Minor trend trading

**KTP** · 04-29-2011, 07:59 AM

Originally posted by katie View Post

After few years of active stock market investing I've come into conclusion that the best way to invest is to follow market minor trends. Identifying the major trend is easy - the major trend is up since March 2009. However, identifying the minor trend (that lasts for 3-6 months) can be sometimes tricky. I'm looking for a web site that share knowledge and predictions based on the most important indexes Dow, S&P500, Nasdaq etc...
anyone can recommend on such site?
Thanks

Off the top of my head I can only come up with 3 websites that reliably predict the stock market over a 3 to 6 month time period. I don't know if any of them are still around, but here are the web addresses:

Mattel - MattelGameFinder.com

https://www.dartboardtoss.com

SLOTMACHINE.COM

**disneysteve** · 04-29-2011, 09:47 AM

Very funny, KTP. Katie, obviously the point is that what you are attempting is impossible. No individual, no website, no software can reliably predict the future. If it could, we'd all be using it and we'd all be wealthy. Stop trying to time the market and start investing rather than speculating.

**katie** · 04-30-2011, 12:40 AM

The Elliot Wave Principal has been followed widely over the past years, it uses the Fibonacci Series as a basis. Eg, in an up-market there are 5 Fibonacci up-legs and in down market there are 3 down-legs. This principal has proved itself (most of the time) in the past years.

nobody can predict the future in 100% success, I want to use the web sites as a reference in order to form an opinion on the market trend. I believe that market minor trend (3-6 months) can be predicted in 70%-80% success.

**Snodog** · 04-30-2011, 08:36 AM

It sounds like you are describing the momentum factor.

Momentum is supported in theory, but simply not practical to implement due to tax inefficiency/trading costs.

I think it is most likely a behavioral error, people SLOWLY incorporate news instead of instantly.

Works everywhere in world BUT JAPAN.

**gambler2075** · 04-30-2011, 09:29 AM

Originally posted by katie View Post

After few years of active stock market investing I've come into conclusion that the best way to invest is to follow market minor trends. Identifying the major trend is easy - the major trend is up since March 2009. However, identifying the minor trend (that lasts for 3-6 months) can be sometimes tricky. I'm looking for a web site that share knowledge and predictions based on the most important indexes Dow, S&P500, Nasdaq etc...
anyone can recommend on such site?
Thanks

I'm interested in how you think you can predict short-term market trends, given that you only have a few years of stock experience. And you admit that during those 2 years, we were in a massive bull market, so if you picked a long-biased strategy, then you would have been right.

I don't think you could have a large enough sample size to determine if you did have an advantage over passive investing in those past few years. For myself, since I am probably one of the most, likely THE most active trader on this messageboard (probably around 5000 trades in the past few years and 33,000$ in commissions to Etrade last year) I have a large enough sample size to start to see what works and what does not, and for me that is short-term trading of biotechs.

I'd be interested in hearing what your returns were over the past few years and especially how many trades you made, then I think we all could decide if you truly have an edge over passive investing.

g

**dczech09** · 04-30-2011, 10:27 AM

I think that experience in day trading is irrelevant. In fact experience is irrelevant and obsolete to knowledge and wisdom. We have seen what happened to "experienced" traders when one trade goes horribly wrong. There are countless text book stories of experienced traders costing their institution a huge sum of money. Day trading is simply gambling; you may win big, you may lose big.

Predicting market trends reliably over 3 to 6 months is like throwing a bunch of darts at a dartboard. A really good dart thrower will hit the bulls eye quite a bit, but one spoof will result in a lost dart. That lost dart could be an association for a poor trade.

If you want to continue trying to time the markets, then I cannot stop you. However don't expect us to say anything less of "I told you so" when a trade goes wrong. You cannot time the market. Nobody can time the market. In fact, the famous last words of an experienced trader is "I can time the market."

**gambler2075** · 04-30-2011, 11:42 AM

Originally posted by dczech09 View Post

I think that experience in day trading is irrelevant. In fact experience is irrelevant and obsolete to knowledge and wisdom. We have seen what happened to "experienced" traders when one trade goes horribly wrong. There are countless text book stories of experienced traders costing their institution a huge sum of money. Day trading is simply gambling; you may win big, you may lose big.

Predicting market trends reliably over 3 to 6 months is like throwing a bunch of darts at a dartboard. A really good dart thrower will hit the bulls eye quite a bit, but one spoof will result in a lost dart. That lost dart could be an association for a poor trade.

If you want to continue trying to time the markets, then I cannot stop you. However don't expect us to say anything less of "I told you so" when a trade goes wrong. You cannot time the market. Nobody can time the market. In fact, the famous last words of an experienced trader is "I can time the market."

So I think that it has been shown that there are experienced traders that make money day in and day out, and have been doing so for many years. I look at trading like the way the casino looks at hands of blackjack. I may not win every trade (hand) but overall, with a positive expectancy, I can basically assure profitability. The biggest thing that takes traders out is poor risk management, which eventually leads to them taking a huge bet that goes wrong and they get blown out. I would say those traders never really understood proper risk management. I know several traders who have made their living for many years trading (10+), and I don't doubt that they will continue to do so.

I am at the point where I think that I have enough trades to say that I truly have an edge on my trades, and whether you think it was just blind luck or not, I think a rational, unbiased person would say that, although it was possible that I was just extremely lucky to turn 10,000$ to well over 1M$ in a few years, over hundreds of trades, it is much more likely that I do indeed have an edge. That being said, maybe I blow up in spectacular fashion some day, that is certainly a possibility, however, I have taken out far more (150K$, not including taxes) than my original investment in the stock market, so I am OK with that.

Time will tell...
g

**katie** · 05-02-2011, 11:36 PM

There is no software that can automatically identify the trend too many parameters are involved like time, price, world markets, currencies, money movements from/to stock markets etc...
identifying the minor trend in 70%-80% is enough to be very profitable.

There are plenty of sites providing technical analysis on stocks, what I'm interested in is technical analysis on the major indices Dow, S&P500, Nasdaq , Russel 2000 etc...

it's true that I'm not that veteran in the stock market, that's why I'm looking for some advice and other opinions

**gambler2075** · 05-03-2011, 08:13 PM

Originally posted by gambler2075 View Post

I'd be interested in hearing what your returns were over the past few years and especially how many trades you made, then I think we all could decide if you truly have an edge over passive investing.

g

<ahem>

I must have missed that part of your post.

g

**jpg7n16** · 05-03-2011, 09:25 PM

Two words: paper trading

gambler - I really like the idea behind what you're getting at

'this strategy is guaranteed to work the majority of the time.'
'really? that sounds great! how have your results been?'
'well I haven't actually tried it out yet myself, but I'm certain it's the best strategy out there'
'....... Oh. I see.'

**gambler2075** · 05-04-2011, 12:32 AM

Originally posted by jpg7n16 View Post

Two words: paper trading

gambler - I really like the idea behind what you're getting at

At first I was hesitant to post what I did, because the OP might get offended, but then I decided to do so anyway, because the only way to be intellectually honest here is to step back, take a look at how well the strategy works, and compare it to buy and hold.

A few other comments:

First: It is very difficult to get a sense of if your strategy is working, unless you have a large enough sample size. With longer term/fundamental plays, it takes many years to play out. A famous investor once said that the problem with fundamental analysis is that, by the time you are proven right or wrong, with a large enough sample size, you are dead.

With shorter term trading (like the kind that I do), at least I can gain enough of a sample size to see if it works or not. I wasn't sure if my initial gains were due to luck or not, but after seeing many, many trades and the outcome, I am confident that my method gives me an edge.

Second: The human mind is very good at seeing patterns where there are none... People look at trades and they see how a few went well... but they ignore the majority that did not, and focus on the winning few. They then see a pattern where there is none. I see this all the time in budding traders on one of my trading messageboards. This may be the case with your short term returns.

Third: The human mind is very good at denial... they can see a few winners and forget their losers. That is why the overall average return of your strategy, and the sample size, is important. I am not saying that you are deceiving yourself, as you may have a winning strategy. All that I ask is that you tell us your average returns, and your number of trades so we (and you) can make an educated evaluation of your strategy. Personally, I feel that for the vast majority of non-traders, the best strategy that they can do other than buy and hold, is buy and hold, but adding more during times of panic (i.e. Mar 2009).

g

Minor trend trading