My posts this week should illuminate the complexities of navigating the trading environment, its relationship to the news flow and the efficient market hypothesis we have recently been discussing in class. To wit, on Monday, Goldman puts out a forecast that the jobs number was about 125K. They have made good forecasts in the recent past, they have street cred and with hindsight they got it right. Still, market selling on this forecast really started 3 days later on Thursday afternoon. Prior to Thursday, market participants (who are trained to read the reaction to the news rather than the news itself) appeared to have decided that the news was priced into markets and the chatter about markets climbing a wall of worry and decoupling from Europe began. Into the mix is the behavior of gold– signalling no QE which also pointed to the number not being so bad. Selling happened only after the news hits and already feels a bit overdone. Despite knowing all of this, and positioning for it, my week was essentially flat. Of course there was risk management, my stops were probably too tight, whatever. My point is that even though market behavior this week does not speak in favor of efficiency it is still hard to make any money!
Think you cannot trade at the speed of light? Think again, HERE.
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