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Strategies & Market Trends : MDA - Market Direction Analysis -- Ignore unavailable to you. Want to Upgrade?

To: ahhaha who wrote (61660)	10/31/2000 4:06:08 PM
From: Wayners	Read Replies (1) \| Respond to of 99985

Take a look at a daily chart of SPOT versus a daily chart of MCDT for example. You will notice that the amplitude of the oscillations of MCDT (I just have a simple 3 day moving average on it) are wide and you can expect prices to carry through on a reversal in direction in the 3 day moving average. This same expecation in SPOT will lead you to bankruptcy in short order. You've got to see the difference between the two. Then add in some money management and suddenly you're making money. MCDT is what I call predictable. SPOT is very unpredictable. I don't trade SPOT.

To: ahhaha who wrote (61660)	10/31/2000 4:14:40 PM
From: Wayners	Read Replies (1) \| Respond to of 99985

When you lose fast you blame it on the technique which is inadvertently correct I'd blame that on the unexpected and there's no way to make the risk go away thats for sure--but I sure can do a lot to make it as small as possible in relation to the reward. I think a lot of people equate risk with volatility. I equate reward with volatility--like a stock moves 7% on average from high to low per day. I equate risk with predictability and a risk to reward ratio as predictability to volatility. Things can certainly go from predictable to unpredictable and thats where money management comes in. If what I expect doesn't happen I get out of the trade. Its that simple. The big gap downs do occur and there's no way to always avoid. The hope is that the daily chart goes against me BEFORE the big gap down and I have to time to unload the position. If not, the fallback is never having more than 20% of your eggs in one basket plus over time there's been a good liklihood for solid tech stocks to come back in time. Just have to wait some out. Thats life. When emotions come into play, the best set TA trading plan and money mangement won't work. I guess I'm a freak of nature because I don't get emotionally charged over this stuff.

To: ahhaha who wrote (61660)	10/31/2000 4:40:47 PM
From: Wayners	Read Replies (1) \| Respond to of 99985

I challenge this claim (curvilinear motion). Stochastic processes are never curvilinear. To assume they are is to assume that people prefer a roundabout way to get to the money. Those 3 day moving averages on MCDT look pretty curvy to me. I also think there are plenty of pretty efficient stocks out there, and believe me I don't trade them. You've got to find the ones that aren't efficient. A larger float seems to have a lot to do with the amount of efficiency. People just can't move large positions into and out of low float stocks in a short period of time because quite frankly the liquidity available per unit time just isn't there. Another thing is there isn't one standard valuation formula that everyone uses to determine what a security is worth. Thats what makes a market. In a truely efficient market there would be nobody to take the other side of any trade. It would be inherently obvious what a security was worth and there would be no way to profit except by gambling on the next valuation. There would be no momentum. There would be no momentum carry throughs. Doesn't sound like today's market at all. I see momentum carry throughs a lot. They're pretty easy to find with some real time data and software.

To: ahhaha who wrote (61660)	10/31/2000 10:12:23 PM
From: Sam Scrutchins	Read Replies (2) \| Respond to of 99985

>>>> 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. <<<< ahhaha, If you have made 5,000 trades and are still around, then you are doing something right whether you rely on fundamental, technical, or whatever analysis. Observing this ongoing discussion, I find it necessary to put my two cents in. I am a simple-minded, sort of educated, southern redneck from a small hick town in Florida. It takes me awhile to figure things out. I started playing this market some 38 years ago, and did not do very well for a long time. Early on, it was pure emotions which never work, later it was fundamental analysis, which got me heavily in stocks like Toyota in the early 60's at 10 cents per share. Unfortunately, this didn't pan out because noone else believed it for years. Later, it was technical analysis using charts that never seemed to work quite right. Several years ago, I decided that the only way to make money on this market was to lead the sentiment swings. I cannot tell you how to do this. It is mostly a combination of being on the right long-term trend for the market and the individual security or index receipt in that order. This is probably based on a fundamental analysis perspective (I read a lot). Beyond that, the issue becomes one of timing, and here, TA excels. That's not the full answer, however. Sometimes the profitable reversals are very short term (e.g., RSI's above or below 80 on the 1-min charts); other times, they are not so noticeable reversals on the 60-min or daily charts. The critical factor here is how to read the sentiment. For me, it's the sum total of reading all of the posts on threads like MDD, picking a few astute advisors (mostly free ones), understanding and applying various TA philosophies, and so forth. All of this information is massaged in my head over time. I then make decisions, and they are right or wrong. I suspect that ALL OF YOU do about the same thing. Whatever I have done in the last three years, it has been mostly right. After being mostly out of the market for years with a growing family of 4 kids, I suddenly faced a divorce and was forced to act. Using the perspective set forth above, I turned 25K into 350K in about 8 months before losing a large portion of it in a useless attempt to become independently wealthy overnight. Subsequent to the main property settlement on the divorce, I found a free $2,700 in June which I have turned into $27,000 in about 5 months. That's about 1,000 percent. I play mostly options, and I've missed good opportunities to turn it into well over $100,000 in that time (e.g., if I had held positions for another two days), so I am by no means perfect. Nevertheless, I've done pretty well. I cannot tell you why I make the decisions that I do, and certainly, things go bad for me. I may profess a perspective, then turn on a dime and take the opposite actions on the market (that's mainly why I'd be useless as a poster on this thread). In essence, all of this is an attempt to understand the psychological underpinnings of the greed and fear drivers in the market. Whatever method one uses, if you can do this successfully, then you will make money. Enjoy, Sam