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Gold/Mining/Energy : Big Dog's Boom Boom Room -- Ignore unavailable to you. Want to Upgrade?

To: Wyätt Gwyön who wrote (83807)	5/1/2007 1:06:02 AM
From: chowder	Respond to of 206330

>>> in his book Practical Speculation). apparently the author tested 6000 technical analysis "rules" and found none of them work. or something like that. <<< That may be true. I don't know what he tested and under what conditions. What I do know from the studies I have read and from my personal observations is that most technicians are looking for counter trend or price reversal set ups. I think that's the low probability of success route. Success is spotty at best with that strategy. Other technicians, like the fundamentalist, are looking for reasons why price will rise and are trying to get in ahead of the move. Again, another strategy that depends on predicting the future. Another low probability set up. >>> if there is a "simple process" that can be readily identified, then it should be readily identified by other people as well. once enough people know about it, it will be arbitraged away.>/i> <<< Sounds good from an intellectual point of view. Doesn't apply in reality though, IMO. People will always behave like people. They always have, and always will be creatures of emotion. They always have, and always will operate with greed and fear. People always have, and always will hold on to losing positions. Many of them will continue to average down on losing positions. People always have, and always will continue to be enamored with bottom fishing, guessing at what the low price may be, and as the price continues to drop, they will continue to hold. It doesn't matter what evidence you provide to show that's the incorrect strategy for earning consistent profits in the market, they will not change their behavior. I have looked at thousands and thousands of charts over the years and I found one thing that all strong performing stocks had in common. Every one of them had a point where price broke out of a base on huge volume. Not all break outs are successful, but all stocks that went on to earn huge profits had a high volume break out coming out of base. Still, the average person isn't going to buy a price break out. They are conditioned to think price is extended or the stock is overvalued or overbought. The novice trader avoids the break out like the plague. It's the professional trader that creates the break out. The professional trader, due to the amount of shares they buy, drive price higher. As price continues higher, you can always rely on the novice trader to pile on after the fact, where the professional trader sells them their shares, thus continually earning profit after profit. It's always been that way and always will because humans operate off of emotion. Like anything else in life, it's those who can control their emotions and direct their thoughts that usually enjoy a higher level of success at whatever they do, and that applies to trading or investing as well.