Shootie,
That is an interesting method, but I wouldn't necessarily associate your experience in a current trade with your experience in prior trades with the same stock. Every moment in the market is unique. Since the Market provides anonymity through ECNs and Market Maker IDs you can't possibly know all the players in the stock at any current time, even if you trade that stock frequently. For example, if GSCO is a Market Maker in your stock, you wouldn't know for sure if that was the regular trader assigned to that stock or Joe Blow trainee. You might think you know based on the way that Market Maker is trading, but again you can never know for sure.
Let's say for some reason you were trading a stock with exactly the same market participants which you had in a prior trade. Now in order for the stock to trade in the way you expected you would have to know every traders opinion on whether the stock is high or low, and at what point they felt they should sell, buy, or hold their positions. In otherwords you would have to understand the psychology of all those traders at that exact moment in time, and they would have to interact with each other in the exact same way as in your previous trade.
Market participants do react with each other in fairly predictable ways, indeed this is the foundation of technical analysis. But every moment in the market is unique, and it only takes one trader buying or selling a lot of shares at a certain level to ruin your perfect setup. I would venture to say if you are successful with your current basket of stocks you could probably apply the same methods to other stocks and have the same success, without spending a year or so to learn the players involved. After a year, month, day, or minute, all the players could be different anyway, and it would be impossible to understand how they felt about a stock's value at any particular moment.
Alex |
