This was actually a reply I typed to a thread about USDINR which was basically an opinion of what a trader thinks the market will do where he gave his analysis and asks for an opinion.
But I thought rather than mention the post and get into a squabble with some member who will tell me how many times his analysis has been right and how good he is at predicting with his analysis I thought better make a separate thread so not to "target anybody"
.... unfortunately I do not have an opinion. I gave up having opinions a long time ago. I kept trying to predict the market for years sometimes I would be right sometimes I would be wrong. Never really made any progress for a long time.
Here's a tip that honestly took me a long time to learn.
I did read a reference to this in a book once which said "Markets are never wrong but opinions often are" .... but I paid no attention because I thought I knew better :rofl: and continued to predict and form "opinions"
TIP--> Don't try to predict what the market WILL DO, but react to what the market HAS DONE.
Key really is not to have an opinion, because no one knows what the future holds on a consistent basis. No one ever.
Let me give you an example.
In 2000 the Wall Street Journal survey of economists revealed that 96 percent of them were bullish. In 2001 the same surveys of economists showed an amazing 99 percent were bullish on the economy. In 2002, the same survey was conducted again, and by now 100 percent of the economists surveyed were bullish.
The Wall Street Journal has been doing this survey thing since 1982, and the track record shows the experts have been correct in predicting the future less than 22 percent of the time. This is a worse probability than random guessing! Yet they continue doing the survey and not telling you how horrible these guys’ predictions have been.
Another one.
LTCM was comprised of two noble prize winners & a distinguished professor of finance and economics, according to Warren Buffet there was no other company in the world that had that much brain power. ... but even they so called "geniuses" couldn't do it.
These are the some of the most highly qualified & experienced analysts.
If they can't do it, do you really think you can? Maybe but I doubt it. Here's a better option. React to what the market does.
To illustrate this if the market has had event A then this is followed by event B in the past. Then research how many times this statement is true.
Calculate the expectancy. If it positive you may have a strategy with an edge. Then simply play the probabilities which is react to what the market does don't try to predict the outcome each time because you can't.
For eg if the market is in an uptrend (define the uptrend you need to have a specific rule not dekhnae says uptrend lag raha hai) & today's close is lower than the prior two day's close buy (you need to define where you will buy, will you buy on today's close? or tomorrow's open or above today's high or somewhere else etc) The opp for a sell, define the downtrend if today's close is higher than the prior two day's close sell (once again define where you will sell) also define an exit rule .... not 1:1 or 3:1 pe nikale jaunga so I can lose 3 times for every win because that will not work and is basically neophyte thinking. You got in where you observe the market has moved in one direction you need an objective exit rule where your testing shows the move has less chances of continuing.
See the probability, calculate the expectancy .... you need to put in the effort and see for yourself only then will you have confidence to trade.
You need to do research for this it requires a lot of work, and you need to trade several markets because not every market will be profitable ever year but if you choose carefully you can certainly be net profitable every year. Diversification is essential and extremely imp in my personal experience, I do not know why books don't give it importance. How profitable you will be is a function of your money management but that is another big topic for another day which I would not like to get into here.
React to what the market does don't try to predict.
Here's an experiment from the book "How we decide" which was brought to my attention by another trader.
If you listen to this I think it will serve you well. Good luck.
But I thought rather than mention the post and get into a squabble with some member who will tell me how many times his analysis has been right and how good he is at predicting with his analysis I thought better make a separate thread so not to "target anybody"
.... unfortunately I do not have an opinion. I gave up having opinions a long time ago. I kept trying to predict the market for years sometimes I would be right sometimes I would be wrong. Never really made any progress for a long time.
Here's a tip that honestly took me a long time to learn.
I did read a reference to this in a book once which said "Markets are never wrong but opinions often are" .... but I paid no attention because I thought I knew better :rofl: and continued to predict and form "opinions"
TIP--> Don't try to predict what the market WILL DO, but react to what the market HAS DONE.
Key really is not to have an opinion, because no one knows what the future holds on a consistent basis. No one ever.
Let me give you an example.
In 2000 the Wall Street Journal survey of economists revealed that 96 percent of them were bullish. In 2001 the same surveys of economists showed an amazing 99 percent were bullish on the economy. In 2002, the same survey was conducted again, and by now 100 percent of the economists surveyed were bullish.
The Wall Street Journal has been doing this survey thing since 1982, and the track record shows the experts have been correct in predicting the future less than 22 percent of the time. This is a worse probability than random guessing! Yet they continue doing the survey and not telling you how horrible these guys’ predictions have been.
Another one.
LTCM was comprised of two noble prize winners & a distinguished professor of finance and economics, according to Warren Buffet there was no other company in the world that had that much brain power. ... but even they so called "geniuses" couldn't do it.
These are the some of the most highly qualified & experienced analysts.
If they can't do it, do you really think you can? Maybe but I doubt it. Here's a better option. React to what the market does.
To illustrate this if the market has had event A then this is followed by event B in the past. Then research how many times this statement is true.
Calculate the expectancy. If it positive you may have a strategy with an edge. Then simply play the probabilities which is react to what the market does don't try to predict the outcome each time because you can't.
For eg if the market is in an uptrend (define the uptrend you need to have a specific rule not dekhnae says uptrend lag raha hai) & today's close is lower than the prior two day's close buy (you need to define where you will buy, will you buy on today's close? or tomorrow's open or above today's high or somewhere else etc) The opp for a sell, define the downtrend if today's close is higher than the prior two day's close sell (once again define where you will sell) also define an exit rule .... not 1:1 or 3:1 pe nikale jaunga so I can lose 3 times for every win because that will not work and is basically neophyte thinking. You got in where you observe the market has moved in one direction you need an objective exit rule where your testing shows the move has less chances of continuing.
See the probability, calculate the expectancy .... you need to put in the effort and see for yourself only then will you have confidence to trade.
You need to do research for this it requires a lot of work, and you need to trade several markets because not every market will be profitable ever year but if you choose carefully you can certainly be net profitable every year. Diversification is essential and extremely imp in my personal experience, I do not know why books don't give it importance. How profitable you will be is a function of your money management but that is another big topic for another day which I would not like to get into here.
React to what the market does don't try to predict.
Here's an experiment from the book "How we decide" which was brought to my attention by another trader.
If you listen to this I think it will serve you well. Good luck.
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