trends are ponzi schemes | Forex Factory

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trends are ponzi schemes

  • #1
  • First Post: Apr 16, 2016 7:41am Apr 16, 2016 7:41am
just food for thoughts.


ponzi scheme:
- early investors join the scheme.
- the scheme grow up, absorbing more and more investors.
- the more investors join, the bigger the scheme grow, the bigger the profits for the (early) investors.
- when there are no new investors, the scheme stop growing, and investors go for the exit.
- who exit late pay. (late exiters losses = profiters profits).



trend:
- early investors join the trend.
- the market go in the trend direction, attracting more and more investors.
- the more investors join, the bigger the trend grow, the bigger the profits for the (early) investors.
- when there are no new investors, the trend stop growing, and investors go for the exit.
- who exit late pay. (late exiters losses = profiters profits).



so that's it, trading, playing with thousands of temporarily (on all time-scales, from the half minute ones to the ones that last for decades) ponzi scheme.
  • #2
  • Apr 16, 2016 7:48am Apr 16, 2016 7:48am
Quoting tunera
just food for thoughts. ponzi scheme: - early investors join the scheme. - the scheme grow up, absorbing more and more investors. - the more investors join, the bigger the scheme grow, the bigger the profits for the (early) investors. - when there are no new investors, the scheme stop growing, and investors go for the exit. - who exit late pay. (late exiters losses = profiters profits). trend: - early investors join the trend. - the market go in the trend direction, attracting more and more investors. - the more investors join, the bigger the trend...
Its the other way round.

That cycle of behaviour has been around for centuries and has been noticed in many great manias and financial bubbles. Ponzi schemes are just another relatively recent manifestation of the tendency to abandon reason while pursuing profit.
  • #3
  • Apr 16, 2016 8:00am Apr 16, 2016 8:00am
Quoting Atokys
{quote} Its the other way round. That cycle of behaviour has been around for centuries and has been noticed in many great manias and financial bubbles. Ponzi schemes are just another relatively recent manifestation of the tendency to abandon reason while pursuing profit.
eheh yes you are totally right.
  • #4
  • Apr 16, 2016 8:37am Apr 16, 2016 8:37am
Smart Money (i.e. Big Money) needs Strong Zones of Buying or Selling to Accumulate their Orders.

For us, Retail Traders it's about Anticipating Strong Zones of Buying or Selling in the form of Limit Orders or Stop Orders.

This is the only way we (Retail Traders) will, for the most part, be able to get in early enough. Once the Trend is obvious it's usually too late.

It's during periods of Accumulation that "we" need to be positioning ourselves along side the Smart Money.

Even if we get the direction wrong a few times the times when "we" get it right will more than compensate.
Attached Image (click to enlarge)
Click to Enlarge Name: 16th April 16 EUR:USD D1 Observations 2.png Size: 124 KB
  • #5
  • Apr 16, 2016 10:02am Apr 16, 2016 10:02am
Quoting stevepatt
Smart Money (i.e. Big Money) needs Strong Zones of Buying or Selling to Accumulate their Orders. For us, Retail Traders it's about Anticipating Strong Zones of Buying or Selling in the form of Limit Orders or Stop Orders. This is the only way we (Retail Trad .... {image}
You are so right...but discovering these levels is not that simple.
  • #6
  • Apr 16, 2016 1:32pm Apr 16, 2016 1:32pm
Quoting Hovig K.
{quote} You are so right...but discovering these levels is not that simple.

Hi Hovig;

Look for Levels where there has been strong Market reaction H4 and above, see the Chart above, and then wait patiently for the Market to return to this Level and Observe how the Market reacts.

Remember Smart Money starts to Sell on the way up and Buy on the way down we just need to spot when "they" are off loading old positions and Accumulating new ones.

Take a look at the Charts below see if they help.
Attached Image(s) (click to enlarge)
Click to Enlarge Name: 16th April 16 EUR:USD D1 Observations 3.png Size: 98 KB
Click to Enlarge Name: 16th April 16 EUR:USD H4 Observations.png Size: 116 KB
  • #7
  • Apr 17, 2016 4:51am Apr 17, 2016 4:51am
I'm not a trend trader, more of a volatility trader.

For me I define a trend as something that keeps going and going and going for weeks!
There are huge opportunity for trends if the cards line up.
It requires a several year base a huge run like the recent 4000+ pip move on u/cad.
There were so many factors saying this would happen!
Stuff like this you have to look on your weekly charts.
They do happen, but not often. Usually around a huge shift in monetary policy.

As for smaller time frames what may look like a trend , usually isn't one.. might just be liquidity picking up and dying off.
For me a small price run of a few days isn't a trend. And would never chase that sorta move. As odds are highly likely it will reverse.

For me I have found it much more profitable to short into quick moves up then to try and chase them!
The only system that will work is one designed by and for yourself.
  • #8
  • Apr 17, 2016 6:07am Apr 17, 2016 6:07am
Quoting stevepatt
{quote} Hi Hovig; Look for Levels where there has been strong Market reaction H4 and above, see the Chart above, and then wait patiently for the Market to return to this Level and Observe how the Market reacts. Remember Smart Money starts to Sell on the way up and Buy on the way down we just need to spot when "they" are off loading old positions and Accumulating new ones. Take a look at the Charts below see if they help. {image} {image}
Thank you stevepatt, it sure helps... patience is the key. Most of us don't have.
  • #9
  • Apr 17, 2016 6:45am Apr 17, 2016 6:45am
Quoting tunera
just food for thoughts. ponzi scheme: - early investors join the scheme. - the scheme grow up, absorbing more and more investors. - the more investors join, the bigger the scheme grow, the bigger the profits for the (early) investors. - when there are no new investors, the scheme stop growing, and investors go for the exit. - who exit late pay. (late exiters losses = profiters profits). trend: - early investors join the trend. - the market go in the trend direction, attracting more and more investors. - the more investors join, the bigger the trend...
Hehehe it's not like that. You get the money from the counterpart... ponzi scheme is another thing.
  • #10
  • Last Post: Apr 17, 2016 9:58am Apr 17, 2016 9:58am
Quoting stevepatt
{quote} Hi Hovig; Look for Levels where there has been strong Market reaction H4 and above, see the Chart above, and then wait patiently for the Market to return to this Level and Observe how the Market reacts. Remember Smart Money starts to Sell on the way up and Buy on the way down we just need to spot when "they" are off loading old positions and Accumulating new ones. Take a look at the Charts below see if they help. {image} {image}
Spot on.
There's always money in the banana stand.
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