Insight for newbies: Look Before Diving Into a System

ok, I originally posted this on a thread for a scam system, but I thought I'd share it on the rookie forum. The problem with this site is that there are so many people who have absolutely no clue what they are doing, and a new system thread crops up before you can say 'money management'. Hopefully this may help some of you who are new to this to avoid being plunged into pit of ignorance, which many of the readers of this forum are in.



There you go Mrsmarple, you have hit the nail on the head. The whole thing is a pile of nonsense...

You should have asked yourself the simple question: WHY DOES PRICE MOVE?

After a moment or two,it would become apparent that the field of global economics is far more complicated than a stupid 'centre of gravity indicator'. What is that meant to mean anyway? Its just a form fitting curve based on a mathematical formula on past price. Looking back, the gullible may think that it is a great system, and since the gullible are never the ones who are likely to learn anything for themselves, they hand over money to that crook Oan. Honestly, if it was possible to press criminal charges against crooks like him, I would be the first to advocate such an undertaking.

This forum is so full of nonsense, particularly when it comes to trading systems. Complete guesswork. The number of people who have no idea whatsoever as to how the markets actually work is dumbfounding. My advice: read a few books about global markets first. Understand structure, who the main movers are: the practices they engage in: hedging against future price movements, arbitrage etc....

Understand what the influences are: news, rumours, hype, supply and demand (when arbitrage is not happening).

Look into currency correlations, and try to find a way of gauging general market sentiment.

This is not the stock market: currencies are driven by more than technicals.

Your post has had no response for over a week and a half so I thought I would chip in with my analysis while I am waiting for GBP/USD to close a 4 hour bar in 15 minutes.

You may not know but I was the person who discovered and named the famous "back of a cat's head" formation which technical analysts have taken on board and now use routinely.

My butler thought it looked like a teapot but he doesn't spend as much time with the cat as I do. He does make a lot of cups of tea, though. That probably explains it. What would he know about currency trading anyway?

You mention Mrs Marple's statement "It's all a pile of nonsense". I am inclined to agree with her but I respect Mrs McGurgle's opinions more.

You may have heard the expression "Anyone who burgles Mrs McGurgles is in for a treat if he pinches her meat". It does, of course, have a double meaning. But I would like to add that she has a fine mind also and I often ask her opinion on the state of the markets. She will often come back with an amusing "Bananas are only thruppence a pound this week".

Interesting post. Whatever your butler is adding to your tea, I wouldn't mind some of it myself.

@emios: you're correct, the 'Center of Gravity' indicator is nothing more than a polynomial regression fit. Can the past predict the future? All TA is based on the assumption that past data can offer some kind of probability-based edge. Otherwise nobody would bother with charts.

Best post ever.

Thanks Hanover and Birdt. I am indebted to the late J. B. Morton ( aka Beachcomber ) for the Mrs McGurgle rhyme, in case you were interested.