I’m posting this here so that I know that it will get answered by our ‘gurus’ (you know who you are)!!!
Let me start out with a couple of ‘statements’ and / or quotes:
1 - There are certain accounts in the US where the trader can only go long, never short.
2 - We’ve all heard of the ‘three-day-up-two-day-down’ phenomenon.
3 - A quote from J. Welles Wilder: “For some reason, random price movement appears to take longer to increase than it does to decrease. This appears to be indicative of most price action; that is, the down moves are more severe and of shorter duration than the up moves”. (from ‘New Concepts In Technical Trading Systems’).
4 - As you may by now know I ONLY used Wilder’s trading systems AND it only struck me today that over the past month or two my number of successful long trades definitely outweighs my number of successful short trades.
My question, or ‘theory’, is this:
From the above would it not be fair to say that going long in any market gives the trader a ‘slightly better edge’?
What do you think (John, Tony, anyone)?
I am glad you posted this here Dale because I am going
to put forward something which has been eating at me for a while,
& I also want to throw it open to discussion.
As you may by now know I ONLY used Wilder’s trading systems AND it only struck me today that over the past month or two my number of successful long trades definitely outweighs my number of successful short trades.
This is a stock market quote?
Now my question, does the stock market move the same way as
the forex market?
In the forex market you go long one currency while going short the
other (bull). This also needs somebody to take the opposite stance. (bear)
To answer your question Dale & I ain’t no guru, the Forex market
moves up at the same rate it moves down.
It has to because there are 2 sides to it, for an example the EUR/JPY,
this could also be expressed as the JPY/EUR, it is market sentiment, fear,
etc. which drives the market. (This was expressed in a post sometime ago
by Rhody or Tymen1, can’t remember which)
[B]Examples[/B]
I feel the yen is stronger than the Euro at the moment therefore I short the
EUR/JPY.
Another trader feels different he goes long the EUR/JPY because Trichet
says the Euro is the strongest currency.
[B][U]
These are just examples they ain’t signals by the way.[/U][/B]
Can you see what I am so badly trying to say?
Hello,
Sorry - I don’t get ‘it’.
This is a stock market quote?
Are you asking me a question about this? Not sure. What I AM saying is that it only struck me today that let’s say, for example, I have 10 open long positions on any given day according to ANY of Wilder’s trading systems. What I’m saying is that on this day 8 of them will hit their TP but on another day let’s say I have 6 short positions as indicated by the same trading systems then possibly only 2 of them will hit their TP (I’m exaggerating for the purposes of demonstration i.e. it’s never ‘that bad’) and this seems to be a ‘repeating phenomenon’ (at least for the past couple of weeks so). This got me to thinking about those trading accounts where you can only go long and not short an instrument and then the quotes from Wilder etc. etc. etc. and that’s why I posted the ‘query’ i.e. to see if there was any merit in this. Of course, the one ‘unknown’ is that maybe his systems are ‘weighted’ in favour of long trades (I know one of them definitely is but I’ve only just started using it i.e. all the other trades have been made using systems of his that I’m positive are NOT weighted one way or another).
I do understand what you’re saying i.e. you’re saying that it’s the proverbial ‘zero sum game’ i.e. for every buyer there is a seller but even bearing this mind is it not just possible that the BIAS is ‘up’ or ‘long’ or MAYBE this applies more to stocks, bonds, commodities, and metals than it does to forex???
Sorry if I’m coming across as dumb but I don’t understand whether you are answering my question or making a statement that you would also like clarification on.
Yep as I have said I know what I want to say but sometimes
interpretations yada yada yada.
This is what I am trying so badly to say.
I do understand what you’re saying i.e. you’re saying that it’s the proverbial ‘zero sum game’ i.e. for every buyer there is a seller but even bearing this mind is it not just possible that the BIAS is ‘up’ or ‘long’ or MAYBE this applies more to stocks, bonds, commodities, and metals than it does to forex???
The overall bias, taken to infinity, if all trades are factored into the
equation is equal, as many longs as shorts. (ie Longs + shorts = 0 )
The fact of your winning longs against shorts I would say are coincidence.
- A quote from J. Welles Wilder: “For some reason, random price movement appears to take longer to increase than it does to decrease. This appears to be indicative of most price action; that is, the down moves are more severe and of shorter duration than the up moves”. (from ‘New Concepts In Technical Trading Systems’).
This is a stock market quote?
Ok sorry got the wrong quote in my reply the one above is the quote I
wanted, this appertains to stocks.
Ok - tell you what - from NOW (OK - let’s be fair - from tomorrow) I will start keeping a very basic trading journal i.e. long or short, TP hit or not, and try and build up some data over a period to see what happens.
I know that ‘logically’ or ‘mathematically’ you HAVE to be right i.e. ‘zero sum game as far back as infinity’ BUT (with stocks anyway) remember that ‘shorting’ a stock has not always been an option i.e. ‘in the old days’ there was no such things as ‘shorting’ a stock i.e. you bought a stock today, hopefully it went up in value over a period, and then you sold it at a profit, and that was how the markets were ‘supposed’ to work. Is it not just possible that this ‘long bias’ has been created in history?
Like I said: ‘logically’ or ‘mathematically’ you HAVE to be right but then again, who would think that the movements of the markets could have anything to do with the movements of the sun, earth, and moon and their realtionship to each other at a given time? Oh yes they do (and no I have not ‘lost it’, I’ve not been drinking and I’m not ‘smoking’ anything - I’ve just started ‘getting into’ Wilder’s ‘Delta Phenomenon’ and let me tell you that what I ‘passed over’ as ‘mumbo jumbo’ when I first got the book (his latest work) sure ain’t no ‘mumbo jumbo’ not by any stretch of the imagination)!!!
To address the Wilder quote about markets moving more slowly up than down, that is definitely applicable to stocks and much less so to forex for just the reasons daydreamer65 points out.
The stock market is an asset market. Most positions do not have a short on the other side. Greed motivates people to buy, but fear is a stronger motivator to make them bail out. That’s why sustained bull markets tend to grind higher while bear markets tend to see violent sell-offs. There has never been a 20% one-day rise in the Dow, but there definitely has been a decline that large.
Because the propoderance of forex trades have longs on one side and shorts on the other, it tends to be more balanced. If you were to do a distribution of daily price changes in forex you’d see a roughly even upside and downside.
OK - well - thanks for the input - it’s appreciated.
I’m still going to start my log and ‘keep track’ of the percentages (I’m only trading forex pairs and some Gold and Silver and Oil at the moment because I can’t buy full size Dow lots at the moment so my results, at least for the next month or two, would be based on forex pairs only).