Is the market really an egg inside the belly of a big jelly monster?

So I would like to share my market philosophy… and hear your perspectives.

It seems that many traders I talk to are focusing on chasing the money in the market, trying to out guess, and out smart the market… to ride that next gigillion dollar trend. All too often we are blinded by the emotions we bring to trading, the silent prayers we make in the hope that we will finally get a break on this game of heads or tails.

They say its a zero sum game… so even if we make money we are just profiting from the poor suckers who didn’t know what they were doing… but what I believe that, a good trader earns their money. I believe that if you know what your purpose is in the market then you can make trades for a purpose and making actions with purpose gives you great rewards… AND if you don’t then you pay the traders who do!

I believe that trading is not about being a punter who may or may not be working the odds with fancy indicators. It is about helping the market correct itself back to its equilibrium. It is about returning the equilibrium back from Chaos (based on the symmetry perspective in chaos theory).

So, before I can discuss what that exactly means, I will share how I see the markets from a not too technical perspective.

Imagine the currency market as a big jelly monster moving fast in a sequence of ordered binomial random variables (basically you cant know with 100% certainty which exact direction it will move and for how long.

So there is this glob of bubbling jelly moving rapidly through space! The trader is a hungry animal that lives on position platforms (price points). There is food on every other position platform that the trader is not on (it is in greater quantities the further away it is) and they are always hungry. However, the only way across to the next position over the great abyss is to ride the jelly monster.

If the trader is successful they will catch the jelly monster for awhile and ride it to the platform that has the most food. But eventually the jelly monster becomes all too unstable and if you don’t get off you might end up falling into the abyss OR have to get off at a platform with less food.

Offcourse, if the trader leaps and fails to catch the jelly monster, or falls off then her capital is eaten, by the jelly monster. As the traders money falls into abyss… the longer the trader is in the abyss the more money they lose (best to have that stop loss to stop falling) cause abysses go on for longer than you think.

So now you know the story of the jelly monster and the trader.

Here is the point!

After reading this… think what is the first question… is it how can we catch the big jelly monster and use it to get what we want? OR What does the jelly monster want? What if instead of trying to capture the Jelly monster we focused on helping it?

Remember the jelly monster is not just made up of speculators trying to move from price point to price point! There are other animals in this metaphoric universe that are trying to do other things… they all see the jelly monster from a different perspective. The speculator/trader perspective is just one.

Some of the other big animals include:

  • Exporters and Importers
  • Institutional investors
  • Bond market investors
  • Future markets (portfolio Hedging)
  • …?

I want this thread to add more stories to explain how these animals live and see what traders describe as the big jelly monster.

The cure to RSItis and MACD Deficiency is to think broadly of what we are actually doing in the market.