Friday, March 20, 2009

Don’t get fooled by the stock market bounce

Don't get fooled by the stock market bounce

Stock markets are rallying, but now's not the time to pile back in. History and the corporate debt markets suggest that stocks could fall a lot further before they reach the bottom.

Posted by damien @ 12:03 PM (3010 views)
Please complete the required fields.



68 thoughts on “Don’t get fooled by the stock market bounce

  • This publication regularly makes rambling commentaries on future market direction. A few weeks ago they advised people to jump into the Zimbabwe stock market. I think its lost about 20% since then, which would have broken anyones’ stop loss….but if it comes back some time in he next few years, they’ll boast about their genius. Dangerous charlatans

    Reply
    Please complete the required fields.



  • I don’t want to step on anyones’ toes but I have recently read a few pieces of trading advice on this site that are just plain wrong. I have been accused of giving advice that is not suitable for beginners but there is no shallow end in this shark pool. Cosy mentoring from hobbyists and keen amateurs is dangerous because it gives people a false sense of security. Everyone has their method but here are a few ‘truisms’ that are written in the blood of failed traders. I hope no one gets their nose put out of joint

    1. You must always trade with a stop loss. If you don’t, then you are fuc*ed. No exceptions
    2. Scaling back on a winning position is mathematically dangerous. I know ‘experts’ often tell you to do it, but I’ll bet a pound to a penny that these people don’t actually trade. If you scale back a winning position then you are reducing your average win. Your average win must be greater than your average loss, so anything that reduces your wins will damage you. The same people usually advise you to leave your stop alone, which of course means that your losses are always at their maximum strength and your winnings are diluted by scaling back. If you are going to scale anything back, then do it to a losing trade. In fact, I usually double and treble up on my winning trades. I profit from this by being right more than wrong. If you are right more than you are wrong, this scaling back nonsense is guaranteed to rob you of your winnings
    2. Be wary of technical indicators and tools that are in the public domain and commonly used. The markets and its participants are out to get your savings. Why use something that telegraphs your intentions and gives other traders information about your position? How can they work if everyone knows about them? Don’t listen to the pseudo scientific babble that justify these indicators and tools. Use your intuition and common sense to judge my statement
    3. Be wary of market predictions. They are always couched in ‘if this, then that …but if that, then this’. The same technique is used by the newspapers when they write their daily astrology columns. If you couch it cleverly enough, any outcome will fit your prediction.
    4. I regularly read on this site that taking longer term positions is the sensible thing to do. The trouble with this is that too much can and will happen to the world during the course of your trade. Most of these events are entirely unknowable and unpredictable. This means that a winning long-term trade is nothing more than a lucky coincidence. I’m sure this will have some people jumping up and down but as I said before, use your intuition and common sense to judge my statement
    5. 99.9% of new traders lose everything and leave the game. REALLY THINK ABOUT THIS because the ability of human beings to consider themselves part of the 0.01% should be made an official ‘wonder of the world’
    6. I have been told on this site that trading costs are not significant for some trading styles. Trading costs REALLY matter. The odds are already stacked against you. Don’t unnecessarily add a few ‘house slots’ to the wheel. Some of the spreads and costs I see touted here as acceptable are ridiculous. Trading costs for an S&P 500 mini contract ($50,000 value) should be no more than 2.35 Dollars (I pay as little as 1.55 Dollars). The spread on this contract should never be greater than 1 tick.. Now compare that to your ‘brokers’ costs and spreads. In any business, costs should be minimised. To argue against this is madness
    7. Inside information and knowledge of other professional traders intentions is a massive help. If you do not have access to this, then you are at a disadvantage.
    8. Trading with large resources (particularly when it is someone else’s money) gives you the ability to ride storms and see things through. If you do not have large resources, then you are at a disadvantage.

    Reply
    Please complete the required fields.



  • Quiet day in the forex market falsh?

    Reply
    Please complete the required fields.



  • techie: don’t take it personally

    Reply
    Please complete the required fields.



  • I have a £50 bet with a mate (made last Sept) that the FTSE 100 index will fall below 3000 before it gets above 5000 again.

    And I think I may be over exposed!

    Reply
    Please complete the required fields.



  • bidin'matime says:

    Flashman – I did a bit of this a while back and made good profits when in ‘practice’ mode, ie not real money, but as soon as I parted with cash, I felt that someone was tweaking the figures against me – you mention inside info – is it possible that traders employed by the bank can see what amateurs are up to and shift meg-bucks to kill them off? If as you say, 99.9% lose the lot, it could be that the banks encourage amateurs in the door, take their money, then rip them off by rigging the markets.

    Reply
    Please complete the required fields.



  • Reply
    Please complete the required fields.



  • wdbeast – you lost on 02-Oct-2008 unless you are only going on daily close levels.

    Reply
    Please complete the required fields.



  • Sorry flash just joking. Think its good to have views from a pro.

    ok iv read em. I think

    5. is unquestionable and cant be stressed enough. Im not sure of your percentages but yes the gist is right – i thought it was about 95% losers.
    6. I think DOES depend on your style. If you trade for size and are looking for a few points then yes exactly right – at the other end of the spectrum say you sell the high of the year and buy the low – does an extra $5 bucks for a turn really matter? Granted your point is valid (the cheapest execution – and lowest spread – is clearly what everyone wants. BUT for you to get that dont you need to do so many transactions or lodge so much cash? Maybe im wrong there. But if correct what i advocate (which is toe in the water with small “stakes”) cant really happen.
    7 & 8 are self evident (well maybe they are to me and you).

    4. That just depends on what you mean by long term. You might take a trade for the “long term” and see it rocket and want to get out, or see it go against you or not perform the way you anticipate and get out. Same with stops they have to be managed but (again depending on what your doing, stops will be more actively managed – eg looking for a short counter trend move using hourly min or tick bars will require more active management than trades based on daily bars for instance)

    You havent mentioned the emotional stresses that you need to take into account. I think for a hobbyist the worse thing to do is overtrade.

    3. I think all indicators have their uses but the skill comes ion knowing when and how to interpret them and in conjunction with others. I broadly agree eg. you cant buy the market everytime its RSI is below 30, but i dont think there is anything wrong with using that as a filter – (not that i do).

    as for 2. you have to explain that a bit more for people. I often scale back but with a view to seeing how any pullback performs and then i will often (but not always get back in) to ride the move.

    Reply
    Please complete the required fields.



  • in any case flash i know you wont have time to respond to these points… have fun this afternoon!!

    Reply
    Please complete the required fields.



  • bidin’matime: Most brokers in the forex world never actually pass your trade onto the market. They take a position against you. They also control and manipulate their price feeds. Many large brokers have a trading desk, which they use against their clients. They can see your stop losses. I place false stop losses away from my intended stop. These fake stops don’t correspond to the size of my actual trade and I cancel and move them around. Gettin ‘ticked out’ happens too many times for it to be a coincidence

    Reply
    Please complete the required fields.



  • As i said “You havent mentioned the emotional stresses that you need to take into account. I think for a hobbyist the worse thing to do is overtrade.”

    Also imo someone should get comfortable with size – see bidin’matime’s point.

    Trading beyond your comfort zone – with regard to both size and overtrading is what will kill the novice. Getting stopped out at the low/high of the move will also really p!ss you off – “the market is out to get me”.

    I remember going from a one unit to a two unit trader was quite difficult then up to 5 was tougher still, but going from 5 to 7 was no big deal and then 7 to 10 (i stopped at 10) was fine. The larger the number of units the more options (xcuse the pun) you have on the plus side and the more f*cked you can be on the minus side.

    Have you read the market wizard books? That could sound cheeky it isnt meant to.

    Reply
    Please complete the required fields.



  • 51ck-6-51x: yes that should be a compulsory read. I read half of that Black Swans book which makes similar points. (I read all of his first book years ago but I found Black swans to be fantastically repetitious)

    Reply
    Please complete the required fields.



  • “Most brokers in the forex world never actually pass your trade onto the market”@flashman – isn’t this fraud/ insider dealing and very, very illegal???

    Reply
    Please complete the required fields.



  • matt_the_hat says:

    Flashman…

    I can see in your kind of work 4. never gets considered, i.e. if you don’t make any profit this day, week, quarter, year your boss would not listen very long to your long term strategy before your out on your ear blogging on HPC all day.

    If 4 is so wrong can you explain to me why tracker funds regularly outperform managed ones (keeping in mind my statement above)

    My argument is that short term trading strategies are based on random noise like speculation, and longer value orientated ones win through in the end, i.e. Buffet and co (probably the 0.01% you were talking about)

    Thanks matt

    Reply
    Please complete the required fields.



  • Too prescriptive Flashman.

    Your posts turns on things being almost utterly unforseeable which seems to overstate it. It was eg recently forseeable that eg house prices were due to fall or that equities would tank. I’m not saying this could have been predicted with accuracy timing wise but it was in the post. In fact didn’t you sell up on that basis.

    Also don’t buy the stop loss absolutes if the position is small enough why bother – I guess it is theoretically possible that say the Euro will move 20% against Sterling in one day but if it does the trader lack of stop loss will be the least of his problems.

    Reply
    Please complete the required fields.



  • Techieman I like this guy on technical indicators on the S and P – wouldn’t trade on the basis of it but some useful thoughts and decent presentation via you tube
    http://www.sandp500analyst.com/index.php

    Reply
    Please complete the required fields.



  • bw – i cant look now but will later thanks. Re the stops though i do absolutely agree with Flash (i didnt want to say that yesterday though because you seemed a little fraught anyway). Whatever size the position is if you are wrong you are wrong as i said the stops protect your cash and tell you if you are wrong – when you are right you can move the stops. You can have a stop triggered but with a bad fill and a fair bit of slippage – that is something else that you probably wont find out about until it happens. Anyway must go.

    Reply
    Please complete the required fields.



  • The HPC crash was untradeable because nobody was able to predict when it would happen exactly. Doomsters and permabears alike have to be treated with suspicion because they are bound to be right eventually. I remember you saying that you didn’t use stop losses because you only put into a trade what you were prepared to lose. This is in effect a stop loss.

    Many things are in fact utterly foreseeable. Some that are supposedly foreseeable cannot be given an accurate time frame so are useless for trading purposes,

    Reply
    Please complete the required fields.



  • bellwether: @19 was a response to you

    Reply
    Please complete the required fields.



  • bystander: It is all in the small print. Buyer beware

    Reply
    Please complete the required fields.



  • I’ve been having a real dilemma over the direction of the FTSE for the next 12 months. With ISA season rapidly approaching and returns on cash being piss poor at best, I have an gut feeling that over the 12 month period I would be better making use of my whole £7000+ allowance and popping it in a stocks and shares ISA.

    I’m sure plenty on here will tell me the markets still have a way to fall and I’m suckered by the recent bank. I wouldn’t agree with either of those two points but looking 12-13 months out it suprising how rapidly and dead market can gain % points. Anybody considering stocks and share ISA this year (09-10)?

    Reply
    Please complete the required fields.



  • One of the most ridiculous ‘technical things’ touted on this site is Elliot Wave

    Reply
    Please complete the required fields.



  • Any good trading advise is ok by me. If new traders dont do there homework it’s down to them, but even if you do the research any
    additional advise should surely be welcomed. Blowing out a couple of accounts is all part of the learning process and if someone is stupid enough to ignore money management and blow everything they have no place in trading or business come to that.

    techieman, flashman keep it up!

    ps…. Always use stops? Agree! Cut your loses and let your winners run.

    Reply
    Please complete the required fields.



  • Falsh – i just took a posiion – but when i saw 23. i had to come back!

    You have just insulted god! :-). We can chat about that another time – but am afraid i am a bit of a disciple… limitations and all – i love it!

    Reply
    Please complete the required fields.



  • matt_the_hat: Points like (4) always get considered in my line of work but they are given an appropriate weighting. People like Warren Buffet may well be part of the 0.01% but he could easily turn out to be a ‘lucky fool’. He has always had the mantra that if you buy value then it will be rewarded. History has been kind to him thus far because markets always have always recovered quickly in his time. However, he is doing very badly now and his mantra might no work anymore.

    Short-term movements are not noise. They reflect buying and selling. It is one of the things that are blindly spouted by textbooks because it suits their purpose

    Reply
    Please complete the required fields.



  • techie: Ok, you asked for it! I’m going to rant about Elliot Wave. Give me 5 mins

    Reply
    Please complete the required fields.



  • techie and all Wavers: Robert Prechter (the chief waver) is quite a good analyst and his has genuine market insight. I have however often suspected that he analyses the situation then finds supposed Elliot Wave patterns that might roughly correlate to his analysis. This is a very good trick because like all good cons it adds an illusion of plausibility to the implausible.
    I have read on this site that Elliot Waves work because they reflect the predictable patterns of human behaviour. Quite ingeniously, Elliot Wave theory anticipates the argument that unforeseen natural phenomena can alter human behaviour by saying that natural phenomena are usually affected by human behaviour and therefore are predictable (global warming springs to mind). The trouble is that there are always natural phenomena that can’t be caused by human behaviour (solar events that heat or cool the world, asteroid strikes, unexpected earthquakes/tsunamis, and many more mundane things). The natural phenomena (major and minor ones) that cannot be caused by human behaviour are constantly with us. They will always be entirely unpredictable and they will always alter our outcomes. The presence of these unpredictable natural phenomena, single-handedly rubbishes the workability of Elliot Wave theory. The poor record of Elliot Wave predictions does further damage. Respected randomness practitioners, mathematicians and Harvard professors alike have proven that it has no value, but its practitioners are unshakeable in their belief. I guess it’s a bit like the religious concept of faith.

    Back in the day when “black box” trading was all the rage, all the big Wall Street firms spent countless millions on researching technical analysis. The world’s best mathematicians and computer programmers were hired and given dream budgets. Elliot wave theory was considered and tested by all of them. After years of testing, not one outfit concluded that it had any value. The general consensus was that its accuracy was no better than random, but even worse, its timing record was considerably worse than random. This is why, not one fund or professional trading floor in the world uses it. It is considered to be “a doomster’s drama novel, no more than a hobby for its practitioners”. People often point to an Elliot Wave prediction that ‘came true’. The trouble is that everyone knows that the markets go up and down, sometimes just a bit, sometimes a hell of a lot. Any fool could therefore predict a large drop in the markets and claim that when it eventually happens, he was right. While we are talking about Elliot wave predictions, here are a few howlers:-
    1. “The Great Bear Market” was forecast in 1997. This was followed by a great bull market.
    2. In 2003 he told investors how to handle the coming deflationary depression. In 2004 we started fighting inflation.
    3. Dow would drop to 400 in 1995
    4. Dow 400 in 1995
    5. Dow 800 in 2002
    6. Dow 1600 in 2009
    Here is a real bit of Elliot Wavery:
    “Today’s top was a spike, on news, so our feeling is it represented the top of wave {a} of an {a}-up- {b}-down, {c}-up move for corrective wave 2-up. This afternoon’s late decline was likely the start of wave {b}-down. The alternate is that wave 2-up topped intraday”.
    And here’s a comment about the above that reflects my own views:
    “It’s not that we don’t understand the individual words and phrases of this kind of commentary, or even what the author is trying to say. It’s just that its completely untradeable, unverifiable, unfalsifiable hindsight-driven smoke-and-mirrors carnival gibberish”.
    This is what Louis Ruykeyser said about Prechter when he came on the PBS show: “Robert Prechter, editor of the Elliott Wave Theorist, has been on several times and, during his last appearance got put in some pretty painful holds. He came on lying. He just denied the things he had said. And we had to point it out. He misunderstood and thought the program was for his own glorification.”
    This is course one of Prechter’s biggest problems. He is a vainglorious liar, (I realise that he did not invent Elliot wave, but he is undoubtedly its’ biggest champion). None of its followers really care about this. It is their hobby. Perhaps more troubling, is the religion like hold it has on its follows. It’s a bit like the Shroud of Turin. It got categorically proven to have been a medieval fake. Somehow, this did not trouble its believer’s, one bit.

    Reply
    Please complete the required fields.



  • rocket robbie says:

    Techie

    The other day when i said i had not lost on a trade yet, i just wanted to explain so you dont think i was being cocky because that was not what i intented. I put £2000.00 in my trading account in December and since then i have brought and sold 10 shares making (dont laugh) just over £400.00. Its not a lot i know but i just wanted to beat the rubbish IR the banks offer. So far i have done and if things turn out ok this year then i will put more in next year.

    I have opened a spread betting account but so far i have not used it. Not sure i trust my judgement on that yet, so will hold fire for a bit.

    Appreciate the advise so thanks very much

    Reply
    Please complete the required fields.



  • Calm down, calm down! There are as many different trading styles as there are traders.

    Reply
    Please complete the required fields.



  • interesting read folks. I don’t profess any knowledge at all. Sadly, I’ve seen 2 property crashes and can see from economics that the demand and supply curves are being totally redefined. Looked at this way, it will be very hard to see the new equilibrium until one of these functions goes stable. That gives me a reasonable pop at the other.

    Reply
    Please complete the required fields.



  • bellwether: I didn’t respond properly to your post @ 16.

    Your comment “I guess it is theoretically possible that say the Euro will move 20% against Sterling in one day but if it does the trader lack of stop loss will be the least of his problems”
    This is a bit naive. I’ve seen way too many astronomical spikes and dips in markets. Depending on what you are trading the losses can be staggering. One dramatic market event can wipe out a career. ALWAYS USE A STOP.

    Your comment “Your posts turns on things being almost utterly unforeseeable”

    Of course they are. Totally unforeseen events happen all the time. This is unarguable. Read ‘Fooled by Randomness’ and maybe Black Swans. I wrote my original post to correct such wallet bashing sentiments

    Reply
    Please complete the required fields.



  • mark wadsworth says:

    Flashman, that’s a good list of tips (although I shall cheerfully ignore most of them).

    But how on earth do you trade futures for $1.55? I do it for $25 round turn, which seems quite reasonable to me, actually.

    Reply
    Please complete the required fields.



  • Flashman

    Interested in your views on brokers trading against you to wipe you out.

    You may have seen me posting recently about various trading courses etc. It had occurred to me that those running the trading courses who themselves trade are adding weight to their own positions by having a small army of students placing similar trades.

    The bit I don’t get though (but am sceptical to the end) is that if you’re taking a spread bet long or short on a currency or market, how does someone trade against you to wipe you out against such a big thing, so to speak.

    I can understand it if perhaps you were taking a biggish position in a small company and they could take a bigger one.

    Perhaps you could clarify that one for me.

    Many Thanks

    PS there was a big conversation yesterday about forex, I think Euro.GBP specifically. It may have prompted your post today. Just wondered if you had an opinion on that.

    Reply
    Please complete the required fields.



  • mark: Trade with a real broker. I get very good rates but the most my broker charges for an S&P 500 emini is $2.35. If you trade size it goes down to $1.40. They are not the cheapest. The bucket shops people use on this site are terrible in so many ways.

    http://www.tradestation.com/popups/fees/commissions_markets/cme.htm

    Reply
    Please complete the required fields.



  • Your comment “I guess it is theoretically possible that say the Euro will move 20% against Sterling in one day but if it does the trader lack of stop loss will be the least of his problems”
    This is a bit naive. I’ve seen way too many astronomical spikes and dips in markets. Depending on what you are trading the losses can be staggering. One dramatic market event can wipe out a career. ALWAYS USE A STOP.

    Don’t like imperatives so maybe just reacting to that. That said there has never been a 20% move Euro v Sterling in one day and I suspect there never will be ie there are limits to even astronimical spikes and dips.

    Your comment “Your posts turns on things being almost utterly unforeseeable”

    Of course they are. Totally unforeseen events happen all the time. This is unarguable. Read ‘Fooled by Randomness’ and maybe Black Swans. I wrote my original post to correct such wallet bashing sentiments

    Totally unforseen events that materially alter the fundementals that surround us are relatively rare rather than happening all the time. There may be chaos underlying but events are generally boradly predictable or civilisation would be impossible. To assume randomness at all times is to make investment and tading impossible.

    A point might be you don’t want to be wiped out by a totally unforseeable event however statistically improbable that might be. To put improbability at the heart of the matter is similar to living in the basis that you might die at any time.

    Reply
    Please complete the required fields.



  • sold 2 rent 1 says:

    flashman,

    Regarding your attack on Elliott waves.

    What you fail to understand is that Elliott waves are not just about human behaviour but they are much deeper and reflect the hidden forces of the universe. Those same hidden forces cause the “unpredictable natural phenomena” that maybe isn’t so unpredictable when you understand the models

    Read: THE METAPHYSICAL NATURE OF PRICE MOVEMENTS
    http://www.my-broker.com/zen/index.html

    You could have attacked any cycle theory (Harrison, Kondratieff, Spengler, Armstrong and Calleman) with the same arguments.
    The reason that these cycles exist is because most people don’t believe in them.

    As consciousness accelerates into a singularity everyone will eventually believe, but then the cycles will break down as they must

    Reply
    Please complete the required fields.



  • Flash also (and I guess we are both argumentative cnts) I think having to pay a bit extra for a trade is kind of irrelevant and probably imposes a discipline forcing the inexperienced to think a bit longer about opening or closing a trade.

    If trading costs were zero losses would probably be greater.

    Reply
    Please complete the required fields.



  • STR 2007

    Forex is by far the worst for this. Rather than droning on, here is a link, I looked up. It links to more information.

    http://www.forexproject.com/tag/dealing-desk-broker/

    I normally avoid predictions like the plague but as you’re one of my favourite posters, I’m long on GDP (at the moment).

    Reply
    Please complete the required fields.



  • bellwether: nothing wrong with being an argumentative cu*t.

    I can understand your point (why live your life based on the highly improbable) but the supposedly ‘highly’ improbable does happen with alarming frequency and placing a stop loss is free. Why not do it? I detect in you, a romantic soul. Your rebellion against placing a stop loss is heroically quixotic. I’m not taking the piss by the way

    As far as claiming that excessive costs are a good thing.. you’re being an argumentative cu*t!

    Reply
    Please complete the required fields.



  • 11. flashman said…bidin’matime: Most brokers in the forex world never actually pass your trade onto the market. They take a position against you. They also control and manipulate their price feeds. Many large brokers have a trading desk, which they use against their clients. They can see your stop losses. I place false stop losses away from my intended stop. These fake stops don’t correspond to the size of my actual trade and I cancel and move them around. Gettin ‘ticked out’ happens too many times for it to be a coincidence

    crunchy- Well, I have had 4 accounts going at once and have never had one OTC broker doing any different to the next on forex.
    The only problem I have ran into is the spreads can go wild at news releases. Don’t believe me? Try it!

    Sour grapes!

    Reply
    Please complete the required fields.



  • Flashman:

    Great info…. although I do think you’d be a great writer.

    Anyway, what do you make of $ vs Euro ?

    Do you think the $ should be dropped as reserve currency and instead we adopt a basket of currencies ?

    Cheers
    Debtfree

    Reply
    Please complete the required fields.



  • mark wadsworth says:

    Flashman, thanks for that, is there a list of Flashman-approved futures brokers with whom one can sign up?

    Reply
    Please complete the required fields.



  • crunchy: I have never actually used the sort of forex broker you use. We deal direct. I am basing my forex broker information on actual prosecutions that have taken place. The price feeds of forex brokers and spread betting bucket shops categorically do not always conform to real market data. Have a look on Google and you’ll find evidence presented in court cases. You’ll also find several thousand complaints (some of them valid). You’ll also find several accounts from whistleblowers and ex forex broker employees.

    It is one of the great ironies of trading that amateurs (who need all the help they can get) use dodgy or expensive brokers.

    Reply
    Please complete the required fields.



  • ”37. sold 2 rent 1 said…flashman, What you fail to understand is that Elliott waves are not just about human behaviour but they are much deeper and reflect the hidden forces of the universe”.

    I think you just demonstrated the ‘religion like hold it has on it’s followers’ that Flashman was referring to.

    Reply
    Please complete the required fields.



  • shipbuilder says:

    7. 51ck-6-51x said…

    “Here is a good read on the subject: Unskilled and Unaware of It: How Difficulties in Recognizing One’s Own
    Incompetence Lead to Inflated Self-Assessments (published in the Journal of Personality and Social Psychology)”

    Had a wee read of that – excellent stuff, very humbling.

    Reply
    Please complete the required fields.



  • Flash all good entertainiment. I think you wish things were more unpredicatable really, and missing risk you glamorise it and then try to frighten us country B UMP kins with your Coolio chatter about walking throught the forex valley of death poppin a collar like WHAT!?

    Reply
    Please complete the required fields.



  • sold 2 rent 1 says:

    p. doff,

    “I think you just demonstrated the ‘religion like hold it has on it’s followers’ that Flashman was referring to.”

    You are correct.

    And similarly, when everyone on the planet believes in God, we will know who/what/he/she is.
    Even Prechter says God was a mathematician

    The Consciousness Singularity just made a whole lot more sense.

    Reply
    Please complete the required fields.



  • bellwether: You couldn’t be more wrong. I enjoy reading this site because I have always lived in a very narrow environment (boarding school, university then straight into the city) and as such I have never been exposed to such a diverse and colourful bunch. I am attempting to reciprocate by saving you a few quid. Nothing more. Nothing less. Trading is fraught with risk and the world is unpredictable. There is no need to wish for it.

    I am sorry if you think I regard you, or anyone else, as a country bumpkin. I do not. I also have no idea who or what Coolio is but I’ll Google him. I don’t want to get involved in a slanging match with you because you are one of the better posters, but I have to say that if you really believe the world to be a relatively predictable place then you might not be suitable for trading.

    I hope I am not correct in my suspicion that you are cross that someone disagreed with techieman?

    Reply
    Please complete the required fields.



  • I love trading threads, because it is only through heated keyboards that people say anything that’s worth remembering.

    Thank you all.

    Reply
    Please complete the required fields.



  • flashman

    Thanks the compliment, I rather fear you may have confused me with someone else (one of my favorite posters) but if you haven’t then I’m glad my paltry efforts don’t go in vein.

    Your link led me through to Elite Trader, I don’t know if that was the intention or not but a fascinating read and what I was beginning to understand.

    IE it’s not so much predicting the direction as having small losses when you’re wrong and bigger wins when you’re right. Overall bringing you out on top. By that I mean you do have to be right sometimes, but accept the losses (they’ll happen) but make them small ones and get out (use stop loss) and treat them as part of the business overhead.

    I’ll keep reading.

    Reply
    Please complete the required fields.



  • Flashman, sorry my comment was just meant as a bit of banter . You’ve caused no offence whatsoever and I enjoy your posts and like a bit of a slagging match/argument.

    There is just something about the unpedicatabilty element that doesn’t hang together and I don’t think I’m trying to be obtuse about it, I’m also expressly not saying there is no unpredictability just that most of the times the rules hold, although they are not really rules of course just a description of what happens until it doesn’t.

    Also I note what you say about trading being gamed but that’s why I wonder about trying to make over very short time frames. Pendng reaching the bottom for stocks which is still a year off I think, I’m trying to trade relatively tiny positions over say a week or a month based on pretty simple movements – eg if the Euro rallies for a month and gets close to parity with Sterling shorting the Euro is probably (and only probably) a decent bet.

    ps Also if you are inferring that I might be in love with Techieman you are right but don’t let him know it would be scandal on the boards!

    Reply
    Please complete the required fields.



  • str 2007.

    It was intentional and I’m glad you find it useful. You are definately on the right track

    Reply
    Please complete the required fields.



  • Right just went and put some stop limits on trades and worked out what the issue is – as an example I’ve got a few position on us financials which I see as being a decent play for the next month or so – the pullback just now being a precursor to a bigger push up.

    This could be completely wrong of course so I check the situation regularly for evidence that the market it turning into something I should be shorting. The thing is there could be quite a big pullback which could wipe out my stops just before the market rallies up – so I’d take the loss and probably miss out on the gain because getting back into the market costs and will no doubt will not feel right at time – also the decent movements in market happen so quickly.
    My biggest losses to date have been cutting fundementally good bets too soon

    Reply
    Please complete the required fields.



  • bellwether: I too find techieman stragely erotic. I am retiring soon (for the second time) and as a result I seem to have developed tendencies to warn people of the perils. I’ve been lucky in the trading game but it really is a cun* to most people. I’m 46 next birthday and my ambition is to open a factory in this country.

    I recently came across a poem about unpredictability. Its simple but I like it:

    The sea is crashing in,
    The wind screaming with the seagulls,
    The deadly cry is heard by far.
    The red flags are flying,
    Pebbles crashing onto the bank,
    Skimming the surface in what seems like playful sprite.
    Daredevils fight the waves,
    Fixed on adrenaline,
    Fixed on unpredictability,
    Losing sight with the night,
    Taken far out into the blue.
    I feel myself being pulled,
    Unpredictability caught me right,
    When needing something to hold on tight,
    I see myself crashing through those waves,
    Unpredictability caught me right.

    Reply
    Please complete the required fields.



  • bellwether: The trading costs you talk about perhaps explain why I insist on minimising costs. It seems I pay bugger all compared to most posters here which gives me more freedom to make adjustments

    You must have some notion of when you will close out a losing trade (I presume you wont let the losses go on indefinitely)? This is in effect your stop loss. In that case I think you are suggesting that you prefer to have a very wide stop loss. There is absolutely nothing wrong with this but you must also be aware that this style demands very large wins to balance out the losses you will sometimes get from wide stops. The temptation to close out winning trades early is huge and I think winning this battle will define your success

    Reply
    Please complete the required fields.



  • Factory doing what?

    Have my own corporate/commerical legal practice – there are some good ops in this area for people who are prepared to be non traditional in approach and offer quality at cost. Did you know that for many legal firms 50% of turnover is profit! Can’t last. Won’t last.

    Reply
    Please complete the required fields.



  • Cheers Flash your post at 56 sums up approach well and also the problems I’m finding with it. Off to the shops now. Have a good one

    Reply
    Please complete the required fields.



  • bellwether: are you a lawyer? My tennis partner is a lawyer and boy is he suffering now. He, and the other 3 partners haven’t taken a salary since November. They don’t do much corporate work. Maybe they should?

    I want to make road bikes (bicycles) with simple energy regenerative devices. Surfaces will be covered with photovoltaic film and braking recharges a battery. The battery will power lights and mini computers/phones/navigation. After a lifetime of trading it’ll be an absolute thrill

    Reply
    Please complete the required fields.



  • Flashman

    That sounds exciting, I can already see the follow on product to your bike, in fact something that should be developed in conjunction with using the same technologies.
    Kiddies bed time now, back later.

    Reply
    Please complete the required fields.



  • hey Flash – this is a truly great thread dont you think? It reminds me of a game i saw of fulham v Portmouth a couple of years back when ‘arry was trying to get them out of the sh1t. Wayne Bridge gets sent off (hes on loan from the “super blues”) theres a penalty and Pompey win 3-0 i think. Passion throughout. Proud to be English (i would say british but that would be stretching it!).

    Yes all that you have said re Pretcher is probably true – i fell in love with the Elliott wave after i read the Frost & P book in around 1982. There was a tuning point as you say in 87 that was based on some Fib numbers extending from prior years which all seemed to culminate in 87, since 87 was a high (before the crash) the prediction of a top or bottom was fair enough. When you were technical didnt you ever use fib numbers? Not saying you should just wondered if you did.

    Anyway after that i spent a long time playing with that and found that the areas that you say are fair criticisms, but when it works it makes you feel like a master of the universe. I dont use it for everything but i do use it in combination with other stuff. Ive always said its an art more than a science and there are always alternate counts – which i just love.

    My postings to Bellwether & STR2007 are meant with good intentions. Your philosophy is absolutely right – to try to put off people for their own benefit. Me? I think you can say the 99.9% of folks lose – but if people want to have a go i commend them for it and would try to help. Not only that but i think if you trade for a while you start to discover who YOU are. I think people on this site may be right to go it a go – after all they are only tryong to make a half decent return. I am reminded of the adage – speculate with small amounts but keep the majority safely invested. Also you never know, it would be very rich of you or i to say that people on here wont be 1 of the .1% (5% I think), that do take money from the markets.

    As ive said i feel comfortable with my style – which may be off the wall, which may be “wrong” but it works for me. Ive had a good run but maybe thats just luck or just applying good money management or whatever.

    So from this barra boy from West Ham (the place not the football ground), its all been good fun. (ps went to see the fulham game cause i had a mate that got some corporate hospitality and invited me along to a box for my entertainment value).

    As for the respect from the guys – i can feel the love in the room. Brings a lump to your throat, and no im not takeiong the proverbial.

    I think its really great to have opposing views eloquently expressed, and fine for people to just agree to disagree. After all there is only one real common enemy and thats the folks on the other side of the trade.

    All of you have a great weekend.

    Reply
    Please complete the required fields.



  • letthemfall says:

    Thoughts on the above banter:

    The Kruger & Dunning paper is an indifferent piece of research – a banal proposition, a methodology easily undermined and mechanical application of stats.

    If Elliot Wave predictions are worse than random (assuming not an accident of a given analysis) they could be used to make predictions (s2r1 vindicated?).

    s2r1: Do you have a view on morphic resonance?

    Everyone loves a bully

    Reply
    Please complete the required fields.



  • @ flashieman, tetchieman, bellendwether, satyr2007…

    Your need to be loved is palpable.

    I feel your pain.

    Only messin’

    Reply
    Please complete the required fields.



  • sold 2 rent 1 says:

    letthemfall,

    “Do you have a view on morphic resonance?”

    Not heard of it before but I found this
    http://skepdic.com/morphicres.html

    QUOTE
    “Perhaps it would be fairer to say that he sees no borderline between science and metaphysics.”

    QUOTE
    “In short, although Sheldrake commands some respect as a scientist because of his education and degree, he has clearly abandoned conventional science in favor of magical thinking. This is his right, of course. However, his continued pose as a scientist on the frontier of discovery is unwarranted. He is one of a growing horde of “alternative” scientists whose resentment at the aspiritual nature of modern scientific paradigms, as well as the obviously harmful and seemingly indifferent applications of modern science, have led them to seek their own paradigms in ancient and long-abandoned concepts.”

    This could be written about Carl Johan Calleman.

    Science is meeting spirituality head on. This is what the consciousness singularity is all about.
    I accept my beliefs may be seeen as religious, although religion is a bad word because the Elite have ensured all religions (Chrstianity, Islam and Judaism) have been poisoned enough to serve the Elite’s own agenda

    Reply
    Please complete the required fields.



  • s2r1

    I thought the subject might be of interest to you, as Sheldrake’s ideas bear some relation to your philosophy. As you can probably guess, I don’t go along with his ideas, but on the other hand I read an irritating and arrogant attack on his latest book by a young upstart from Nature’s staff, which loftily implied that science was clever and pretty much infallible, while Sheldrake is a nutter. That attitude annoys me because it suggests that scientists have a monopoly on understanding, which is clearly not so, notwithstanding the importance of science. Pontificating scientists like Dawkins have a similar attitude – the aristocracy of the intellect (ie their intellect), was how Bronowski I think put it.

    It is illuminating to consider that Dirac, probably the greatest English scientist since Newton, took numerical coincidences in physics seriously. Nowadays few see little mileage in the idea. It just goes to show that far out ideas are not the province of the crackpots.

    Reply
    Please complete the required fields.



  • (I like to this thread was posted on my website, so I will comment here too):

    [i]”The presence of these unpredictable natural phenomena, single-handedly rubbishes the workability of Elliot Wave theory. The poor record of Elliot Wave predictions does further damage. Respected randomness practitioners, mathematicians and Harvard professors alike have proven that it has no value.”[/i] (Flashman)
    ===== Quote: [url=”http://www.housepricecrash.co.uk/newsblog/2009/03/blog-dont-get-fooled-by-the-stock-market-bounce-22461.php”]http://www.housepricecrash.co.uk/newsblog/…ounce-22461.php[/url]

    [b]Flashie is an idiot. I think he must good at “throwing away babies with bathwater”![/b]

    EWI’s record is “mixed”, but it sometimes makes incredible calls. To me, it has value, and I pay attention to their forecasts – and Neely has made better calls that EWI’s Prechter.

    [b]One of GEI’s posters, is off on a one year Round-the-World trip, courtesy of his trading profits in 2008, using EWI’s trading signals.[/b]

    [img]http://www.imagechicken.com/uploads/1237707850033821200.jpg[/img]

    Neely’s method is more complex, and I am still learning about it. I plan to buy his book and study it over time. (Maybe I can even try to get him to join a future GEI conference call someday.)

    An even more powerful combination might be to use Elliottwave in conjuction with Volume-driven signals, and astrology, as “pattern recognition expert” Larry Pesavento seems to be doing.

    I have been making a decent living using various technical trading methods alongside my own brand of fundamental analysis. I could tell you about the details of what I have done, but it might sound too much like bragging. And I would have to leave off a rather bad year in 2008, when I failed to act on some signals that I was getting, and stayed with a large Junior portfolio, and wound up riding it down through a very nasty correction in Junior mining stocks. A nice overall gain, but with a confidence-hurting “major drawdown” in 2008.

    As I see it: After 5-6 years of big annual profits, the Loss I made in 2008 are more of a comment on my own lack of trading discipline, than they are of failures in Elliott wave analysis or my other technical trading techniques.

    I do hope to show people that these tools can help produce outsized returns on a consistent basis. How are the following real-life statistics as a demonstration of what can be done:

    My “DB Portfolio” was started on the day of my Call of “the Bottom” on a GE Conference call that you can go back and listen to. It has showed:
    [b]Some decent outperfomance of the rising SPX index. My 34.2% beats the index by 21.6% ![/b]

    The current high cash levels (55%) I’m holding may help, if we see a brief pullback now, as I expect.

    HISTORICAL TRACK RECORD
    ===================

    Date==== Portfolio Value / Cash held & (Pct.) / + Change / SPX cls. / + chg. / Outpf
    ======= : ========= : ============== : ====== : ===== : ===== : =====
    05.Mar.09 : ..$ 237,301 .. : ..$ 000,000 (00.0%) + 00.0 % : 682.55 :
    13.Mar.09 : ..$ 295,179 .. : ..$ 011,464 (03.9%) + 24.4 % : 756.55 : + 10.8 % : + 13.6 %
    17.Mar.09 : ..$ 307,459 .. : ..$ 049,314 (16.0%) + 29.6 % : 778.12 : + 14.0 % : + 15.6 %
    20.Mar.09 : ..$ 318,434 .. : ..$ 177,329 (55.7%) + 34.2 % : 768.54 : + 12.6 % : + 21.6 %

    Updated details, see thread in : [url=”http://www.greenenergyinvestors.com/index.php?showtopic=6249″]GEI Member’s section[/url]

    Brief. But if I can keep returns like that going, surely it demonstrates something good!

    (note: the above was posted on GEI’s [url=”http://www.greenenergyinvestors.com/index.php?showtopic=4762&st=60″]Neowave Warnings[/url] thread )

    Reply
    Please complete the required fields.



  • Paul Harris says:

    In response to comment 28, you might be interested in an essay that refutes Elliot Wave theory at orvinfive.blogspot.com.

    The essay targets the very theory itself and doesn’t address the results of trading, but it’s worthwhile and I suspect that you will share the author’s views.

    Reply
    Please complete the required fields.



  • The stock market has been bled dry by short sales, derivatives, and other unethical trading practices. We need to curtail the activities of these creative traders because they’re basically skimming from everyone’s retirement account.

    Reply
    Please complete the required fields.



Add a comment

  • Your email address is required so we can verify that the comment is genuine. It will not be posted anywhere on the site, will be stored confidentially by us and never given out to any third party.
  • Please note that any viewpoints published here as comments are user´s views and not the views of HousePriceCrash.co.uk.
  • Please adhere to the Guidelines

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes:

<a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>