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To: unspun; BipolarBob
Stock price changes affect the wealth of traders, not companies. The difference is crucial. If you don't understand the difference, do yourself a favor and don't trade.

A market is comprised of ALL its participants, regardless of who they are, how much trading capital they have, or what motivates their trading decisions. Any theory of market analysis that has any validity must be able to account for actual market action. That means it has to account for the behavior of any and all participants—including governments, central banks, investment banks hedgefunds and evil multibillionaires.

There is a large cohort of traders who are consistently profitable over time, in spite of news events, natural disasters, government intervention and attempts at manipulation. Some of them are billionaires, but most have much smaller amounts of trading capital, and have absolutely no ability (as individuals) to move the market.

Traders can be consistently profitable using precisely the same techniques that professional gamblers use to consistently make money: Money management, risk management, self discipline and trading based on the relative probabilities. Markets are not deterministic, but neither are they random. It is usually possible to determine when the probability is far higher that the market will rise and not fall, or fall and not rise. Just as it is usually possible to determine when you probably have a winning hand, and when you probably don't.

22 posted on 08/31/2010 5:57:05 PM PDT by sourcery (United We Stand, Divided We Fall: You have to give in order to get)
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To: sourcery; unspun; BipolarBob

“Stock price changes affect the wealth of traders, not companies. The difference is crucial. If you don’t understand the difference, do yourself a favor and don’t trade.”

Do yourself a favor. Read this classic and learn that there is more to the world of securities than just day trading:

http://www.amazon.com/Security-Analysis-Benjamin-Graham/dp/0070239576

The initial post concerns reform of the markets, not day trading. You’ve been posting nothing other than a simplistic rationale about trading. I’m pretty sure it’s because you know little else about finance.


25 posted on 08/31/2010 6:28:58 PM PDT by Pelham (Islam, the mortal enemy of the free world)
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