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Market & Trading Facts

  • #1
  • First Post: Sep 17, 2005 4:05pm Sep 17, 2005 4:05pm
Well, I mentioned before that I am creating my trading handbook which will be my reference in the years to come.

At some points, I stopped and thought that I need to include Market & Trading Facts that are not questionable or arguable. Knowing the facts is extremely important as we all need to differentiate between FACTS and what we believe in.

I need your help here, everyone who can think of a market or trading fact, please go ahead and post it. I will start with myself, that's what came to my mind till now, but I think we all need more.

1- Supply & Demand forces are the main cause of price changes regardless of real or intrinsic value

2- All markets are "zero-sum" markets which means that for every trader winning there is another trader, or a group of traders, losing the same amount

3- No holy grails in trading. There is no system that is 100% efficient

4- No one and no system can tell the future. The future is the future and what to come is unknown. We only speculate

5- Human nature do not change. Human feelings are always the same. Fear, Greed, Hope and all other feelings are always there inside us. They only differ in magnitude from one person to another


I am waiting for the rest of the facts from you guys. Hope that this thread be a helpful one.


Thanks,

Nader
  • #2
  • Sep 17, 2005 6:52pm Sep 17, 2005 6:52pm
Quoting narafa
Well, I mentioned before that I am creating my trading handbook which will be my reference in the years to come.

At some points, I stopped and thought that I need to include Market & Trading Facts that are not questionable or arguable. Knowing the facts is extremely important as we all need to differentiate between FACTS and what we believe in.

I need your help here, everyone who can think of a market or trading fact, please go ahead and post it. I will start with myself, that's what came to my mind till now, but I think we all need more.

1- Supply & Demand forces are the main cause of price changes regardless of real or intrinsic value

2- All markets are "zero-sum" markets which means that for every trader winning there is another trader, or a group of traders, losing the same amount

3- No holy grails in trading. There is no system that is 100% efficient

4- No one and no system can tell the future. The future is the future and what to come is unknown. We only speculate

5- Human nature do not change. Human feelings are always the same. Fear, Greed, Hope and all other feelings are always there inside us. They only differ in magnitude from one person to another


I am waiting for the rest of the facts from you guys. Hope that this thread be a helpful one.


Thanks,

Nader
I know what I would add.
People tend to think in the same way other people think. The profecies in the market are often self-fulfilled.
  • #3
  • Sep 17, 2005 9:42pm Sep 17, 2005 9:42pm
Quoting ivenger
I know what I would add.
People tend to think in the same way other people think. The profecies in the market are often self-fulfilled.
Can you please clarify and give an example if possible?

Thanks,

Nader
  • #4
  • Sep 18, 2005 2:34am Sep 18, 2005 2:34am
Quoting narafa
Can you please clarify and give an example if possible?

Thanks,

Nader
I think what I mean is that people tend to see different patterns and thus make them self-fullfilling.
Everybody knows that fibonacci lines are important. So when a price touches fibonacci it causes many people to make their stakes at that line. This moves the market to a certain direction. Thus the knowledge that people have that a certain pattern is important makes it important. Otherwise it might not have had any importance.
  • #5
  • Sep 18, 2005 6:02am Sep 18, 2005 6:02am
Quoting ivenger
I think what I mean is that people tend to see different patterns and thus make them self-fullfilling.
Everybody knows that fibonacci lines are important. So when a price touches fibonacci it causes many people to make their stakes at that line. This moves the market to a certain direction. Thus the knowledge that people have that a certain pattern is important makes it important. Otherwise it might not have had any importance.
Ya I got your point, but I think that people dump doing what they do when things change. For example, some people stop using Fib lines as soon as the market do not respect them for 2 or 3 times, so they simply dump Fib lines and start looking for something else that work.

Thanks,

Nader
  • #6
  • Sep 18, 2005 10:04am Sep 18, 2005 10:04am
Quoting narafa
Ya I got your point, but I think that people dump doing what they do when things change. For example, some people stop using Fib lines as soon as the market do not respect them for 2 or 3 times, so they simply dump Fib lines and start looking for something else that work.

Thanks,

Nader
Maybe short-term they dump them. But it oscillates. Because sometimes it works and people start noticing them again.
  • #7
  • Sep 18, 2005 11:26am Sep 18, 2005 11:26am
Quoting narafa
1- Supply & Demand forces are the main cause of price changes regardless of real or intrinsic value

2- All markets are "zero-sum" markets which means that for every trader winning there is another trader, or a group of traders, losing the same amount

3- No holy grails in trading. There is no system that is 100% efficient

4- No one and no system can tell the future. The future is the future and what to come is unknown. We only speculate

5- Human nature do not change. Human feelings are always the same. Fear, Greed, Hope and all other feelings are always there inside us. They only differ in magnitude from one person to another

Nader
I fully agree with your points ... and may add:

6- The forex market has no bull or bear bias therefore time and patience are our best friends
7- When all the gurus or pretending to be are almost unanimous, it is time to at least think about the opposite.
  • #8
  • Sep 18, 2005 1:06pm Sep 18, 2005 1:06pm
Quoting mf4x
I fully agree with your points ... and may add:

6- The forex market has no bull or bear bias therefore time and patience are our best friends
7- When all the gurus or pretending to be are almost unanimous, it is time to at least think about the opposite.
Nice input, but don't you think that point 7 is questionable. I mean maybe some gurus tell the truth, sometimes.

Thanks,

Nader
  • #9
  • Sep 18, 2005 10:05pm Sep 18, 2005 10:05pm
".... The Trend is your friend, until it bends...."

".... Plan your trade & trade your plan.."
  • #10
  • Sep 19, 2005 12:49am Sep 19, 2005 12:49am
Quoting narafa
Well, .....Thanks,
Nader
Many months ago I started a thread..."Ten commandments of forex".
Guess what,after a week died.
So,my brother don't waist your time....
  • #11
  • Sep 19, 2005 1:11am Sep 19, 2005 1:11am
Quoting narafa
Nice input, but don't you think that point 7 is questionable. I mean maybe some gurus tell the truth, sometimes.

Nader
Hum, well I believe the real gurus - the one making money - do not talk about price forecast, the other are mainly looking for some sort of reputation.

Sure sometime everyone can be right, but at the end the odds are 1 chance out of 2 to be right (long or short).

When more of 80% of the analysts are in the same direction I do the opposite and up to now I did well !
  • #12
  • Sep 19, 2005 2:46am Sep 19, 2005 2:46am
Quoting Pipbull
".... The Trend is your friend, until it bends...."

".... Plan your trade & trade your plan.."
Well, Plan your trade and trade your plan is a great fact, thanks Pinbull.

About the trend being our friend, this has been debatable. Merlin is the one who is leading the counter party, so I think he would better respond to this.

Thanks,

Nader
  • #13
  • Sep 19, 2005 2:47am Sep 19, 2005 2:47am
Quoting hun83
Many months ago I started a thread..."Ten commandments of forex".
Guess what,after a week died.
So,my brother don't waist your time....
well, I can see that the thread you mentioned was an excellent one and included lots of good and useful information. It is not neccessary that a thread or topic to be open for a long time to be useful, just look at how many people viewed the thread and you will know how important was it to people.

Thanks,

Nader
  • #14
  • Sep 19, 2005 3:04am Sep 19, 2005 3:04am
Quoting mf4x
Hum, well I believe the real gurus - the one making money - do not talk about price forecast, the other are mainly looking for some sort of reputation.

Sure sometime everyone can be right, but at the end the odds are 1 chance out of 2 to be right (long or short).

When more of 80% of the analysts are in the same direction I do the opposite and up to now I did well !
Well, I think you better do this in the extreme market conditions.

See this cycle and tell me what do you think about, and bear in mind that this cycle is talking about the stock market and stocks in general, but it can be generalized over any market if the proper cycles are made.

1- Pre-Phase of a Bear Market (Or a market top): Almost all analysts are extremely bullish and recommending buying stocks

2- Primary Phase of a Bear Market (The first drift): Almost all analysts are bullish and recommending to buy stocks at these great attractive prices saying that it's just a correction within the great bull market

3- Secondary Phase of a Bear Market (The Second Drift, longest in time): Analyst decisions and recommendations are the most confusing with almost half of them tending to give buy recommendations and the other half tending to give sell recommendations. During this period of time, an analyst can upgrade a company stock today and downgrade it tomorrow, they are in a whole mess

4- Final Phase of a Bear Market (The Third Drift, Shortest in time): Analysts are extremely bearish and recommending dumping stocks, downgrading companies without valid reasons and forcing the bearish and gloomy sentiment among the market

PS: This is the phase where you are expected to go against the majority of the recommendations, it's the extreme market conditions I am talking about. It is the phase which professionals usually start accumulating stocks

5- Primary Phase of a Bull Market (The first lift): Almost all analysts are bearish and recommending to short stocks at these extremely high prices saying that it's just a correction within the gloomy bear market, and that the worst is yet to come

6- Secondary Phase of a Bull Market (The Second lift, longest in time): Analyst decisions and recommendations are the most confusing with almost half of them tending to give buy recommendations and the other half tending to give sell recommendations. During this period of time, an analyst can upgrade a company stock today and downgrade it tomorrow, they are in a whole mess

7- Final Phase of a Bull Market (The Third lift, Shortest in time): Analysts are extremely bullish and recommending accumulating stocks, upgrading companies without valid reasons and forcing the bullish and rosy sentiment among the market

PS: This is the phase where you are expected to go against the majority of the recommendations, it's the extreme market conditions I am talking about. This is the phase which professionals actually start getting rid of stocks and considering to short them

It's no surprise that Analysts lag the market, but they for sure have a reason for this. Did I say missleading the public??

Thanks,

Nader
  • #15
  • Sep 19, 2005 3:06am Sep 19, 2005 3:06am
narafa i think this thread is a great idea. ive thought of doing something like this, where you list ONLY the facts. when you know what the absolute facts are, it can be a tremendous decision support system. lets stick with JUST THE FACTS. if anyone brings a valid argument against one of the facts, it has to be eliminated from the list. what do ya think? we could build a valuable resource here!

so far i will agree with the following facts.

1- Supply & Demand forces cause price changes
2- Forex is a "zero-sum" market (not ALL markets are)
3- No holy grails in trading.
4- No one and no system can tell the future. The future is the future and what to come is unknown. We only speculate.
5- Human nature does not change

so basically i agree with all that you said in an edited version. is there anything you would change in this list of 5? does anyone rebut that these are facts?
Relax and be happy.
  • #16
  • Sep 19, 2005 3:13am Sep 19, 2005 3:13am
Quoting merlin
narafa i think this thread is a great idea. ive thought of doing something like this, where you list ONLY the facts. when you know what the absolute facts are, it can be a tremendous decision support system. lets stick with JUST THE FACTS. if anyone brings a valid argument against one of the facts, it has to be eliminated from the list. what do ya think? we could build a valuable resource here!

so far i will agree with the following facts.

1- Supply & Demand forces cause price changes
2- Forex is a "zero-sum" market (not ALL markets are)
3- No holy grails in trading.
4- No one and no system can tell the future. The future is the future and what to come is unknown. We only speculate.
5- Human nature does not change

so basically i agree with all that you said in an edited version. is there anything you would change in this list of 5? does anyone rebut that these are facts?
Ya, we need to add the following to the list, unless there is a valid argument against them:

mf4x: The forex market has no bull or bear bias

PipBull: Plan your trade & trade your plan

I would add: History repeats itself the same way, if and only if, the same events occured the same way


Any other inputs?


Thanks,

Nader
  • #17
  • Sep 19, 2005 3:16am Sep 19, 2005 3:16am
Yep Narafa I agree with your detailed view.......

And on top of that , I would say never believe what anyone is saying, he can be bullish on Bloomberg tv and doing exactly the opposite on the market !



If I 'm MR buffet's clone and I have a huge position long euro say 5+ Billion, if I sell in One shot I cannot get good counterpart then I intoxicate the news saying I'm long bullish and bet on $ weakness and as a result I can get rid of my euros with no problems ......... (buffet said he was long euro by Christmas time last year no ??????)
  • #18
  • Sep 19, 2005 3:21am Sep 19, 2005 3:21am
Quoting narafa
mf4x: The forex market has no bull or bear bias

PipBull: Plan your trade & trade your plan

I would add: History repeats itself the same way, if and only if, the same events occured the same way
man i have a hard time considering any of these three "facts"

"The forex market has no bull or bear bias"
im not sure i understand this one. sometimes it has a bullish bias, sometimes a bearish one.

"Plan your trade & trade your plan"
this is more like solid advice than it is a fact.

"History repeats itself the same way, if and only if, the same events occured the same way"
im not sure i can agree with this one. although it would be hard to quantify, it seems unlikely that there are not instance where the the same events occured and the marketed acted differently. if would be aweful hard to prove this too, so considering it a fact may be a stretch.

i have one suggestion to add, let me know if you think it should be added:

6 - the only constant in the market is change
Relax and be happy.
  • #19
  • Sep 19, 2005 3:32am Sep 19, 2005 3:32am
Quoting merlin
man i have a hard time considering any of these three "facts"

"The forex market has no bull or bear bias"
im not sure i understand this one. sometimes it has a bullish bias, sometimes a bearish one.
I think what was really meant by this one is that the forex market always have both biases at the same time. We are trading pairs, remember, when the people are bullish on the USD, they are bearish on the Yen. I think we should twist it a little bit and say that: For every currency pair, bullish and bearish bias always exist at the same time.

Quoting merlin
"Plan your trade & trade your plan"
this is more like solid advice than it is a fact.
I agree, it's an advice. However I can see that advices that are not debatable can be included. If you want us to just stick with FACTS, I don't mind. I only aim to get a bunch of FACTS about the market and trading that I never question in the future anymore. I just want to get a real base in this world of illusions

Quoting merlin
"History repeats itself the same way, if and only if, the same events occured the same way"
im not sure i can agree with this one. although it would be hard to quantify, it seems unlikely that there are not instance where the the same events occured and the marketed acted differently. if would be aweful hard to prove this too, so considering it a fact may be a stretch.
You can dump this, it will drag us in a long discussion and drive us away from the thread main target.

Quoting merlin
i have one suggestion to add, let me know if you think it should be added:

6 - the only constant in the market is change
Do you mean change in prices or in sentiment or what?

If you mean change in prices, then I think that it's the same as the Supply & Demand Fact. Otherwise, please clarify.

Thanks,

Nader
  • #20
  • Sep 19, 2005 3:39am Sep 19, 2005 3:39am
Quoting narafa

Do you mean change in prices or in sentiment or what?

If you mean change in prices, then I think that it's the same as the Supply & Demand Fact. Otherwise, please clarify.

Thanks,

Nader

I think he means that the market itself changes all the time. (Thus for example no trading strategy can work forever).
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