Markets trend. There are impulses, and in those the price consistantly makes several higher highs and lows, or lower highs and lows in the case of a downtrend impulse, or leg. The majority that try to compete in this activity fail, and from what I have seen they either don't know the basics, or have loss phobia. Or are dense, that's also a possibility.
It is basic. Do not go against the trend. Especially when it is diagonal. The market goes up in impulses. Forget elliott or dow waves, there can be any number of impulses within the impulse. 5 higher highs and lows, 6, 7, 8. Of course I am not used to seing something like 25 in a row. People would become instant billionaires if that happened. I wish...
I can't prove the market behaves in that way but I can use some empirical evidence. In here I will present a couple of examples. 2, 3 or 4 examples can be a coincidence. But when something repeats itself over and over it is unlikely it is a coincidence. It's basic and easy to play around the fact that currency pairs make successive higher highs and lows. For example it might be pointless to hold a long once the price has reached a lower low (but it's a bad idea to have a stop at the very low or just below it).
Eurodollar downtrend from the 20 April to the 10 May:
Put into context:
And then the new low:
Another example:
Forex charts look noisy and random, but they are obviously not random. The price does not randomly make a higher high in a downtrend then continues down. It keeps making lower highs without fail, and once there is a higher high well, most of the time it does not go just slighlty higher then drop.
How embarassing is it that PHD economists can't see this?
Sometimes a higher high in a downtrend is a trap
Here is what individual investors can be seen doing:
Retail positions have no predictive abilities that I know of.
Their entries are basically random. And don't matter.
I am not contrarian to retail positions when I enter, sometimes I buy with 80% of them.
I see 0 correlation with my entries.
But where is there a difference? Each time I have a big winners going past 5R I look at retail positions, and what I see is 80-90% are in the opposite direction (and have been for a while).
Them sucking and being on the wrong side could either be due to entering at stupid moments, or closing winners quickly and holding losers which leads to an aggregate of "80% long" at the bottom of long downtrends.
Are they dumb or afraid? By afraid I mean loss aversion.
I do not think personally they are all idiots that just go against the trend, but I do think there are a lot of individual investors that do just that. I can imagine them being all nervous while I'm just chilling.
I would say at least 90% got to be afraid, let's simply call it what it is: weak.
There are plenty of idiots. Who gets into this? People that have money and went to school right?
Engineers and doctors? There has to be some gamblers too.
In investing in general I know the vast majority is "educated" as well as IQ > 100 but short term like this might not have the same distribution.
How basic is it? Price makes lower lows and highs it is going down, and once there is a higher high the trend takes a break or reverses.
Trade like a pro, not another statistic.
It is basic. Do not go against the trend. Especially when it is diagonal. The market goes up in impulses. Forget elliott or dow waves, there can be any number of impulses within the impulse. 5 higher highs and lows, 6, 7, 8. Of course I am not used to seing something like 25 in a row. People would become instant billionaires if that happened. I wish...
I can't prove the market behaves in that way but I can use some empirical evidence. In here I will present a couple of examples. 2, 3 or 4 examples can be a coincidence. But when something repeats itself over and over it is unlikely it is a coincidence. It's basic and easy to play around the fact that currency pairs make successive higher highs and lows. For example it might be pointless to hold a long once the price has reached a lower low (but it's a bad idea to have a stop at the very low or just below it).
Eurodollar downtrend from the 20 April to the 10 May:
Put into context:
And then the new low:
Another example:
Forex charts look noisy and random, but they are obviously not random. The price does not randomly make a higher high in a downtrend then continues down. It keeps making lower highs without fail, and once there is a higher high well, most of the time it does not go just slighlty higher then drop.
How embarassing is it that PHD economists can't see this?
Sometimes a higher high in a downtrend is a trap
Here is what individual investors can be seen doing:
Retail positions have no predictive abilities that I know of.
Their entries are basically random. And don't matter.
I am not contrarian to retail positions when I enter, sometimes I buy with 80% of them.
I see 0 correlation with my entries.
But where is there a difference? Each time I have a big winners going past 5R I look at retail positions, and what I see is 80-90% are in the opposite direction (and have been for a while).
Them sucking and being on the wrong side could either be due to entering at stupid moments, or closing winners quickly and holding losers which leads to an aggregate of "80% long" at the bottom of long downtrends.
Are they dumb or afraid? By afraid I mean loss aversion.
I do not think personally they are all idiots that just go against the trend, but I do think there are a lot of individual investors that do just that. I can imagine them being all nervous while I'm just chilling.
I would say at least 90% got to be afraid, let's simply call it what it is: weak.
There are plenty of idiots. Who gets into this? People that have money and went to school right?
Engineers and doctors? There has to be some gamblers too.
In investing in general I know the vast majority is "educated" as well as IQ > 100 but short term like this might not have the same distribution.
How basic is it? Price makes lower lows and highs it is going down, and once there is a higher high the trend takes a break or reverses.
Trade like a pro, not another statistic.