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Take the Emotional Bias Test!

  • #21
  • Sep 15, 2012 1:26am Sep 15, 2012 1:26am
The reality is that once a 20,30 and similar crossovers have been achieved... The moves generally become self fueling provided enough opposite direction sentiment has been established.

If your big enough you should play around with manipulating the patterns in small stocks... You discover some very very interesting tactics.

Here is a quote from my favorite trading book of all time... Taylor Trading Technique by George Taylor...

"A Grain-Stock Trader Operator is exactly what a speculator should be. An operator manipulator and a trader and he must understand the fundamentals of manipulation to be a good trader since manipulation enters into the market at all times. In other words a good manipulator would be a good trader but it does not follow that a good trader would be a good manipulator. However, they would both be well versed in the manner of how buying and selling moves prices in the markets."
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  • #22
  • Sep 15, 2012 1:48am Sep 15, 2012 1:48am
The recent reversal in the EUR/USD was very unnatural. In my opinion it was a artificially manipulated reversal. But, at a certain point into early September it became a self fueling trend and no longer needed support.

The price action in august appeared very unnatural in two different locations like there was an artificial floor being put under the market. Others call these "icebergs" See the EUR/CHF for the mother of all central bank icebergs... LoL!

Generally those that place icebergs absorbing all selling pressure in an instrument are taking on a position because they think they can either shift the momentum or are front running something in the future.


It's kind of funny... They are trying to institute new rules in US markets to try to illegalize tactics like artificial trend acceleration and extension.

If a small stock is slowing down in an uptrend and your holding a large position... Sometimes it's best to artificially support it out of the dips and push it a bit higher. Even though it will drop harder when you eventually start selling out your position you usually get better prices overall by manipulating it higher...
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  • #23
  • Sep 15, 2012 4:53am Sep 15, 2012 4:53am
Quoting MasterGamble
You seem to be forgetting the German courts okaying the printing of a trillion dollars in bonds by the ECB two days before?

News just catalyzes emotions. Nothing more... Those two events balanced themselves out fundamentally.
They do not balance themselves out. The German court ruling to approve Germany in contributing 190 billion euros to the ESM was good for the Euro. That outcome had been priced in by traders months ago so it wasn't such a surprise to the market. Announcement of QE3 w/ such crazy details have not been priced in. Hence, sudden rise in E/U. News and the outcomes of such do affect the market. They're not a big deal bc of emotions they cause. lol
  • #24
  • Sep 15, 2012 5:07am Sep 15, 2012 5:07am
Quoting EmeraldEyes
They do not balance themselves out. The German court ruling to approve Germany in contributing 190 billion euros to the ESM was good for the Euro. That outcome had been priced in by traders months ago so it wasn't such a surprise to the market. Announcement of QE3 w/ such crazy details have not been priced in. Hence, sudden rise in E/U. News and the outcomes of such do affect the market. They're not a big deal bc of emotions they cause. lol
LoL... QE3 was priced in when Bernanke hinted about it in July during his twist extension...

Actually... QE3 was probably already priced in back when QE1 was launched...

Efficient market theory has been disproven long ago. The markets are not driven by logic and strategy. They are driven by cycles of greed and emotion plain and simple.
  • #25
  • Sep 15, 2012 5:15am Sep 15, 2012 5:15am
Hey... Lets start a new type of joke. Like yo mamma, except in trading...

If efficient market theory wasn't a joke... Gold would be worth an infinite amount because of how much central banks are going to print.

If efficient market theory wasn't a joke... The EUR/USD wouldn't exist right now because the eurozone is going to break up within a few years.

If efficient market theory wasn't a joke... The seven month QE2 rally would have instantly seven months before... And the correction and next rally would have occurred within that period... Oh wait? LoL...

Efficient market theory people are great. Fun to take money from and fun to screw with.


If efficient market theory wasn't a joke... Markets would price in the mathematically proven drop in world population to two billion or less within fifty years as the green revolution collapses with the cheap oil bubble imploding.

If efficient market theory wasn't a joke... Markets would be priced to infinity because of how much money Bernanke will eventually print.
  • #26
  • Sep 15, 2012 5:23am Sep 15, 2012 5:23am
The reality in the markets is that prices drive decisions and decisions drive prices.

It goes like this...

Global equity markets up...
Italy/Spain bond auctions improve because of improved sentiment from global equity markets going up.
Global equity markets go up because of good auctions...
Which then causes sentiment reports to go upward...
Which then causes investors to invest...
Which then pushes more demand onto auctions...
When then drives further sentiment increases...

Well anyway... You get it. Self fueling looping feedback cycles drive everything in economics and finance.

Look at the US market... We have one of the most bizarre looping feedback cycles in recent years...

US equities go down... Bernanke starts a new QE program...
QE program burns out and US equities correct...
Bernanke starts new QE program because of equities correction...
QE program burns out and US equities correct...
Bernanke starts new QE program...
Then is like... #**# it... I'm not going to let the correction happen again...
QE INFINITY BABY!!! US MARKETS ARE GOING UP EVERY DAY FROM HERE TO THE END OF TIME! INFLATION DRIVEN UPWARD DRIFT!!! YEAAA

If efficient market theory wasn't a joke... The DOW would be trading at a million.

If efficient market theory wasn't a joke.... A million dollars couldn't buy a loaf of bread now because of the infinite amount of credit Bernanke is going to flood the system with.

Within the current financial system credit acts the same as currency remember.
  • #27
  • Sep 15, 2012 1:29pm Sep 15, 2012 1:29pm
This test is like it has been raining the whole month and someone ask you do you think tomorrow will also be rainy?
  • #28
  • Sep 15, 2012 3:25pm Sep 15, 2012 3:25pm
Quoting MasterGamble
LoL... QE3 was priced in when Bernanke hinted about it in July during his twist extension...

Actually... QE3 was probably already priced in back when QE1 was launched...

Efficient market theory has been disproven long ago. The markets are not driven by logic and strategy. They are driven by cycles of greed and emotion plain and simple.
The EZ sovereign crisis has to do with a contraction in economic activity, a ever diminishing pool of investor confidence to continue to finance the sovereign deficits. The ECB pledging to helps qualm the contraction and possible deflation and depression in the EZ. Germany approving means that there will be no political tug of war and a united fiscal policy is emerging.

This is GOOD for the Euro.


Bernanke QE3 has to do with MBS and an attempt to help the sluggish housing market, The markets have been anticipating this but not priced in completely....once the green light was a go you have the ECB euro positive and the FED dollar negative, it is only obvious which way is safer.


look at it in this way if you must.....the ecosystem and changes to the ecosystem gives you an idea of what will happen to the species....the statistics of species population can give you further info on birth rates, confirmation of you hypothesis, and standard deviation of the population.

fundamental economic factors is the ecosystem and the population stats is the chart.

or here is another example.....I get a better job....gives you an idea that i will make more money....you keep my book and can tell my inflow and outflow habits patterns, etc.
AVT INVENIAM VIAM AVT FACIAM
  • #29
  • Sep 15, 2012 8:10pm Sep 15, 2012 8:10pm
Quoting MasterGamble
LoL... QE3 was priced in when Bernanke hinted about it in July during his twist extension...

Actually... QE3 was probably already priced in back when QE1 was launched...

Efficient market theory has been disproven long ago. The markets are not driven by logic and strategy. They are driven by cycles of greed and emotion plain and simple.
hi mastergamble
what is QE3 and QE1
sorry my silly question
thx salaam
  • #30
  • Sep 15, 2012 9:37pm Sep 15, 2012 9:37pm
Hi OP,

Looking at your chart, it looks like to me that you are trading a moving average. You appeared to have broken down the trend into 4 segments: 1. when the moving average is bullish, and price is above the "cloud"
2. when price is reversing to the downside with a bullish moving average
3. when the moving average is bearish, and price is below the "cloud"
4. when price is moving up in trend and entering a bearish moving average pattern.

You also appear to be counting bars, and your middle indicator moves based on that. It is some formula you are using that you divide by 100, or something, and since you are using pivots, I think you are shorting strong markets with your indicator reading close to 100, and look for longs at -100, and matching it with pivots with hope for a mean reversion strategy.

It looks like a good strategy.
  • #31
  • Last Post: Edited 11:14pm Sep 15, 2012 11:00pm | Edited 11:14pm
Depends... I have a few different entry/exit strategies. Most of the time I am not paying much attention to pivots unless they get in the way...

I use a proportionate projection system for entry at my signals.

Here were some trades of mine the other day. Was applying a range and candle count strategy.

That 3rd trade I realized was retarded as soon as I sent the order... Generally it's not the best idea to buy the first lower low after the first lower high unless trend strength is a bit higher. Lol... Counter trending before at least two consolidation cycle counts really should only be done with real strong momentum.


Quoting Dick Clark
Hi OP,

Looking at your chart, it looks like to me that you are trading a moving average. You appeared to have broken down the trend into 4 segments: 1. when the moving average is bullish, and price is above the "cloud"
2. when price is reversing to the downside with a bullish moving average
3. when the moving average is bearish, and price is below the "cloud"
4. when price is moving up in trend and entering a bearish moving average pattern.

You also appear to be counting bars, and your middle indicator moves based on that. It is some...
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