I had a good long talk with Giovanni yesterday. He worked at a 330 million dollar hedgefund this past summer so he has plenty of perspectives to represent about trading.
My conclusions and ideas about trading: The market is made up of players in a pyramid scheme.Remember the old food pyramid, with a triangle for fats/oils at the top. Imagine that.
In the top triangle, are Ibanks
Sharing the level underneath are Market makers(specialists, floor traders etc) and Hedge funds. The later would have more real estate at this level if it could be ideal.
Underneath are mutual funds foreign long run investors, prop firms.
At the bottom are online brokerages and their constituents. Note: The sections are divided by volume of people in each category, not by %age share of total market cap. I have no idea how to represent the market cap. The market makers are the ones who always win of course. My ideas in trading are biased by me being indian. No really, read GAMES INDIANS PLAY. It'll explain to you why if you are ever in a business transaction with an Indian odds are you are losing. I can't help it, I was taught these things since I was young. The point of this is, it is my opinion that shifts in the stocks I trade are rarely due to news. Its a psychological war between market makers and traders like me to make money off of day-to-day price variances. This is, afterall, what a true daytrader like myself, and the rest of GOTS are trying to do. This is why I recongnize the fake breakouts. They are attempts for the market makers to convince people that the stock has reversed. False, there is no news, a wave of buying has come in so that market makers can get nice short entries. The higher up you can make the stock tick, the better your entry for a short. Simple.
Conclusions with GIOVANNI: Everything I write on this blog is complete bull that my self-inflated ego vomits out everytime I make a winning trade. Thats right. Look at all of the quotes people have about trading. When your POS stock begins breaking out in your $10K short, you aren't quoting Warren Buffet anymore, you're hyperventilating into a brown paper bag and taking pointless puffs of your asthma inhaler! Even Giovanni's boss, the parter of the fund, loved reading self help books on trading. I have nothing against the guy, he's actually managed to keep his fund afloat in this mess. Good for him. I'm just saying that I have plenty of theories about how the market works. I could easily be wrong. I know what I see is profitable, but I have no idea if I'm my logic is what is going on. If you see an inefficiency, exploit it. That is what Muddy does. This is what I do. I just like to explain why I think it worked. The point of this post is, my explanations could easily be wild theories.
Hell, Muddy, probably realizes its pointless to blog like I do. People make a winning trades, move on, just realize why it worked and try it again the next market day.
This is a very funny post, in my opinion. It feels good to be breaking even after months of being down.
