Reliability and Obscurity of Information

Reliability and Obscurity of Information

I have been very actively observing other markets and seeing people’s trade ideas through twitter and stocktwits. My observation is that the market is made up of way more points of view. I am not sure how many are out there, but I feel outnumbered in my approach. It could be where I am choosing to hang out; it could be that our time frame and products traded are very different. I estimate more than half are trading stocks, a wealth creating mechanism. If I make a dollar being long a stock most of the people in the market at that time will make a dollar as well. I almost exclusively trade futures. Futures are zero sum game, if I make a dollar someone losses a dollar. Maybe market mechanics are to blame for the differing approach.

It has taken a very long time to make my trading strategy as simple as it is. One of my mentors and many of the other traders that I have spoken with from the CBOT never went to college. They were taught by a friend or parent and they were taught by a friend or parent before them and so on. Many of the seeds of technique were planted well before they had the technology or the internet to see and transmit information in real time. I was taught that simple is always better, but it could have been by necessity. College did not prepare me to be a trader but college football has helped. I am making an assumption here, tell me if I am wrong, but I feel like college has influence those data heavy people. I understand the reason for this but not in this post.

Reliability and obscurity is the side effect of our never quenched thirst for information. Information is the security blanket for adulthood.

Reliability is and will forever be important to our society. Reliability can help you build relationships, get a promotion, or have confidence in taking a trade. Part of the reason a Bloomberg terminal is $1800+ is because traders believe in the data that comes from it. I hate knowing that my bottom line is affected by false or faulty data.

Obscurity is also a concern. I cannot imagine not getting the information from the FED meeting 6 months after the meeting like in the past. I can do without other reports; I won’t list them because I reserve the right to change. However, some of the indicators and reports people are trading off of appear to me, to be irrelevant. It could be that I do not understand, I accept that. I often wonder if I write something and no one reads it did I actually write it? Ha ha. Do some of the report filers feel the same way?

What do I consider to be reliable or important? I consider the following criteria: How far away from the actual market is the indicator? How many people are looking at the indicator, report, or newsletter? Why are they putting out the report or newsletter? I am a micro term opportunist; I prefer indicators that do the indicating in the market I am trading. If it is directly measured in the market I am trading, I worry less about the many factors influencing it. If enough people are looking at an indicator the market will react to the indicator, at least its extremes. If a business news network said there was 98% correlation of indicator based on the median weight of a beef in Chicago, if I could get the data in real time, I would look at it. Does not mean I could profit from it. When I look at any report produced I ask myself why. Are they doing it for marketing reasons, for content creation, or to extract data? Ignore it, find it interesting but data is often covered up, and use it regularly and in that order.

I appreciate others sharing, even if they are looking at the Chicago Beef Weight (CBW) indicator. Ha ha

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  • “…some of the indicators and reports people are trading off of appear to me, to be irrelevant.”

    Especially when it come to government released reports. So many Traders key off “the number” of whatever report is being released. But how can Traders do this? Everyone knows that a couple weeks or months later these number nearly ALWAYS are revised. Often dramatically!!

    I feel the release of Government reports is one of the dirtiest, slimiest, corrupt practices in finance in government. I believe beyond a shadow of a doubt these “numbers” are often manipulated to fit the political narrative of the moment. And the powers-that-be will always be protected in the case of a revision later. They'll always have an out based on “bad data” or whatever…. It stinks badly to me.

    • Administrator

      Thanks for the comment Sean. The numbers are ridiculous but the revisions are even worst. It is really amazing to me.

2 Responses to Reliability and Obscurity of Information

  1. chicagosean says:

    “…some of the indicators and reports people are trading off of appear to me, to be irrelevant.”

    Especially when it come to government released reports. So many Traders key off “the number” of whatever report is being released. But how can Traders do this? Everyone knows that a couple weeks or months later these number nearly ALWAYS are revised. Often dramatically!!

    I feel the release of Government reports is one of the dirtiest, slimiest, corrupt practices in finance in government. I believe beyond a shadow of a doubt these “numbers” are often manipulated to fit the political narrative of the moment. And the powers-that-be will always be protected in the case of a revision later. They'll always have an out based on “bad data” or whatever…. It stinks badly to me.

    • Administrator says:

      Thanks for the comment Sean. The numbers are ridiculous but the revisions are even worst. It is really amazing to me.

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