Which Makes Consistent Money in The Market

I offer this as food for thought. You know who's been making money based on their posts here. You know who's been taking the hits. I'll name a few who I know have been making a whole lot of money trading WITH the trend, based on my observation, but I absolutely apologize in advance for the dozens I am not remembering to mention or just don't have the knowledge to list. Just to name just a few who are making $ trading with the current trend: Index Trader, Punter, Gary Smith, Atlas Shrugged, NAV, RodgerDoger, Souelle, Arbman, Fib 1618, Hiker, Pedro, Crew123, TOR, Tuffy88....and a whole bunch more. Please forgive me if I didn't put you on the list. {And Z, you are literally in a category of one - because you make money any which way things run } I just ran a very quick recap from memory and certainly left out a bunch of key people. If you are part of those trading with the trend, then you already know it and don't need me to tell you.

But, now, here's my point. Have these traders been anticipating the next market move and trading on that --- or have they simply recognized the current trend and remained faithful to that trend in progress? And those who have been taking the hits -- are they trading what is or what they expect will be?

Which then makes more sense.... .....to trade what is....or to trade what you think will be?

Okay - I think we know the answer as pertains to the current situation. But what about over time? Which pays off in a major way - to anticipate a turn and trade accordingly....or to recognize a turn after it occurs and trade with the new trend as long as it runs? Perhaps you can see the answer. There was a question below, and I have seen other references to this same issue -- about how many saw the turn approaching in late 2007 and got short. Could it be that this is the wrong question? Perhaps the question should be: who saw the turn after it occurred and got short? {or just got OUT if you only trade long}. Which approach do you think put the most dollars in the trader's bank account? Anticipate the trend or recognize the trend?

There will be a big down turn at some point - and who knows maybe immediately. Or maybe a month from now, or maybe 6 months. But my point was, is, and will always be: as traders, our only real mission is to trade the line of least resistance as it exists RIGHT NOW - today. There is an overwhelmingly strong desire among traders towards trading what we expect to occur - we always want to get ahead of the next big move. We want to "outsmart the market". But my experience keeps proving that "a bird in the hand is worth 1000 in the bush" when it comes to trading the current trend and putting $ equity in the bank.

You may see it differently, and that's fine by me. Jmho, D

Edited by IYB, 11 April 2010 - 01:12 AM.

The answer to your question really depends where we are in the cycle, imho. There are times that anticipating makes much more sense when the large cycle lows or highs are due very very soon and the market literally falls apart everywhere except for price or vice versa. In the current case, I already tried to summarize where we are in the cycle. So, I would err on the side of the trend for a few weeks more at least, we need to see volatility increase before a substantial sell off...

BTW, your question is a timing question, it means cycles or at least minimum volatility analysis with one's preferred methods. If somebody is trading the markets passively, they should almost always follow the trend and wait for breadth confirmations, kind of what tuffy does...

Edited by arbman, 11 April 2010 - 03:47 AM.

IYB I believe you left out two key factors: (1) Time Frame traded and (2) Position Size. This is what makes trading so challenging. As I'm sure you are aware, if you trade a short time frame (e.g. 10, 15, 20 minutes) then your concept of "trend" may differ from trading daily or weekly. The recent drop is a good example. When we reached 1171 depending on timeframe one may look at this and say "the cycle has turned down" while some else may say this is just a small reaction to a major up trend. Both may make or lose money depending on their interpretation. I find that position size normally governs your time frame of interest. One major player you overlooked is "dachief". To his credit he's been long (???) since around 750.

Edited by dw85745, 11 April 2010 - 04:34 AM.

IYB

I believe you left out two key factors: (1) Time Frame traded and (2) Position Size.
This is what makes trading so challenging.

As I'm sure you are aware, if you trade a short time frame (e.g. 10, 15, 20 minutes)
then your concept of "trend" may differ from trading daily or weekly.
The recent drop is a good example. When we reached 1171 depending on timeframe one may look at this and say "the cycle has turned down" while some else may say this is just a small reaction to a major up trend.
Both may make or lose money depending on their interpretation.

I find that position size normally governs your time frame of interest.

One major player you overlooked is "dachief". To his credit he's been long (???) since around 750.

DACHIEF is a fool is been long on the way down all the way from 2008.... I don't see how he makes money.

Anticipating turns make the most money. Unfortunately they can also lose you money.

Well it's important to look at a trader for at least 30 years of track record to say he is worth his salt.

NDX...one year...17 'hypothetical' trades...squiggles and wiggles, anticipation, or trend trading...you be the judge...

Lest any miss my point - it is just this: Our job as traders is to be long when prices are rising, short when they are falling. Period. A problem all traders have to wrestle is the temptation to be so fearful of missing the next trend that they "forget" to take their share of the one in progress. And in the process, they find themselves on the wrong side. In fact the whole other discussion about 2007 is symptomatic of that nagging trader issue. It really doesn't matter to me who saw the crash coming - what matters is who recognized it when it began. 'Nuf said. Good trading, D

It really doesn't matter to me who saw the crash coming - what matters is who recognized it when it began.

Great point Don. The second part seems to be much tougher for me at least.....not that the first part is any easier

CP

The trend is your friend, but there is a siren song heard often heard by traders in trying to predict a top or catch a falling knife.

There is no better feeling than pulling down all of my bets off of the craps table just before the next roll and hearing the dealer shout: "7 OUT! Line away."
The feeling of control and omnipotence is much better than any money I may have won.
But it is artificial since one does not really have any control or special power.
But the feeling is still there.

Likewise there is no worse feeling than walking away from a hot table with a little profit and hearing the cheers get louder and louder as a hot roller continues on a streak.

So I've learned to take a little money off the table, and then "let it ride."

The past few weeks have been exceptional in that we have been overbought so long, pushing the top of the price envelope with the risk-reward not good.

Those who are long are having their day in the sun, high-fiving each other like 2 craps players hitting a hard eight for the 3rd time.

Just remember to poke a few chips in your pocket from time to time, and tip the dealers.

Just don't get turned into a toad by the sirens!

And don't be A Man Of Constant Sorrow
(Yes, Delmar is a Tulsa boy.)

Edited by Rogerdodger, 11 April 2010 - 11:32 AM.

ON WALL STREET THE SAYING IS..."ITS BETTER TO BE LATE THAN EARLY"

It really doesn't matter to me who saw the crash coming - what matters is who recognized it when it began.

Great point Don. The second part seems to be much tougher for me at least.....not that the first part is any easier

CP

I pulled out ever long-term equity investment I had in mid-late July of 2007. I had never done that before (it was a hassle). I did not, and have not, moved those funds back in yet. In retrospect, It would have been good as the run-up since March 2009 has gone on over a year (Long-term investment taxes are a lot less and they would have qualified by now.) but, I couldn't, at the time, be sure and frankly, didn't expect the this run-up to last this long going this high. Nonetheless, I have always expected there will be a bottom around 2012 that will be better for a long-term entrance and everything that has gone on since 2007 when I got out seems to be on schedule for that expectation to play out. We shall see. In the meantime, those funds have been growing via various bond funds of various lengths of maturity. I've had precious metal positions for so long, they are not and have not been an issue one way or the other and a couple of small dividend plays I left in place. I just let those ride. And of course, there is my day trading which is biased, long or short, to the specific trade.

Edited by milbank, 11 April 2010 - 12:03 PM.