Forum Archive Index - October 2003

["tennyson@caverock.net.nz" <tennyson@caverock.net.nz>]

Title:

Hi Woody

>

> Snoopy you are TOO pedantic. Relax a bit go withthe flow. I lack the

> Knowledge of English to combat you with this language. In Dutch,Malay

> or Indonesian I can better explain. to ME to go beyong FA would take

> me hours and hours because I could also elaborate on TA, There are

> Chartists, Pure Cycle Traders, There are Luna Cycle Traders,

> Astrological Traders,

>

Sorry Woody, your English is so good sometimes  I forget that it is not

your natural language!    The fact that not all F/A people use a system that is exactly the same should not be difficult for you to understand though.

> > >

> > > You have Price: Which is both a Fundamental and Technical Issue

> > > You have Time: Which is only a Technical Issue You have Support

> > > and Resistance. You have Cycles.

> > >

> > > Price is what the Market is willing to Pay: Now all the FA traders

> > > do their research come to a conclusion and from this they

> > > formulate a Price, a value for the Market. The Buyers wont pay

> > > more and Sellers wont accept less. Now this creates a memory in

> > > the Market.

> > >This memory is called Support and Resistance.

> > >TA traders read this message and

> > > formulate from their charts that the Max Price for the Market is

> > > $x.00 and the Min Price is $y.00. So they note the Support and

> > > Resistance lines on their charts. Now every time a price moves

> > > near a Resistance line both old and new. The Buyers hesitate the

> > > FA traders hesitate because their value indicators say DO not pay

> > > any more for this Market.  The TA traders do not need to say that

> > > they just watch their lines and they know that the Market will

> > > hesitate at the line or even stop. Now if the Majority of the FA

> > > traders decide that THIS is the Price then they will not pay

> > > anymore, so the Market stops. They TA traders are already prepared

> > > for this and place their stops there or Exit the Market. Now the

> > > FA sellers use their value indicators to tell them that this is a

> > > good place to sell, WE HAVE SOLD HERE BEFORE.

> > >( Hence a Cycle )

> > >

> >

> > You were going well, but I think your logic just derailed.  

>

> PLEASE TO TELL WHICH ONE IS DERAILED!!!!!

>

You said that a T/A person will always get out before an F/A person.   I disagree.

>

> WAKE UP SNOOPY I HAVE NEITHER THE SPACE NOR THE

> TIME TO TO SPEAK

> ANYTHING ELSE BUT GENERALLY!!!!!

>

OK I'll be more direct.   Your belief that all trading systems work on fixed support and resistance lines is wrong.  This is no criticisim of your system.   I am just pointing out that others do it differently.

>

>SINCE OUR COMPANY MAKE AN EXCELLENT PROFIT AND WE HAVE APPLIED FOR AND

>WILL RECIEVE AND A SECURITIES LICENCE TO OPERATE A HEDGE FUND IN THE

>NEAR FUTURE I FAIL TO SEE THE DISADVANTAGE OF MY SYSTEM.

>

There may not be any disadvantage.   Perhaps in the markets you trade your system works perfectly for you.   I merely point out that if you take your system to another market you might find another trading system is better.

>

>  Think of

> buying an antique clock as an analogous example.    I buy a  clock

> for $2000 and stick it on my mantlepiece.  In two years time I  offer

> to sell it to you for $2100.  Do you buy it from me or not?   I

> guess the first thing you would do is go and visit the antique shops

> and see what similar clocks are selling for.   Let's say most were

> priced  around $2200.    So the facts are clock prices are on an

> uptrend and  you have a chance to buy one at less than market price.

>   So do you  buy it from me?  I will be interested in your answer!

>

>

>MY ANSWER IS SIMPLE I WILL PAY YOU WHAT EVER THE CLOCK

>IS WORTH TO ME.

>

>IF IT IS ' NEUCHATEL GRANDE SONNEIE ' I WOULD PAY YOU A

>FORTUNE

>

>IF IT WAS A PENDULE NEUCHATALOISE I WOULD PAY ONLY

>$2000.

>

>HOWEVER IF IT WAS A  PENDULE NEUCHATALOISE  LOUIS XV

>THEN MAN I WOULD PAY YOU $1000'SSSS

>

Well,  the clock is a 'PENDULE NEUCHATALOISE'  so your answer is that you will pay me $2,000.   Very good, as you got it for less than the market price of $2,200, so you got a bargain.   Or did you?

You made one mistake in buying this clock from me.    You were so busy trying to figure out what kind of clock it was that, you did not look closely at my particular clock.    

Before you get angry, let me make it clear that I was not trying to rob you.   The clock you have just bought from me goes perfectly and looks very fine, as good as the day it came out of the craftsman's hands who made it.   But inside the clock I have made changes.   I have pulled out the mechanical movement and put in a battery motor - made in China! The clock still appears the same, but I have destroyed the value of it by making this alteration.     It is now worth only $150!

Now what has all this got to do with the subject we talk about? 

Imagine the 'clock' is now a 'stock'.   You use the market to determine that it has a value of $2000 to you.  $2000 is below the market support level (the price the the antique dealer catalogue in the clock analogy) so you know you have bought it at a good price.   But you did not do any F/A on this clock/stock.      You did not look beyond the price to see what you were buying.     You thought that the clock/stock  was the *same clock* that I had bought two years earlier.   But it wasn't.  The clock/stock *looked* the same at a casual glance.   The clock/stock was priced the same.  So you assumed the clock/stock *was* the same.  But you were wrong.  You did not look carefully enough.  You did not do your F/A and did not notice that inside the clock was greatly changed!

The stock price was $2,000 two years ago.    The stock price is now $2,000 again.   It has just bounced off the support line so now is a good time to buy the stock.      Do you see the problem with this 'support line' theory?     You assume it is the *same* stock as it was two years ago.    But underlying businesses can change and keep the same label.  You might be wrong!

SNOOPY

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