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:: why markets
turn up and down
almost
50% or the time, any particular stock or market will turn, changing
direction. Why do markets turn?
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NOTE:- "Why Markets Turn" has been registered as a trademark by "Morikawa, Dan", the owner and operator of the website "whymarketsturn.com" on Nov 13th, 2006. This article is nothing to do with either Mr Morikawa, or his astrological software prediction method, and all trademarks are hereby duly acknowledged. To read more about Mr Dan Morikawa and his allegations of 'copyright infringement' aganst this website, click here The Reason Why Markets
Turn
Trader Jack 2004
Here's an idea
for you. A great many trading systems and methods rely heavily on
predicting when a particular market will turn. Catching these reversals
or rallies would be neat, wouldn't it? In fact, what if you could
figure out when a market would NOT turn? You could place a trade,
secure in the knowledge that as long as tomorrow wasn't going to
be a market turning point, your position was safe. That would be
almost like 100% safe trading, wouldn't it? You enter when tomorrow
is NOT going to be a pivot in the market, and you take the trade
off when tomorrow IS going to be a pivot. Sounds simple, doesn't
it?
Turning Points
Markets turn
for a variety of reasons, which usually seem blazingly obvious after
the fact. Perhaps a monumental piece of news broke, and the market
halted in its mad bull rush upwards and started to fall. Maybe some
other country changed their interest rates, and the knock on effect
on OUR currency meant our interest rates had to change too,
causing turmoil in the markets and a rapid turn in market direction.
It could even be something as simple as yesterday's market volatility
being so large that a turn around was BOUND to happen as happy traders
cashed in some of their chips (notice:- market events which are
BOUND to happen often don't, unless you are looking at it with 20-20
hindsight!).
Are Market
Turning Points Random?
You may have
noticed on the left, the little intro explaining why markets turn
about 50% of the time. This is interesting in itself - if it were
not true, you could make easy market profits by simply continually
betting on the more likely scenario (a bit like having a coin
that came down 'heads' 6 times out of 10 - you wouldn't really be
betting on tails, now, would you?!). But hang on - does this
mean that all the various events that make a market turn all nicely
add up to a good round 50%? Is it really possible that the madcap
combination of breaking news stories, interest rates, arbitrage,
speculation and market making shenanighans can possibly sum up to
produce a random 50-50 split? If you think YES,
click here. If you think NO,
click here.
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