Everyone is always talking about "Big Brother" and how the Government is watching everything you do and has a very keen want or need to be involved in every aspect of our lives. The comforting thing for me is that I really don't think I am that special and the Government really doesn't care that much. The scary thing for me is they don't have to be so obvious! We learn from the Wall Street Journal that four MIT-affiliated data scientists wrote an article entitled "Unique in the shopping mall: On the reidentifiability of credit card metadata". Here we learn that the researchers "analyzed anonymous credit-card transactions by 1.1 million people. Using a new analytic formula, they needed only four bits of secondary information—metadata such as location or timing—to identify the unique individual purchasing patterns of 90% of the people involved, even when the data were scrubbed of any names, account numbers or other obvious identifiers." "They" don't need to know who "I" am; "they" know who "we" are. They can pick anyone out of the crowd and without a name, an address or even a Social Security number, know who they are, what they buy, when they buy it, where they live, even who they associate with an accuracy rate of 90%! Welcome not to "Big Brother", welcome to "Big Data"! How do you think that translates to our financial markets? Ben Hunt, from Salient Partners' Epsilon Theory makes a very interesting point:
In exactly the same way that we have given away our personal behavioral data to banks and credit card companies and wireless carriers and insurance companies and a million app providers, so are we now being tempted to give away our portfolio behavioral data to mega-banks and mega-asset managers and the technology providers who work with them. Don't worry, they say, there's nothing in this information that identifies you directly. It's all anonymous. What rubbish!With enough anonymous portfolio behavioral data and a laughably small IT budget, any competent magician can design a Big Data system that can predict with 90% accuracy what you will buy and sell in your account, at what price you will buy and sell, and under what external macro conditions you will buy and sell. Every day these private data sets at the mega-market players get bigger and bigger, and every day we get closer and closer to a Citadel or a Renaissance perfecting their Inference Machine for the liquid capital markets. For all I know, they already have.
So, all this worrying about HFTs coming in and "stealing" our trading profits in the form of front running our orders? Save it, we did it to ourselves.
Trade well and follow the trend, not the perma-bull OR perma-bear "experts."
Behold the age of infinite moral hazard! On April 2nd, 2009 CONgress forced FASB to suspend rule 157 in favor of deceitful accounting for the TBTF banking mafia.
The markets had a pretty quiet session to start off the week. The volume was fairly light and volatility was pretty quiet for the most part. The markets just drifted lower once traders settled in, and the major averages closed in negative territory. Buyers were trying to fend off the selling, and I do suspect we can be facing the same type of trading conditions today. I think we will push higher, and grind our way to gains. With any major economic data due out this week, there really isn't any fuel for the fire. Let's see if we can rally back for some gains today.
We make money on every single signal we put out right? WRONG! Part of being a successful trader is coming to terms with the fact that you will be wrong.....A LOT! What is important is how you deal with a trade that is not working out. If you employ the right methodology, you will be right more than you are wrong but you cannot let the times you are wrong effect you financially nor mentally. Often times, a new student will inevitably get in a losing trade and try everything he/she can come up with to try and make a losing trade into a winner or less of a loser. This is not the approach you need to take. Losers are losers and that's ok. Instead of trying to make a loser into a winner, focus your efforts on finding the next trade that will make you money. Cut you losses and move on. The money you will make on your next trade is just as green. Put the odds in your favor, manage your risks and move on!
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Keep a civil tongue.