More Prediction Chases

Feedback in:

“Hi there, Sorry if I go on a bit, if you manage to stay awake during this email then well done. I am 17, and I’ve been trading horse racing markets full time for 3 months on the betting exchange (illegally of course, using an account my dad made for me). It’s going well, but the profits are limited because the markets are so thin. I’ve recently been looking into trading financial markets, and came across a few turtle books. Before I found these, I had an idea of how to make money in these markets; experience. I had read so many times that people who follow set rules in the market will end up out of pocket, and the only way to make money was to get a ‘feel’ for the market and move in and out when you feel the time is right. After reading the books though, this changed my view. For the past two weeks I have been reading books, forums, watching markets and developing a strategy. I back tested a few of the ‘mainstream’ (and therefore losing) strategies that are about. Things like moving average crossovers, Bollinger breakouts, MACD crossovers/divergences etc. After I had done this, I came to the conclusion that the way to make money is to avoid sideways markets. Trend following struggles in sideways markets (obviously if done properly the profits will make up for the losses) and I made it my mission to find a way of predicting sideways markets before they happen, and at the same time predict potential trends before they happen. So what measures volatility? Bollinger Bands. And what struggles during sideways markets, but at the same time is used my many as a trend indicator? Moving averages. I am pretty sure I have developed a way of predicting trends and sideways markets before they happen using a ‘variation’ of Bollinger bands and simple moving averages. I’ve been back testing for the past few days (I don’t have any software to do this so I’ve had to do it manually) on individual stocks, indices, and currencies…This is where I need your help. I would like your opinion on [my] results. I have no one to compare these with, because I don’t know anyone that trades these markets. I would also value your opinion on which markets to trade. One problem I have come across is that signals regularly come in the middle of the night, and then by morning the market is miles away from the entry point. So I looked into stocks, but the problem there is they all seem to mirror each other? I hope you don’t mind me telling you what the strategy is. Without sounding like an idiot, I just want to keep it to myself for now.”
Kind Regards,
Daniel H.

A method of predicting (avoiding) sideways markets?

I am assuming you would then be left with a strategy that never loses money?

Predicting = impossible.

Avoiding sideways markets = impossible.

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You might like my 2017 epic release: Trend Following: How to Make a Fortune in Bull, Bear and Black Swan Markets (Fifth Edition). Revised and extended with twice as much content.

9 thoughts on “More Prediction Chases

  1. Correction to the correction. No one can predict anything, including Jim Simons. He only plays the probabilities. If he were able to predict, he would’ve avoided August 2007 and the major hit he took there.

  2. Daniel,

    If anyone does know, they surely wouldn’t be telling anyone. Or, they’d sell books making you think they contained the answers within. Chasing answers, always chasing answers…

  3. Why predict when you can just wait see where its actually going… very simple. Bollinger breakouts, MACD crossovers/divergences, fibbannico, ghann,all that bullshit is bullshit.

    “One problem I have come across is that signals regularly come in the middle of the night, and then by morning the market is miles away from the entry point,”

    If your that sure of your strategy you can put limit orders and sleep very nicely at night.

  4. If anyone were to unlock the mysteries of making accurate market predictions it would surely be a 17 year old kid with several days of backtesting under his belt.

  5. I think he’s onto something and has a great future ahead of him. What were you doing at 17?

  6. Daniel,

    With thousands of variables contributing to the market, including the weather, you have a better chance of predicting the weather than the market.

    What’s more, there’s no need to predict anything…when it goes up, buy; when it goes down, sell; when it goes sideways, go to the beach.

    Good luck.

  7. The market is very stingy. It only give us one day of information at a time. I do not beleive anyone who says “The market is looking 6 month’s into the future”.
    We have to deal with that one day snapshot the market gives us. If that snapshot is positive for enough days we can identify an up trend. If the daily snapshot is negative for enough days we can identify a down trend. Not complicated, but for some, difficult to see.

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