repost - think like an insto

  1. 1,368 Posts.
    I had a few requests to repost this, so here it is. Since reading 'the education of a speculator- by V Neiderhoffer' it has become clearer to me that the only way for the winners to win, is to take money off the losers.Its like a big game of poker with lots of fakes and bluffs, then the big money comes in and cleans up.No wonder pros have very little interest in TA, except as a guide to what the mugs might be doing.Pros believe 'might is right' and thats very hard to argue with.I wonder how many posters on HC have even spoken to a real floortrader? Not many, I'lll bet.
    'know thy enemy
    - sun tzsu'


    Message Learn to think like the instos do- NAB,ANZ, NCP, TLS (read
    times; 39 replies )
    Conference ASX
    Posted Fri 7-Sep-01 10:38
    Member andrewk4
    Email Address withheld
    Member Since 28-Jul-00
    No. Connections 407
    No. Posts 521

    Ive often wondered why most pro traders I talk to think chat room sites and daytraders in general are all idiots, losers and mug punters. I have a lot of respect for the seriuos posters and friends I have here at HC. It all becomes clearer when you consider 2 recent conversations I had with ex floor traders.

    1- this guy used to work on the floor for a large overseas bank that trades asx stocks. Yesterday he said "hows your nab trades going?" I said I stayed
    away from the early fracus and only went long Weds arvo when I saw a clearer picture of higher highs and lower lows. He said "you should know better than
    that. The big boys know its in downtrend, and they know the amauters will buy it on the bounce. Then they sell, sell sell, because they are bigger than the little boys and have more money, so they must win." He went on to tell me of a time a few years ago, when bhp had an unusually good profit announcement, and he was trading for the insto. They knew the little boys
    would buy it up, and proceeded to sell against the trend all day in an effort to break the buying power. After being 25m down in one day, they
    finally broke the buyers efforts and bought in lower for an 8m profit the same day. He said it was the sickest he'd ever felt about a trade though, being 25m down with the banks money. The big boys take money off the
    little boys.

    2-Last week I spoke with a floor trader from chicago forex. He said last time the US dollar was in decline, (some years ago)" we just waited for the
    rally and sold the heck out of it. Every time it rallied, we went short heavily and killed them, because we had more money than the little guys."

    I mean no disrespect to all the good traders here, but if you are a newbie, you can learn a lot from this. The trend really is your friend. If a stock is in confirmed downtrend, dont go long thinking the turning point is
    just around the corner, unless you are VERY sure.
    Take the recent good news on ncp,that it is in talks with china. See the way the bears hammered it on the rally? They sucked me in , too.
    See nab, when the fund mgrs said the drop should only have been $2, not $4, yet they hammer it down further because they can.
    See tls, when the papers say the bad news is all over, and its good buying at 5.00, I predict it will get smashed agian soon.
    See why most brokers dont know any TA? They dont need to, because its all about whos in control. All they know is trendlines and support and resistance levels.
    Take a look at the XAO with 3 lower highs and 4 lower lows. If its in decline, which stocks make up the bulk of the xao? Banks, resources, tls and ncp.

    If your trades are profitable, then dont listen to me. It doesnt matter how you do it, as long as you show a profit.
    If youre not winning lately, have a good hard think about this post, and who you are playing agianst.
    Theres a lot to be said for the contrarian theory.
    Again, no offence guys, I just hope to save some of you from making
    donations to the big guys. Im not telling you to go long or short on any stock Ive mentioned here. Just trade with them, not against them. Do
    what the market is telling you to do.

    OK, now Im bunkered down, you can all shoot at me :-)

    "In hindsight, I should have been a bull in a bull market, and a bear
    in a
    bear market. Sounds silly, doesnt it?"
    -E LeFevre.

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