Think You're Smart? Markets Are Laughing

no one has to be smart, just know the odds and stick with the trend. You can be dumb and make money

i agree

very well said.

And you can make stupid money

Trying to be smart is exactly what takes you under and keeps you under. Facts are a) no one can tell what the play is beforehand b) so lag is the word c) but at some point there is a chance that a direction is sustainable over some given interval d) at that point you take the risk and live by it d) if your method of arriving at that point of entry does not lag too much, and you make your mind easily and quickly (consistently) based on that method whatever it is, and it works more times than not e) you are in business.

The Crow (-_-)

You must have a lot of failures

sure ive had plenty of failures, but im still out ahead!

lol im grateful for my failures, as they have taught me a lot and made me a better trader, person and life as a whole.

great same here.

Ok, so are you dumb or wise?

He admitted he was dumb. Why do you ask? He was dumb not to read any news, not to follow any strategy, and not to listen to any economists. The market is made for dumb person. And that's the problem with smart people, they are doomed to fail.

I think you said it all right there .. i totally agree with you!

But I think that the article has a good point. For the past several months, the smart money, for example, has been on EUR/USD short. All of a sudden, the market environment changes with the oil price collapse, U.S. equities markets are off in substantial measure due to this, risk-off sentiment due to the Russian economic collapse ensues, flight into safe haven currencies like the Yen begin, the Greenback suddenly weakens, and the Yen experiences some strength. In short, long EUR/USD is a viable trade (at least in the short term) because the fundamental backdrops of Fed tightening, ECB easing, and all that fierce hot mess mean little, at least for a short period of time. Sure, folks are scratching their heads at things being somewhat upside down as compared to what they've been thinking the past few months or so, but to me it just means that things never stay the same, and you can't rely on things staying the same.

Why so many investors, investment companies, and the like are scratching their heads is a mystery to me. Shit changed, so the market changed. It is not rocket science, yet masters-degreed quants and experienced six-figure salaried investment brokers and analysts are trying to say that what the markets are doing is inexplicable or in violation of some fundamental rule or some such nonsense.

On a more basic level, what is behind what the markets are doing is irrelevant ... . It is what the chart tells you that counts.

And for that ... you don't need no rocket science degree.

Dumb trade, dumb money =)

From your chart screen;...On the left is history, on the right is a mystery NO ONE Knows, You simply have to figure how to manage wins vs loses like anything else..Trading is simple, people are difficult.

Trend is a myth, it can and would end at any given minute no matter how much positive odds you have stacked up... and it could do just that for strings of losses.
I am not arguing smart or dumb... I am just pointing out that "Trend" is just a overrated thing.

It all depends on how you define trend, what are the parameters and what time frames you chose to follow. Anybody who plays the odds in this game to a degree of success would tell you that the first thing that comes to his or her mind before looking for a trade or before placing a trade is "how is the trend?" After all can you really play the odds against the trend?

sure you can play against the trend,lol.. many do as counter traders.

but... you tell me how you define and rely on something ("trend") that you got no control over, it can end at any time at will.
so you as a "trend follower" is just as vulnerable as the other guy doing other things.
This article is on the money with stressing the "uncertainty"... massively related to fx market.
That's ok you won't probably agree as do most.

divergence of economic recovery and monetary policy between the ECB, BOJ and the Fed is not a myth

Whats that got to do with trend!!..

You know its funny you mention counter traders because I've read an article a while back and it was probably the funniest thing I've read about trading It said that being a counter trader is like pissing in the wind and hoping not to get splatter

No disrespect intended there!!! All I'm saying is that if your betting with the trend rather then against it at list you are giving yourself half of chance. How you chose to manage those chances I think is what makes all the difference

Happy Holidays

Actually, trend is not at all a myth but I agree that trading by the trend (or with the trend) is not so smart or at least not the thing to do at all. Here is what I mean:

a) The trend is the general or broad direction any variable such as price that evolves by persistent cyclic trends assumes from time to time. Generally - it is best defined by some linear function measuring a slope that is up or down over some historical interval based on an averaging of the cycles that defined the given trend up to some present point (the future part of which must of need be projected or estimated).

b) Now that is a huge, huge problem. Averaging a series of cycles (of uneven dimensions each different than the other in all material particulars - such as wavelengths, points of negative and positive amplitudes, etc implies - and like you point out correctly - not only is trading by the trend undependable it is outright dangerous because you never know when it will move out of your reward range i.e., the range between your TP and entry that protects your stop especially because you have to project the future part of a trend (which even if it sustains the current slope may be so different in cyclic dimensions as not to resemble what you bargained for). The pity (of trading by trends) is that once commited you have no control since any move below your entry is risky as it threathens your stop and without accurate understanding of how price moves (and a fair guess as to how it will move after you have placed a bet - i.e. its cyclic dimensions) you depend on absolute luck to deliver a win (not good enough for success which = consistent wins or at least a fair portion wins over losses).

c) this is simply because of the cyclic nature of price movements we talked about and these movements are there regardless of trend because whatever the trend trader mentality is fixed - they aim to buy low and sell high so about any trend really are the myriads of the uneven ups and downs that reflect this mentality which the idea of trading by the trend glosses over. Therefore, notwithstanding the fact that trends are rather obvious facts of markets it is cycles (or more correctly the phases of the cycles defining a trend) we should actually be aiming to trade rather than the trend. Of course doing so (trading cycles or the phases of price cycles) does not eliminate all the unknowns (e.g. depending on time frame they can assume any sort of dimensions not easily predicted).

d) Regardless, what guarantees success on a consistent basis then is understanding i) the cyclic nature of price movements ii) timing and trading instances of the phases of these cycles within time frames suitable to your capital base iii) doing so with above average success rate (based on skills that must encompass knowledege explicit or implicit of how these cycles work within a fractal structure that defines the market).

e) Frankly, with the sort of capital base the retail trader has and in fact the very limited understanding of how price moves - that is presumed adequate for money bets - trading as a rewarding enterprise might be a fleeting illusion to be pursued but never attained for nearly all aspirants. I am afraid the knowledge and time and the needed experience even with those two on hand might not just be there for the retail person. Some of the pit falls of trading is absorbed by a massive captal base but not all.

Sorry this is long but you can see it was important and necessary - to explaining the fine points involved and even so - this is very, very, very basic treatment of this important area of practical trading - something not really addressed in trading academies

The Crow (-_-)

Thats a smart observation, problem is you're late by over a 1000 pips now.

BOJ would like UJ to be 180, so they are still halfway. ECB who knows, maybe EU .80. So it's long way to go and can last for 3 years. Disclaimer.