecisive.
Squeezes, if you're on the right side of them, are a wonderful thing. Not so much if you're on the wrong side, of course. I've been there too...
BTW, since learning, through acute pain, what earnings days are like, I've always collared any stocks I owned when earnings rolled around: sell calls above, buy OTM puts underneath. It's the only reason I have any money to play with at all.

 

[DionysusToast]

Is my interpretation correct?

Well - that's my take on it.

 

[DionysusToast]

Markets are subject to reversal, at all times.
I've always thought the real trick is to figure out when that reversal is going to take place. I've always made my best money taking the other side of the market on a Fed day (a day when the Federal Reserve makes its decision on interest rates; they're a lot less important now, unfortunately): sell when it went up prior to 2:15 EST, buy if it went down prior, stand pat if it's indecisive.
Squeezes, if you're on the right side of them, are a wonderful thing. Not so much if you're on the wrong side, of course. I've been there too...
BTW, since learning, through acute pain, what earnings days are like, I've always collared any stocks I owned when earnings rolled around: sell calls above, buy OTM puts underneath. It's the only reason I have any money to play with at all.

I like your thinking very much. Indeed - it is very good of you to share the option strategy with us.

Do you think that a collar around stocks you don't hold would be a good strategy too or are you mostly doing that for 'insurance' purposes ?

BTW - feel free to clam up at any time, no need to reveal innermost trading secrets publicly.

 

[Benton D Struckcheon]

I can't even get my mind around the idea of having a collar around a stock I don't own. Collars, in my mind, anyway, are by definition insurance policies. Once or twice I actually managed to pull some clever intraday trading on a collapsing stock to make a decent profit, but really, that's not something I'd want to try on a regular basis, if for no other reason than that it would shave five years off my life expectancy, at least. I have a pretty high risk-tolerance, but not that high.

 

[Benton D Struckcheon]

Thinking about it a little more, you'd also be crazy negative gamma. If one of the other options guys are around, they could confirm I hope, but I'm pretty sure that'd be the case.
Gives me the shivers just thinking about it...

 

[Trader333]

It appears that the cases for whether TA works or not seem to be based on absolute views, ie it always works or it doesn't. I would agree that when news events occur then TA (on an intra-day basis) cannot really give an indication of the likely movement in price. However, that does not mean that TA cannot work at other times. Myself and many others on this site have seen TA used on a basket of stocks for weeks on end where almost every day there were consistent profits of between $2K and $10K a day being made. Quite a few of us also saw this live and many others witnessed it in a web conference room.

The key to the success was the basket of stocks that were either all Shorted or all Long at once and some did lose money but overall the basket was profitable.


Paul

 

[tar]

http://www-rcf.usc.edu/~lharris/ACROBAT/Zerosum.pdf

 

[montmorencyt2w]

It appears that the cases for whether TA works or not seem to be based on absolute views, ie it always works or it doesn't. I would agree that when news events occur then TA (on an intra-day basis) cannot really give an indication of the likely movement in price. However, that does not mean that TA cannot work at other times. Myself and many others on this site have seen TA used on a basket of stocks for weeks on end where almost every day there were consistent profits of between $2K and $10K a day being made. Quite a few of us also saw this live and many others witnessed it in a web conference room.

The key to the success was the basket of stocks that were either all Shorted or all Long at once and some did lose money but overall the basket was profitable.


Paul

Just to mention, for what it's worth, that Gary Norden's book (which I've referred to once or twice) claims that (at least classical) TA was invented/designed for use in the stock market, and that its use outside of that arena is extending it to a sphere that it was not intended for, is not (to his thinking) particularly suitable for, and in which (to his thinking) it doesn't work very well.


After a brief initial foray when first starting, I personally have avoided stocks, and even indices, for the most part, so I don't have an opinion on how effective it is there.

 

[DionysusToast]

http://www-rcf.usc.edu/~lharris/ACROBAT/Zerosum.pdf

Sorry - but I only got to the first paragraph that said trading was a zero sum game.

Trading is not a zero sum game.

For example - take 2 traders, one going long at the exact same time the other went short with the same position size. They both exit at the same time. In this case, you would say that one trader lost and another gained.

The losses and gains are not equal. The losing trader lost more than the winning trader won.

Hence minus sum game.

 

[tar]

Sorry - but I only got to the first paragraph that said trading was a zero sum game.

Trading is not a zero sum game.

For example - take 2 traders, one going long at the exact same time the other went short with the same position size. They both exit at the same time. In this case, you would say that one trader lost and another gained.

The losses and gains are not equal. The losing trader lost more than the winning trader won.

Hence minus sum game.

whatever goodluck

 

[robster970]

whatever goodluck

Harris covers this extensively in the book that this paper is derived from. It's zero-sum if there is no cost of doing business. It's negative sum if you include costs of doing business (dealer, brokerage costs, etc). All depends on how you model the market. Personally I always think of it as negative sum because I always think about my costs of doing business. Others don't. Horses for courses.

 

[DionysusToast]

It doesn't depend how you model the market. The market is what it is. Commissions and spreads are there.

That's the issue though - people 'modelling' things.

 

[robster970]

It doesn't depend how you model the market. The market is what it is. Commissions and spreads are there.

That's the issue though - people 'modelling' things.

I know it's -ve sum. You know it's-ve sum. I'm surprised the thread has run for this long.

 

[Prawnsandwich]

Yeah I'm a bit surpised as well.....when its fairly obvious that TA works, and works very well....when used in a effective method.

By TA I mean anything from candlesticks, MAs, chart patterns, trends, indicators , price action etc

Problem with fundamental analysis is that the market prices in a lot of known and projected fundamental information, as there are always insiders and entities who have access to information ahead of the masses....very difficult for small / retail investor to compete with big / insider money

TA is suppposed to pick up this inside information acting in the market via chart patterns , trends etc...

 

[montmorencyt2w]

Yeah I'm a bit surpised as well.....when its fairly obvious that TA works, and works very well....when used in a effective method.

If it is obvious that TA works, and if 90% of traders use TA, why then are there persistent reports that 90% of traders fail?

Problem with fundamental analysis is that the market prices in a lot of known and projected fundamental information, as there are always insiders and entities who have access to information ahead of the masses....very difficult for small / retail investor to compete with big / insider money

TA is suppposed to pick up this inside information acting in the market via chart patterns , trends etc...

Supposed to being the operative phrase.

 

[oildaytrader]

I know it's -ve sum. You know it's-ve sum. I'm surprised the thread has run for this long.

I was confused when Shakespeare wrote "like is a tale told bu=y an idiot , full of sound fury , signifying nothing"

Now I understandwhy he wrote it.

Mr D , couldn't you just have said "the spread makes it a - minus sum game?"

 

[Prawnsandwich]

If it is obvious that TA works, and if 90% of traders use TA, why then are there persistent reports that 90% of traders fail?



Supposed to being the operative phrase.

In the first instance I'm not sure that 90% of traders use TA..where did that figure come from ?....Im sure many are looking at fundamentals, eg earnings and many are probably not using any proper system apart from what they hear / see on Motley fool, yahoo finance CNBC etc...or are just gambling

Traders that use TA and are failing are not using it correctly..or or are not exercising money managment or probably just dont understand what it is...as as evident from this thread..

Supposed to being the operative phrase.[/QUOTE]

It can really be very simple....the price of a stock may be going up over a period without there being any obvious news or fundamental information in the public domain and you can use TA to work this out ...How ? By looking at a chart and seeing the price going up...

 

[virtuos0]

Sorry - but I only got to the first paragraph that said trading was a zero sum game.

Trading is not a zero sum game.

For example - take 2 traders, one going long at the exact same time the other went short with the same position size. They both exit at the same time. In this case, you would say that one trader lost and another gained.

The losses and gains are not equal. The losing trader lost more than the winning trader won.

Hence minus sum game.

You're wrong. In the example you give above both traders are TAKING liquidity from the market, whereas in fact in each and every trade there is one party taking liquidity and one party providing liquidity. So yes indeed it is negative sum between two traders both taking liquidity, but that just isn't how the market works!