Why psychology? Why not?
Why don't I just develop some crazy god like indicator that
predicts the market 100%? Well, not only is that impossible but it’s a waste of
time simply because the market cannot be predicted. Let’s examine that
statement.
The assumption made by technical market gurus is that they can
predict market movements 100% of the time or whatever bogus claims they make.
But they are predicting markets based on price, or a derivative of price
(indicators). But then price moves because of buyers buying at a certain time
and sellers selling at a certain time. But buyers and sellers make
their trades for various in-explainable reasons. So they really are
trying to predict the most illogical element in the market... people.
Fact is it doesn't matter if god himself came down on earth and
every indicator in the world said buy shares in Company A. If no one buys any
shares the stock won't move. So my assumption is, “Wouldn’t it be better
to trade the source rather than the derivative?” Why trade indicators if you
profit or lose based on price, why analyze price if you can analyze the people.
So my logic is trade based on what you expect the masses to do.
Perfect example, I had some shares of Google in a demo account going into
earnings. I knew I’d get a pop and I sold it all. Mark my words Google will hit
$580-575 over the next two weeks and I still haven’t read the report or the conference
call. That’s how all these growth stocks trade.
The only problem is it’s not like I can go to every trader and
investor and ask what their positions are. So until I get that small glitch out
the way I’ll share my system with you all. Until then thanks for reading and
happy trading.
No comments:
Post a Comment