Post
Topic
Board Speculation
Re: Goomboo's Journal
by
Goomboo
on 24/05/2013, 21:27:10 UTC
The amount that they move the price is not necessarily quantifiable, its rather qualitative in nature. Compounded one can see the effect these events have on the price overall.

I don't agree with you.  I believe that people overstate their ability to see the "effects" of developments in markets.  Having Bloomberg and CNBC on the trade floor makes you pretty skeptical of "cause and effect" in the markets.  "Markets are down 2% today on fears of Europe".  Really?  The reporters know the collective reason why hundreds of thousands of individuals bought and sold?  Even better is when the market ends the day positive following a loss: "Markets are up 1% today on European optimism".  Nonsense.  I've even seen the Bloomberg terminal spit two news articles in the same day telling me why the markets moved up and down, each just a rephrasing of the same news.  It's human tendency to assign a cause to something and when it comes to trying to say why trillions of dollars and hundreds of thousands of people collectively behaved a particular way is just silly.  It's human arrogance at its finest: "I know why it happened, I am smart and in control."

As I have said before, traders are not paid to know why something happened: they are paid to make money.

Many venture capitalists do not use hard data, they use their gut, which is based on knowledge and experience. There is often data behind their feeling, but they do not analyze it in detail before acting - they act as soon as they know the moment is right (or more often than not for the less successful of them after the moment has passed because they either did not trust themselves to act without data or did not see the opportunity).

Back in grad school I took an entrepreneurial class and a VC firm talked about funding new ventures.  He basically expected 70-80% of investments to lose everything, 5-10% to double his money, and 1-5% to return 10-100 times investment.  This sounded an awful lot like trading to me - managing risk and only approaching the highest probability opportunities.  At the core, pure investing and trading is basically after the same thing, they just pursue it differently.

(as you pointed out, investing to date has actually been more profitable than your system when utilized perfectly)

Buy and hold hasn't "made" more than traders of the moving average crossover.  In fact, buy and hold has "made" nothing.  If they sat throughout the bubble and the subsequent crash and are still sitting, chances are, they will "make" nothing.  You have only made money when a trade is closed and you actually have profit in the bank.  If you are content to watch the value of your account fall by 81% in 7 days, you will be content to watch it dwindle to zero.

We see the world through different lenses.  Best of luck with your investment.