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wasp

Bulls N Bears.. Its All in My Mind

bulls n bears  

20 members have voted

  1. 1. bulls n bears

    • Glass half full? I am just as comfortable long
      1
    • Glass half empty? I'm only happy when I'm shorting
      3
    • Who cares - just concentrate on whats in the glass and ignore bull/bear factor
      16


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I have this tendency to only feel overtly confident when a market is heading down. This isn't based purely on a psychological factor, a high rate of the time, (currencies) will drop a hell of a lot easier, smoother and longer in a downward movement.

 

Someone once mentioned I should flip the screens so I am always in a 'bear' market and I think it may help!

 

It is a negative, cynical outlook on the world that does it I believe. I am long eurjpy right this second and I do not believe this will break the highs and continue up for a few hundred pips.

 

If I turned the screen upside down though, I would be marking on the major levels for the next 300 pips lower ready.........

 

Anyhow, I am curious to others thoughts on whether they find their personality plays a part in this way?

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  wasp said:
I have this tendency to only feel overtly confident when a market is heading down. This isn't based purely on a psychological factor, a high rate of the time, (currencies) will drop a hell of a lot easier, smoother and longer in a downward movement.

 

Someone once mentioned I should flip the screens so I am always in a 'bear' market and I think it may help!

 

It is a negative, cynical outlook on the world that does it I believe. I am long eurjpy right this second and I do not believe this will break the highs and continue up for a few hundred pips.

 

If I turned the screen upside down though, I would be marking on the major levels for the next 300 pips lower ready.........

 

Anyhow, I am curious to others thoughts on whether they find their personality plays a part in this way?

 

I have pretty much the same mindset.

It seems to me that prices can collapse down with gaps, more easily more often, than they tend to rise.

It would be interesting to know some actual stats on this in terms of seconds/minutes/pips movement etc. as perhaps there is a possiblity that i am over imagining the significance of the difference between rise/fall speed/ease.

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I think part of it for me at least is knowing that when the market drops, it drops much quicker than it typically rises. When we are in a true down move, that thing can move b/c there are many that simply only go long. Some can ONLY go long (mutual funds). So when those stop levels are hit, there can be a tremendous domino effect.

 

There is a big danger however in getting overly optimistic about taking shorts. Need to take what's in front of you w/ no bias whether that trade is long or short, unless of course your methodology calls for that bias.

 

Usually we see longs grind it out and take time to get to profit areas (unless drive by news), meanwhile a shorting wave can take seconds or minutes depending on the move you are riding.

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  wasp said:

 

It is a negative, cynical outlook on the world that does it I believe ...

 

Anyhow, I am curious to others thoughts on whether they find their personality plays a part in this way?

 

You may be cynical on the world, but you must be optimistic on yourself. You would have to be in order to trade well. I prefer shorting, too. I think it is because of the quick profits. I also think it is because the market turns over more quickly at tops than bottoms. I find I have more stop losses in buying than in shorting. Because it takes longer, I think bottoms are harder to read than tops, so that is another factor for me.

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Don't you find though that folks have a tendancy to embrace & overemphasize bad news more than they do good news?

 

I guess that (fear) simply knocks onto trading as it does in the wider world. I guess maybe a good percentage of it is pre-conditioned.

 

Offer someone an item of good news & they'll fish & ferret around for confirmation first, allowing the good news to begin cooling off.

 

Pitch in a sorry tale of woe or panic & they go all out & stampede it to death :o

 

Human nature is a strange condition for sure.

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I never pick the tops and bottoms, I just wait for it to start a new trend, so short or long doesn't matter much to me. I do agree that in the stock/index futures world down is faster than up most of the time but I find I probably do about as well in either situation.

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  wasp said:
I have this tendency to only feel overtly confident when a market is heading down. This isn't based purely on a psychological factor, a high rate of the time, (currencies) will drop a hell of a lot easier, smoother and longer in a downward movement.

 

Hi wasp,

 

With regard to currencies - that is completely and totally all in your mind. Currencies are a relationship. No matter which way it is moving, one of the currencies is appreciating while the other is depreciating. Does it make sense to you if I said a spread (relationship) of gold and silver always "will drop a hell of a lot easier, smoother and longer in a downward movement". Thinking about the basis for your assumptions can go a long way towards your personal growth.

 

My best regards,

MK

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  Jocelyn said:
Don't you find though that folks have a tendancy to embrace & overemphasize bad news more than they do good news?

 

I guess that (fear) simply knocks onto trading as it does in the wider world. I guess maybe a good percentage of it is pre-conditioned.

.

 

I think that's a good point... fear is imo a greater emotion than greed. Markets are just a representation of human psychology, right?

 

Still, JT1 put forward an interesting question. We should back up what we "feel" or "think" by some numbers. Just out of curiosity, I'd like to know about how sharp rises and falls generally compare. It's also interesting we always talk about "selling climaxes" but a buying climax is mentioned far less...

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Days with the greatest gain (net and percentage wise):

 

http://www.djindexes.com/mdsidx/index.cfm?event=showavgstats#no3

 

Days with the greatest loss (net and percentage wise):

 

http://www.djindexes.com/mdsidx/index.cfm?event=showavgstats#no4

 

 

It's remarkable, that aside from 1914 and the crash in 1987, the greatest gain days are all around +/- 10%, but the worst days are actually smaller percentage wise.

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It helps to know whether you trade better to the long side or to the short side, or if there isn't much of a difference. Do you keep metrics on your trading? For example, What percentage of your shorts are winners vs what percentage of your longs. What about points or pips? Does your average short result in more profit, or is it your average long? There are lots of ways to evaluate this, but you need the basic data. Let me know if you would like a simple log and worksheet to do this and I can post what i use.

 

Eiger

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  Eiger said:
It helps to know whether you trade better to the long side or to the short side, or if there isn't much of a difference. Do you keep metrics on your trading? For example, What percentage of your shorts are winners vs what percentage of your longs. What about points or pips? Does your average short result in more profit, or is it your average long? There are lots of ways to evaluate this, but you need the basic data. Let me know if you would like a simple log and worksheet to do this and I can post what i use.

 

Eiger

 

Keeping a log is a good idea for these things. But whether you trade better on the short or long side, is often a result of the current cycle the market is in imo. For example, last year's parabolic rise pretty much screamed for the long side...

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  firewalker said:
... But whether you trade better on the short or long side, is often a result of the current cycle the market is in imo. For example, last year's parabolic rise pretty much screamed for the long side...

 

That's definately true over the short term. Longer term, though, the market cycles should even out and you will get a truer picture of your strength (long or short), if you have one.

 

Eiger

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Plunging (shorting) is far less stressful for me, as there is far more chance that there will be gaps down, than the typical steady climb up.

Sure, sometimes there can be gaps up if price is climbing quickly and for a reason such as after a news release or a sudden break above R, but not generally i don't think.

I feel justified in favouring longs over shorts. However, if i get 2 signals on 2 instruments on the same candle, one long & one short - trading only 1 at a time on the shorter timeframes, i don't automatically pick the short - i look to see which choice makes most sense in the context of the overall chart. If they look about even stevens, i'll go with the short.

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"In judging volume behavior, allowance must be made for the fact that declining markets normally are accompanied by lower volume than advancing markets except, perhaps, at times when active liquidation is taking place. The reason for this is that bull movements attract a much greater public following than bear movements." - Wyckoff quoted from here: http://www.traderslaboratory.com/forums/f131/determining-the-trend-of-the-market-3873.html

 

I'd like to quote jasont as well, from something he wrote in his blog:

"Another reason I think is that the market moves down a lot quicker than it moves up. I guess due to the speed of the selling it is harder for people to get on board in comparison to buying."

 

I'm bit surprised this thread hasn't got more attention, as I think it's an interesting topic to debate.

 

If the public can't short (because not every investment tool allows the man in the street to sell short), or does not want to (because he prefers to "buy and hold"), why do we assume that selling happens faster than buying?

 

Or is it perhaps not selling, but just liquidation of actual positions?

If the public can only go long, and participation is greater in upmoves, should we not expect those moves to happen quicker and be steeper?

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Thanks for bringing my attention to this thread Firewalker.

 

Jocelyn said "Don't you find though that folks have a tendancy to embrace & overemphasize bad news more than they do good news?" The people that know I trade the markets often only ask me how my trading is going when we are declining and often only ask what to do when we are declining. Of course I never have the answers for them but they still seem to gain an irrational thought process when faced with the possible idea of loss. These are all mum and dad investors who would never short a market mind you.

 

I don't necessarily think people assume the market drops quicker than it rises but more so see that it does. I haven't done a full scale investigation to what I am about to say but the following is something I have loosely picked up on. When we turn down after a move up, we usually take maybe 2 or 3, 5 minute bars on the ES to change direction. However when we turn up after a move down, we often see 3-5 5 minute bars on the ES to change direction.

 

As I said this is not a fact based analysis but just something I have broadly noticed. It is probably also why I am better at long trades than short. In fact my statistics on winning long trades are twice as good as my short trades. It is a bit of a psychological reason, due to seeing the market drop quicker than it rises, I often get in too early because I am afraid of missing out on the move. However I believe the long moves take more time so I wait for more confirmation.

 

If you were to draw the markets as waves, the tops of the waves would have shaper turns than the bottoms which would be more broad based. I agree that this thread should have more attention. It is an interesting phenomenon.

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  firewalker said:

 

Or is it perhaps not selling, but just liquidation of actual positions?

If the public can only go long, and participation is greater in upmoves, should we not expect those moves to happen quicker and be steeper?

 

 

 

Interesting!

 

 

Maybe the fear of a drop is greater than the fear of a rise? But, it's institutional money that makes the market, so why do they stop competing so suddenly, and probably more importantly, what's the strategy/call for the resumption of the competing? What are the institutions up to?:question:

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In an article link provided by eggbeangame (http://www.zealllc.com/2008/spxdown.htm), the author states:

 

"While bears are much tougher trading environments than bulls, they can still be traded profitably by the prudent."

 

What do you think/experience? Is a bear market more difficult to trade than a bull? Is it because the average volatility usually is greater? Does it have an affect on your strategy for intraday trading?

 

There are many more experienced traders here than me, so let's hear those with the experience :)

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