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Thanks for your email
No I had not heard of any of the traders that I know trading that
inefficiency. Usually they like to trade "boat races", i.e., highly
predictable situations. John Sweeney at TASC sent me the following email
last year about trading a specific market inefficiency.
"... This seems fine. I study the quantity "will meet or have exceeded $XX"
as a
minimum amount to say the trade is behaving normally and, therefore, it's
worth continuing or adding to it at that point. The difference is that
where, for example, you use 65% at day three, I'm interested in 99% at day
three. See the difference?
John ..."
Hopefully the general examples that I gave can get you started in thinking
about looking for market inefficiencies. Most traders are not used to
thinking strategically about "where's the money" but instead are focused on
the noise of the markets.
I don't know about whether "Metastock works" as you put it ... the only
thing that I can say is that Metastock was bought by a data company and not
by a trading/brokerage company. I can only assume that if it "worked" then
it would have been bought up, taken in-house to generate profits and removed
from the retail market as usually happens.
Best regards
Walter
----- Original Message -----
From: Walter Lake <wlake@xxxxxxxxx>
To: <metastock@xxxxxxxxxxxxx>
Sent: Friday, November 05, 1999 2:32 PM
Subject: Re: Increasing the MetaStock(R) Formula Language with MetaStock 7
| Hi Al, Tom, Joe, and others
|
| Sure I'd be glad to talk about it.
|
| Market inefficiencies break down into two areas: structural and individual
| market inefficiencies.
|
| Structural inefficiencies are equipment, order routing, exchange rules,
etc.
| For example if you are trying to trade NASDAQ stocks in short time frames
| using a broker telephone system and you are completing with traders using
| direct lines to the floor, then you're on the wrong side of a structural
| inefficiency. Different rules of conduct for market makers in the
different
| exchanges allow opportunities for exploiting a rules structural
| inefficiency. Etc.
|
| So in your strategic business plan, what structural advantage do you have
| going for you?
|
| Market inefficiencies for example are reoccurring patterns in your
tradable.
| For example, agricultural spreads reoccur every year at the same time and
| for the same length of time. Often there are fundamental reasons as to why
| the spread works. They are an example of market inefficiencies. They're as
| boring as watching paint dry on the wall but they make money regularly.
| Others, trade "events" in their markets because they have a predictable
| pattern. Etc. Business needs regular predictable activity to make money.
|
| What is your activity advantage?
|
| The business of trading is exploiting the market inefficiencies in the
niche
| that you trade. You go to work everyday, the business makes money. It's a
| job. It's not exciting, it's not flashy, and it's usually secluded and
| un-noticed.
|
| There are lots of niches that the bigger accounts can't exploit that are
| perfect for the smaller trader to exploit up to the 10 contract or 5,000
| share size .
|
| CMA was a options maker ... he can tell you about trading as a business.
|
| Best regards
|
| Walter
|
| ----- Original Message -----
| From: Al Taglavore <altag@xxxxxxxxxx>
| To: <metastock@xxxxxxxxxxxxx>
| Sent: Friday, November 05, 1999 10:57 AM
| Subject: Re: Increasing the MetaStock(R) Formula Language with MetaStock 7
|
|
| | Walter,
| |
| | I read with interest what you have written. In past posts you have
| | expounded upon market inefficiencies. Would you please elaborate. Are
| you
| | defining inefficiences by fundamentals? Price patterns? How do you, as
a
| | trader, determine when a market, sector, stock, any tradable or group of
| | tradables is inefficient. If you prefer, e-mail me direct at
| | altag@xxxxxxxxxxx
| |
|