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Do you consider derivatives as a supply-demand market.
closer to the one you descrive for commodities ?
AlexAtreides
--- formulaprimer <formulaprimer@xxxxxxxxx> wrote:
> This is an argument that is worth discussing, but
> this is the most
> important point in my view. Stocks have no true
> supply or demand
> factor, there is no intrinsic need for anyone to own
> a piece of
> stock. While there is a need for commodities like
> corn, crude oil,
> etc, this analysis can even be expanded to cover
> futures and their
> initial creation for risk protection as a hedge.
> Technical analysis
> works for supply and demand driven markets and stock
> markets are
> random in nature due to its lack of supply and
> demand dynamics so it
> leads to the thought why do you apply technicals to
> stocks? Maybe
> luck and correlation of technical analysis is one
> and the same in
> stocks. One more thing about sample. If you take
> sample of losers
> you will get a losing result, but if you take the
> sample of winners
> you get winning results. I never understood why
> anyone would include
> losers in a sample of trading success. That would be
> like taking a
> sample of all the bad basketball players and small
> number of pros
> and say that shooting a basketball into a hoop is
> luck not skill.
> This is similar to this argument. Those who say
> trading is not
> technical and luck just don't get it and deny the
> constant winners
> of funds and those who utilize their technicals.
> KS.
>
> --- In equismetastock@xxxxxxxxxxxxxxx,
> sebastiandanconia
> <no_reply@xxxx> wrote:
> > "...This is the sensational bit! You can use
> random
> > noise, smooth it, and generate nice looking,
> systematic effects.
> What
> > Slutzky did and what shocked the academic world at
> the time was to
> > mimic an actual trade cycle using only random
> noise..."
> >
> > Burton Malkiel ("A Random Walk Down Wall Street")
> describes an
> > experiment where the outcome of coin flips (+1 for
> heads, -1 for
> > tails, and doing a running total) is displayed on
> a stock chart.
> > After a few hundred coin-flips, the resulting
> pattern of numbers
> looks
> > just like the activity of a "real" stock.
> >
> > These are not just meaningless egg-head, academic
> thought
> > experiments. The implications are profound for
> traders/investors
> > using most kinds of TA, including moving averages.
> If your
> favored TA
> > method can't distinguish between
> randomly-generated data and the
> real
> > thing, is it really measuring what's going on in
> the market or is
> it
> > just measuring the characteristics of a data-set?
> >
> > Since we know that most stocks travel together
> ("the rising tide
> > raises all boats"), can any indicator that ignores
> the activity of
> the
> > overall market really be valid? Stocks also rise
> and fall based
> on
> > earnings, dividends and valuations. Can any
> indicator that
> ignores
> > these factors be considered valid? What about
> economic factors?
> > Liquidity? Fed policy? Float size? Short
> interest? Volume?
> >
> > I stand by my original point that massive
> historical back-testing
> > using the arbitrary mathematical formulas of the
> vast majority of
> TA
> > methods only produces unimportant coincidental
> correlations, and I
> > would welcome any logical argument or proof that
> this isn't the
> case.
> >
> >
> > Luck,
> >
> > Sebastian
>
>
>
>
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