LG, it's not the mind meld you need to get right on timing stocks. That's passe. Herds of sheople with a mind-meld are no longer the determinant of stock price action. Models which purport to model sheople are now the determinants.
Using TA Models is a bit like Heisenberg trying to measure electron's momentum and position simultaneously = you can't do it because by taking part in it, you change it. You try to predict the share price, but in predicting it using your predictive models, [carefully avoiding human emotion I suspect - or kidding yourself that you don't have emotions, which is the first mistake investors make - followed by thinking they can separate their thinking department from their emotions], you change the position of the very thing you are trying to measure with your model because you move the market and other models have to account for your model and then your model has to react to their change which arose from your model's effects.
So stock market prices are no longer made up of hordes of people in full-blown endorphin-primed excitement and wealth hysteria followed by sweating, pallour, depression and despair. Stock prices are determined by models which are predicting what each other will do. The smartest models will be deliberately changing prices to see what the other models do and then adapting to that feedback. It's like a game of chicken. "Let's take the price down and see who blinks and when and how much - we control how much we are selling so we can control what the other models see". There will be deliberate market movements by models - laminar flow in the markets is NOT the way to make money. Volatility is needed. So the best models will cause volatility, which they then profit from - they'll know how to 'panic' the other models into a buy/sell then take the opposite tack when the modelled buy/sell price is reached.
TA Moonies [which I hope you appreciate is a term of endearment] think their modelling sits outside the market. It doesn't. It sits inside the market and is now a large chunk of the market [if we judge from how many people follow DoubleTops, Moving Line 30 Day Averages, Double Bottoms with inverted conical aspersions with double-helix reversions, and stuff like that]. The predictive models are therefore the pricing mechanism. So many people [and computers] use them, that they are, to a great extent, the market.
The competition then becomes to create a model, the champion model, which most accurately combines all wave-functions of the other models which are used. The dumb models - such as a 30 day moving average, will be subsumed by more successful models which are outsmarted by the top model.
Nobody reading this has got the top model [okay, that's a WAG]. You are all playing roulette and hoping to be in the lucky half [with the house = the brokers, taking their cut off the top].
Sure, half of you [just under half] will indeed be lucky and will win. Some will win spectacularly and will do so for years and decades using chicken entrails and a random number generator. Those using simplistic models [such as 30 day moving averages combined with BigMac indices] will consistently lose over a period of time since their model is defeated by the smart models. The only way to win is to be lucky and that means using random numbers [or dartboards] or to have the top model [or close to the top model - maybe the top 10% of models would still win since the top model would be capital limited and couldn't take more than a small bunch of opportunities].
D E Shaw comprised 5% of the NY Stock Exchange trades at one time [I'm not sure that's true, but it's what I heard somewhere a couple of years ago]. They use models, not emotions. That's the scale of model trading.
Sure, there is plenty of sheople emotion too [see this thread] but it is in thrall to the models. The models move the market and the sheople smile or moan accordingly.
That's my model anyway.
Mqurice
PS: Actually, I DO use timing when buying. I judiciously wait until markets and the stock are down [as much as I figure they'll go]. But I do NOT buy and sell in trading ranges to make money from the sheople [and models]. I figure Q! is worth $1 trillion then buy it at what seems like a low point. |
