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Strategies & Market Trends : ahhaha's ahs

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To: ahhaha who wrote (1705)4/5/2001 6:02:21 PM
From: BilowRead Replies (1) of 24758
 
Hi ahhaha; Re that specialist who said that you tend to have more volatility at tops and bottoms...

This is an old (and true) traders' observation. For it to make sense you have to know that the volatility is being measured in a very short time frame (i.e. ignoring the long term trends), while the tops and bottoms are being measured in a longer time frame (i.e. ignoring the short term tops and bottoms). Of course the specialist couldn't get all that into a sound bite, so he comes off sounding ignorant. As an example of this, you have to get away from the bubble market. Alcoa shows the tendency, note the increase in volatility at the October 00 low, for instance:
finance.yahoo.com

Probably the worst thing that traders do, as far as sounding ignorant, is they go through and redefine all the mathematical definitions. For example, what they call that a "derivative" differs from the mathematical definition. See, for example: fimi.com This is not really ignorance, what they're doing is using "derivative" in the sense of a derived series: "Something derived."

-- Carl
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