“Why did you bet that the market would go up”?

A friend of mine at poker asked which way I thought the market was headed.

“Up,” I replied.

“Why,” he asked (which is the next question 99% of the time).

“No idea the reason. The news tends to happen after the fact.”

To a lot of people outside our group, predicting future price trends using price (or COT info) is completely foreign to them.

They learn everything they know from watching a few minutes of financial news.

Now it is a valid question. Why do we have such an edge over other market participants?

My hypothesis is that there's a ton of traders that react at the same time to the news. That's why I never use the news to trade.

If market participants were logical and efficient, then there wouldn't be so many billionaire hedge fund managers.

Here's an example of how large and pervasive these edges turn out to be.

It's an equity curve of a swing trading strategy for individual stocks.

In fact, it's very similar to the Z-Swing strategy, but it trades much more often.

With 9838 trades (and counting), it's extremely robust.

Again, these edges shouldn't exist, but they do.

Everyone always asks me “why did the market go up”?

I got into trading in order to make money and enjoy the finer things in life…not to predict what the news will be.

Let me ask you: Would you rather be right or rich?

Trade smart,

Dan “Prince of Proof” Murphy