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Strategies & Market Trends : DAYTRADING Fundamentals -- Ignore unavailable to you. Want to Upgrade?

To: bajasurf who wrote (2572)	8/9/1999 12:31:00 AM
From: Bilow	Respond to of 18137

Hi bajasurf; About those analyses of the randomness of wallstreet. My guess is that a certain amount of the predictions depend on who is doing the computer programming. If people actually expect to be getting their rent money from that computer, they are going to be programming it a little more imaginatively. Also, the comparison needs to be risk adjusted. If one can make half the return, but only be in the market one quarter the time, that is probably a better technique than buy and hold. Especially if this bull market ever ends. The main problem with buy and hold is that, like all the other techniques, it hasn't been tested over the next 10 years. My guess is that there will be some surprises. As far as the Efficient Market Hypothesis goes, I think it is silly in the extreme. The best counterexample is an analysis of the variation in stock prices that occurs during the trading day versus that which occurs outside that time. Since almost all corporate news is released after hours, and since the trading hours are so short, one would expect that the majority of stock movement would occur after hours. But this is not at all the case. As far as that squawk box goes, I really don't know what it is connected up to. I know that when I ask to be allowed to short a stock that is not on our list, the okay comes back through the squawk box, so I am guessing that it is somehow associated with our broker/dealer or clearing firm... -- Carl

To: bajasurf who wrote (2572)	8/9/1999 4:55:00 PM
From: David Lind	Read Replies (4) \| Respond to of 18137

Bajasurf, regarding the lack of certainties in the study you highlighted, there are far too many variables in making good trading decisions to trust to a programmer. What parameters were used? As you probably know from your own experience, the variables are almost infinite, and require much experience and highly developed intuition. As just a single example, you can have the perfect setups on your charts, and if the underlying market falls away from you, you may make a trade in the wrong direction. Happens all the time. Was the computer programmed to appreciate the overall dynamics of the market and the current economic situation? Did it factor in the morning reports of fair value, and the probability of an interest rate hike in two weeks? Doubtful! That is why trading will always be a human endeavor. Because the market is moved by US, not by the strict laws of probability. If you are a new trader and need assurances that technical indicators will ALWAYS protect you, then you are looking in the wrong direction, because they will not. However, they are a very valuable tool when used as a part of your overall decision in trading direction and timing.

To: bajasurf who wrote (2572)	8/9/1999 7:53:00 PM
From: Dominick	Respond to of 18137

bajasurf: You stated,<<There seemed to be no relationship between the technical signal and the subsequent performance of the stock>> Ah! but there is. If a stock moved 2 pts. on 500k volume yesterday and moves 3/4's of a pt. on a volume of 1 mil. today isn't this a TA indicator of supply overcoming demand? Of course you can't apply what the market is telling you today and project it to the future long term. The market must always move up and down to find buyers and sellers or stagnation will kill it. Remember there are at least 3 trends to consider.1-the long term, 2-intermediate and 3-the short term. All three going in different directions. No matter which one you choose you must be aware of them all and what their current position is in their respective trend. The trend is your friend. That computer model just compared pattern pictures. It didn't allow for the principles of supply and demand, effort and result and cause and effect. These are extremely important principles which if ignored leads to loss. Of course the result is not guaranteed but it does tell you what SHOULD happen when these principles occur. If it doesn't well, that's what stops are for. (G) What TA helps you with is not buying a good stock at a bad time. Still a student, Dominick