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

To: aldrums who wrote (17382)	7/21/2005 12:20:38 AM
From: Threei	Respond to of 18137

My point is if everybody rushes in to exploit an edge in the market (if that edge is TA, Soes or whatever), soon that edge is negated and nobody can make money I am not sure it's always the case. I would rather have worded it this way: When certain edge (pattern or whatever) is overexploited, it does not just disappear. Rather it starts working differently, following the usual market's way of hurting the most, and this in turn presents new edge. Somewhat simplified example just to illustrate what I mean: Let's say crowd falls in love with certain breakout setup and everyone and their brother starts playing it. It's not that stocks just cease to move after breakout, right? Rather they start showing failure so the majority loses on that same setup that used to bring them profits. In common and mistaken expresssion, "setup doesn't work anymore". In fact it still does, just differently; now fading the setup, playing the failure is what works. In a while it's failure of failure that works, etc. Being one step ahead of the crowd (sign of geniuses) or adjusting quickly (sign of just good traders) is what allows them to continue making money. But situation where "nobody can make money", I have hard time imagining that :)