Apr

17

Pure Greed, from anonymous

April 17, 2015 |

 One of the frustrating things about going against price action is sitting there watching the various markets' movements align to eventually produce a constantly changing level to buy or sell at. It's like a dog-fight between two state of the art fighter jets.

A really good analogy is the pilot looking through the HUD (Head up display) in which he can see at least three variables operating in more than one dimension all working to get the red dot on the target that is then augmented by a beeping sound (more multidimensional input).

Getting back to markets then, whilst all this is happening the reversalist is watching the price action move towards the zone… Waiting, waiting…The thought that eats away at me is this–why aren't I 'on' this move that is occurring NOW (as we approach my zone of interest).

Today is a perfect example. The market mistress allowed me to sell GBP USD at a much less worse than usual moment. However, I watched it climb in a straight line for 3 1/2 hours from the London open before it got there.

For the life of me, I cannot find repeatable techniques that will allow me to trade both sides of the market (using the same model) over the day. (I am excluding My high frequency activity here).

I know it is greedy, but I don't see why I can't have the cake and eat it.

Another tidbit that reversal types will identify with: During winning periods isn't it horrible that the moves that lead up to your taking risk are relatively more smooth and pleasant than those subsequent….

Which leads me to this:

I speculate that market moves which, after the fact, look beautiful, calm and smooth are relatively substantially more difficult to predict than subsequent horrible messy volatile reversals.

principiis obsta (et respice finem)

And the reverse.

anonymous writes: 

All 100% true in my limited experience. Its feels like a great irony that you wait for key moments, and then your key moments in a sense seem more difficult vs. what you had just witnessed… If you think it is going to "get there" why the hell is one not already long (or short)?

Consider a military ambush. The enemy might be in field of vision for a shot for quite a while before they enter the "kill zone". In fact the shot might be more clear as they (the prey) are in the open. They wonder about predictably, or so it seems, strutting or driving forward in a linear fashion. So why wait for "the kill zone" to make a shot? The difference is when they are in the kill zone, they are cornered and their reactions to that first shot are predictable - they are trapped and you can gun them all down much more reliably. I see waiting for the key moments as identifying points where the competition is off balance or trapped vs. just having a guess at market direction. It seems like it should be the same, but maybe it isn't.

By the way If my analogy is off-base I apologize to anyone with actual knowledge of how military ambushes are constructed. 


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1 Comment so far

  1. Jim Davis on April 21, 2015 1:02 am

    Yes, well, so many of us see the same thing so it must be a mirage, no?

    How about this theory. The ‘move’ toward the ‘zone’ you’re waiting for as a ‘reversalist’ is designed to get suckers to buy/sell, and must therefore be palatable. The reversal itself is much more violent and noise ridden as those trapped wrong, seek to escape further loss.

    Or maybe not.

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