I recently read a post An Explanation of Why Pattern Recognition Works in Trading. I liked the title even if it had nothing to do with the contents of the article.
The article starts out very strong and identifies what most traders fail to understand. This lack of understanding makes learning to trade hard and what causes traders to give back money. To paraphrase, some strategy or idea is working right now.
This is where we start to separate.
I am not for sure what he means by ‘there is no such thing as a market”. A market is the place where buyer(s) and seller(s) come together, it can be literal or figurative. The way this transaction happens has changed.
“One of the reasons that markets experience great volatility is that different groups buy or sell for different reasons at different times.” I think what the writer meant to say is rapid one directional moves occur because everyone is trying to buy (sell) at the same time. Volatility happens because of the lack of density of buyer and sellers across prices. The reason the density is low is because of the spread, the difference between the bid and offer.
There is a big difference between rules and a strategy. Effective trading requires rigid rules and a flexible strategy. If you think my previous statement is opinion, you should turn to the person on the right, hand over a few thousand dollars in return for a kick in a balls and be thankful.
It is true that smart traders follow the big money. The smartest traders get out into big money’s orders.
The writer brings up what is important is “who” is trading not “why”. Why can become important later if that is the type of trader you want it to be.
The authors final statement about trend… well I already said it here.
Maybe the writer just had a bad day because it is a good blog.
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