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The Undisputed LAWS of the Financial Markets?

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^eagle^

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Chaos Theory for Beginners; An Introduction

I found this article to be helpful in describing markets. I trade forex and see attractors all the time. and self similarity is changing timeframes. the charts look very similar yet different because of different attractors.

Don't know the dynamics behind stocks or options as I don't trade them. I found this to be very helpful in discovering predictability in an sometimes unpredictable market.

Elliot wave theory is a very simplified version of chaos theory. I found elliot wave to be worthless in forex. Just like most osscilators. Maybe it works better with stocks because of the nature of stocks and that is where it came from.
 

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rc08234

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1. Not all trading is zero sum, but futures markets are.

2. Markets fall faster than they climb.

3. More traders fail than succeed.
 

H. Palmer

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Aug 12, 2011
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Some laws that have stood the test of time.


1. Insiders are more likely to make money in the markets than outsiders. You can become an insider in a market by knowing people on the inside or by systematically studying a market or industry (I did the last with the IT industry and it paid me well).

2. Risk is a result of not knowing what you are doing. Therefore never invest in an industry you do not understand. Also, and Buffett confirms this, there is no need for diversification if you know what you're doing.

3. The price of commodities is roughly constant through the decades and centuries. For instance, the price of houses is roughly constant when expressed in gold.

4. Bubbles burst when your taxi driver, shoe shiner and grocery cashier are going into the market.
 

^eagle^

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1. You cant go broke taking profit.
2. you cant go broke breaking even.
3. Only a big loss can hurt you.
 

loop101

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I would say:

- the only thing you control in the market, is how much you can lose
- every market participant has an inherent advantage
- the only money you make in the market, is the money you take out of the market
- any method that makes money fast, can lose money fast
- anything known about the future can be exploited for profit
- every dollar ever traded, was traded as part of a larger system
- if you extract your initial capital from the market, you can never lose money trading
- what works, changes over time
 

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