This is my daughter, who is in grade 7 now, who after playing our stock trading game, Big Board Raiders, which is also one of the coolest interactive math games, was ready to learn to read Techincal charts, something I had no clue of at her age. This of course is a cheap attempt to get my key word into the first sentence so google likes my post more, sort of google sucking up like an apple for the teacher. Lots of people look at the stock market as gambling, except the professionals. To the professionals its just math, actually statistics, a very twisted and boring math to learn. Luckily, today you don’t have to learn it, you just have to read what the answer is and that isn’t difficult. I played poker as a kid, taking the paper money from the other kids. It was our way of cutting out the competition, because we bought the papers for 5 cents and sold them for 10 cents, and that really dates me. I never really learned how to play poker until I played at this bucket shop, where I worked as a stock salesman on Howe Street, of the notorious Vancouver Stock Exchange. They sold moose pasture to the suckers who believed the the stories they invented. The same piece of ground got sold over and over with a new story. I worked there 6 months and never sold a single share. I was 19 years old and not a good enough liar. If someone said NO, I accepted it as NO. These guys didn’t understand NO. This was a concept I could not get past. If someone was dumb enough to buy a few shares, they turned him over to the loadman, who was basically a verbal bully and he’d have you selling your house to buy more. It was however a very good education and that is what got me going down the path I took when I went to university. It was taking a kid who grew up in a pool hall, which in those days were those places mothers hoped their kids would never enter, and educating him. It did give me the ability to see the game that was going down. God I do ramble on. I had this thought about how you could compare playing poker, like Texas Hold em with playing the market using Technical Analysis (TA). If you went to Las Vegas and sat down at a poker table and paid your anty, they call it the blinds, and looked at your cards and folded if you didn’t have at least 4 of a kind, a very good hand for those non poker players. First of all, you would need really deep pockets for this strategy and second if you did bet everyone would fold because they would know you had a killer hand, this would be the most basic of “tells”. So your poker strategy would be a big loser. Poker is just too big of a risk for the reward that you might get. If on the other hand, you used Technical Analysis to tell you when you had a very high probability situation for you to take a position in the stock market, say greater than 97% in your favor, this would be like a 4 of a kind hand in poker, but there are no blinds to bleed you dry and you only bet when you had these odds, this would be a winning strategy. So you might only play 2 or 3 times a year, but you wait for that killer hand. Well, happily nobody would fold on you, but they might panic and sell stock to you cheap or at the other end buy your over priced stock, because when you have these odds, you definitely are at the end of a big move and the odds favor a reversal. This strategy is done all the time using Technical Analysis by hundreds of thousands of people in all countries. If they all see the same signal, then this creates a sunami of money flow in the direction of their bet. It becomes a self fulfilling prophecy. Almost to good to be true. Just don’t stay at the table too long, that’s where they get you. TA is not a system that someone can hose you to use, it’s math, plain and simple. There is no system, that is for niave kids fresh out of high school. Systems have been pursued for the last 200 years, by some pretty damn smart people. It’s niave to think this generation is smarter than those that came before us, in fact human beings are very predictable when it comes to fear and greed, these are the oldest of emotions. Da Boyz know all about stampeding the herd, the minute you think you have a system, Da Boyz from wall street will eat your lunch. But there are those odd times when things are so out of wack, that they have to go back to normal. These are the times TA will tell you this is a winner. There is one thing that is always true, when prices get far away from the mean, they always return to that mean, a rough paraphrasing for simplicity, in actuality they use a 100 or 200 day moving average. The tendency to return to the mean is a mathematical truth. TA is free to all that want to take the time to learn it. The people who use it are more than happy to teach you, the only thing you have to do is learn it. There’s no money you have to pay. If someone wants money from you then you’re being screwed. The cool thing about it is that the more that use it the more it delivers. The democracy of money. So I say Poker is a low probability play, Technical Analysis when done right is high probability.
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