|
PureBytes Links
Trading Reference Links
|
Hi Nicholas
When an indicator or trading system "points" to something ... what is it
pointing at?
Usually it is noise ... sometimes it is a market inefficiency.
It is the market inefficiency that earns you the money and not the
indicator. The question that the investor / trader has to ask is "what is
the real inefficiency here" or it just "noise". If it's real, can I exploit
it.
If you want to sell burgers on a corner and there is already a McDonald's, a
Wendy's, and a Burger King, plus home cooked, etc. there, then you have an
efficient market. Only slim pickings remain for the business person who is
focused on selling burgers.
Efficient markets don't earn you any money regardless of how good your
indicators and systems are. There's no "edge" to steadily put money in your
pocket. "Noise" does not earn you money either.
Inefficiencies are usually grouped into two types: structural inefficiencies
and market inefficiencies.
By continually focusing on the indicator or trading system, the investor /
trader is not looking at the business. As they say in the movie, "show me
the money". Show me where the money is in the business.
Joe clearly points the way "... might be worth the time spent as you come to
understand something about how the market maker is making money in it. ..."
Once you understand your chosen market, then you'll understand how ALL of
the participants make money in it. How the participants exploit their own
parts of the existing market / structural inefficiencies.
Best regards
Walter
|