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Strategies & Market Trends : MDA - Market Direction Analysis

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Dec 2 4:00 PM EST

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To: Wayners who wrote (61654)	10/31/2000 3:48:31 PM
From: ahhaha	Read Replies (4) of 99985

In a truely efficient market all prices move in sudden stairsteps that cannot be seen ahead of time and cannot be profited from because you can't make money AFTER prices have already moved. All markets with adequate participation move in stochastic waves. It's the nature of probability mechanics. The equations of motion governing the waves subject to the least action principle is completely expressible in a polynomial in sines. Whereas the instantaneous distribution can be "muxed" into a square well, it takes a chaotic state to achieve the transition to the new equilibrium. Adherence to the square well can only occur when the market becomes instantaneously inefficient. This is what happens when a price gap occurs. The specialist sets the price where they are willing to get on the other side. Price setting is inefficient and contrary to the definition of market. Don't follow that? Then tell me who would hold such that price would remain constant after a stair step? You'll notice that most charts do not look like this--they're curvilinear that can take several days to get to the higher or lower point with plenty of opportunity for entry and exit at a profit. I challenge this claim. Stochastic processes are never curvilinear. To assume they are is to assume that people prefer a roundabout way to get to the money. The key is to have the tools available to find fresh reversals (that takes real time price and volume information--not necessarily news but it could cause it), take advantage of the historical inefficiencies of that security and only ride it for a single leg at a time or up to 3 legs maximum before taking profits. The frequency of the oscillations in price tell you when to take profits. You and Peter Eliades would get along well. Cycles say... Try to sum a lot of profits up and they add up fast. Using charts to nail exact tops and bottoms IMO does not work very well. Charts will help you capture the meat of each move, then move on to the next very high percentage play. I hope this helps enough to get you interested in learning more and testing it out I've read more stock charts than anyone on the planet including "Charty", and anyone doing what you claim is headed for disaster. You either gradually lose or lose big, fast. The former is the worst way to go as I learned after my 5000th trade 20 years ago. It's a disaster because you are deluded into believing what you're doing somehow has a positive expected return. When you lose fast you blame it on the technique which is inadvertently correct.

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