To: Ally Re: Predictability of Direction in Different Time-Frames
<stock direction is unpredictable within the time frame of a trading day>
I have to say I completely disagree with that. On the contrary, I find that the short-term movements are the easiest to predict.
You said yourself:
<Identifying supply and demand requires more skill than luck>
Well in daytrading, we are identifying supply and demand, in a much more immediate sense. I find that the further away the time frame, the more factors that can come into that trend to alter the direction. Lets face it, ANY type of trading is based on buying something with the hope that in the future, that price will go the way you expect. We are ALL trying to predict the future. I find the immediate future to be actually much easier to predict.
Let me give you an analogy..
In trying to predict my own future.. While I sit here typing at my computer, I can reasonable say that in the next 5 minutes I will still be sitting here. I can say that because I know my intentions and I can see immediate outside factors that may affect my immediate future. In predicting what I will be doing tomorrow, I can fairly reasonably predict. I know I have to work, I know things I need to do and intend to do, and I can foresee many of the factors that may alter those plans. But, there is less certainty, because there is a lot more room for those unforeseen factors to come into the picture. In trying to predict what I will be doing next year, I do know my goals and intentions. If all things remain constant, then my prediction will be accurate. But there are so many unforeseen factors that can come into the picture over the next year, that my predictions are much less clear.
I find that predicting the direction of stocks is very much the same. In the immediate future I can see the immediate tape. I can see supply and demand in the current trading. I can see market direction. By next week there are so many unforeseen factors that can enter the picture, that my predictions are much less clear, much less accurate, especially in such a reactionary market. If all things remain constant and the trend continues, yes the prediction will be accurate. But the point is the unforeseen factors that can alter that trend. Taking the time frame out further, there are many more unforeseen factors. I know the intentions and goals of the company. I know their products and market, and if all things remain constant I can assume a prediction. But again, that leaves a lot of room for unforeseen variables.
- Shawn |
