Are you an expert?

Reaper posted recorded comments talking about news interpretation logic flaws among speculators gone wild over SOMX & BTIM & hits the nail on the head. View his video here:

http://www.reapertrades.com/2010/03/trade-recap-for-march-17th-and-march-18th/

I would like to add my 2 cents. I am biased toward trading, especially day trading. I am not an investor.

I am smart enough to know what I do know and what I do not, and not dumb enough to claim otherwise.

However, it never ceases to amaze me how such folks will make claims that are ego driven at best, dangerously naive at worst, about stocks in situations like these.

Comments like "HEB has a secret on Ampligen that only *I* know about, that will cause it to go to $20 a share in the near future!" etc. One person argued this on a blog when the price was $2.50 per share. Please check the price now for a sneek peek at how that hot tip panned out.

Incredible how they seem to know the future impact of news or research, when often they do not understand the data, how to interpret it, nor have done the research to justify issuing a buy now alert Piper Jaffray style.

How in heavens name does one even get a future share price level out of that?

In any event, interpreting the effect of news on stocks is often an amazingly imprecise science.

In the short term it is even harder to do this accurately in a prediction sense.

Many will argue with me here, claiming I am admitting that day trading is pure gambling. These folks do not understand the observation and probability game that is involved in speculating the speculators, not equities.

I do not have to anything about the security to make money off human nature failings, trader errors, or quirks that are built into the way the market operates in specific situations that I know how to exploit, like DCBs.

Your job is NOT to *predict* per se in trading, which is a common error among novices in the market, but to react and adjust to what is happening, interpret live price action, and to value and act upon the ongoing market's interpretation of how the news should be received, not your assumptions of how they should react. The current perception of the herd, not the reality or your prognostications, are what matters.

Leave your ego at the door, or you will give me your wallet soon after!


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