The Market Is A Ship Without A Rudder Heading into Year-End

One of the long-time readers of the site asked whether I have a 2016 outlook.  The funny thing about the market is I have no idea what it will do.  I can, at best, generate statistical probabilities.  However the outcome is ultimately random since each fresh sample is independent from the data set.  In other words, past performance is not indicative of future results.

Anyhow, I find my statistical vision spans two weeks at a maximum via the Exodus algorithmic engines.  My model generates statistics for 5 trading days and is part of the Exodus Strategy Session. Even equipped with these two tools, I find my ability to predict or envision stock market outcomes is most effective on an even shorter time frame.  This is why I do an auction theory report every morning, before the day starts.

My trades are based on statistics generated from actual trading–stats that show that specific trading “pictures” have worked well historically.  Again, past performance is not indicative of future results.  This is why you need to manage risk.

Stats are your research and just a part of the overall plan you need to trade.  You need “setups” defined as specifically as possible, a plan for tracking your performance, a list of issues you are working on, the most common errors you commit and your mechanism to fix them, and a risk profile for the capital you commit to any given plan.

Everything I am saying here pertains to trading.  Investing is a different animal.  This is when understanding your risk tolerance and expectations is key.  Also diversification, position sizing, and outsourcing your fundamental research to The Fly, in my opinion.  Also you need to embrace your inner lazy man and just let the investments work.  This is hard for people.

I have completely digressed.  Heading into year-end I only have stats going out to the close of tomorrow.  After that everything is neutral–all cycles are complete.  So I may elevate some cash and cruise into the new year.

Exodus members – the Strategy Session is published.  Be sure to check it out.