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Hello David,
One thing I was reminded of by your question is Larry Connors' Turtle
Soup trading system whereby one fades a new 20 day high/low based on
the premise that so many Turtle traders enter there. So there must be
people who buy at the 15 day high in anticipation off selling those
goods to all the Turtles 5 days later. And then there are the guys
who try to front run those guys ad infinitum.
The Dogs of the Dow system became so popular that housewives were
trading it. Somebody must have been smart enuf to anticipate that by
a few days and the process feeds on itself till the buying gets pushed
back to Labor Day.
They say prices go down because there are no more buyers. So if
everybody rushes in to buy the obvious Fib corrections, or a break of
the 20 ema, or yesterday's high, after the gold rush there are no more
buyers and prices fall back. Some on this list have discussed the
technique of not trading on the signal of a system but waiting a bar
or two for prices to fall back (in case of longs).
Friday, February 22, 2002, 3:16:05 PM, you wrote:
DF> I would be interested to hear comments re: what peole think about too many
DF> people trading the same system, i.e. does it negatively effect the system?
DF> I've always wondered about why people say this is so. It seems to me that
DF> the more buying/selling power there is, the stronger it would make the
DF> system. But that is just logic off the top of my head; I have no idea how
DF> this would really play out. It also seems to me that even if the concept
DF> were true, that the stock market is so huge, it would be difficult for any
DF> one system to be negatively affected by a large number of people trading it.
DF> People often say that if there were a large number of people trading a
DF> system, eventually the floor would start fading those signals... but does
DF> anyone actually do that? Does anyone actually know people who say, "hey OB
DF> (or whatever) is going long, lets fade it!" ? That seems kind of unlikely
DF> to me, but I'd be interested to hear comments from people who know better.
DF> Thanks,
DF> David
--
Best regards,
Jim mailto:jejohn@xxxxxxxxxxxxxxxx
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