Can we really predict the market prices? (oscillator model)
Recent market movements have proven that even an experienced traders can make significant mistakes in their forecasts. It's always funny to read tweets like "Buy the dips" and two days later see the market going much deeper. So the question is: is it possible to predict with confidence the further movements of the market?
And I think in general the answer is No. The reason is that market is moving on the basis of our shared emotional state. It's like an system of nodes connected through social channels and oscillating together. This model (multiple spring oscillation) is very simple, but works pretty well. Green node means a person who is positive about future and red is otherwise.
Bull market looks like this (when people overconfident):
When market is crashing:
Look at these fast red nodes - nice to meet you, weak hands! Funny thing, because of the bug sometimes they break their links and fly out of the screen, often by the whole groups - just like in life. Slow green guys obviously are a long-hodlers. In real life many factors can influence whether a node becomes green or red: the weight (amount of money), count and strength of its social links, maturity.
After this chaotic state the oscillator gradually calms down.
So, as you can see the system is not deterministic, therefore its further state can not be predicted. Plus, big events come into play. According to "Black Swan" theory there will always be an unpredictable events that can suddenly change the market, sending prices in an opposite direction.
So black swans can be devided into two categories: pump swans and dump swans.
Let me make a short list of possible birds:
Pump Swans
- Crush of stocks&bonds bubbles
- Countries that will follow Japan
- World War III (it's huge and controversial, but...)
- Edit: Donald Trump on SteemIt
Dump Swans
- Big exchange hack
- Unsuccessful bitcoin network hardfork
- Bug in Ethereum ICO's contract code
- Regulations in any country
- Quantum computing
If you know about other possible black swans please leave a message below!
When the market will crash again and you will feel bad remember - the next black swan always waits for opportunity to save us! Or kill, it depends :D
I can predict small parts of the market. Anything that I invest in becomes the target of manipulation, or is ruthlessly attacked by state controls. If I were to try any of this I would go to jail, but the big moneyed interests just get to shove all of our faces in the mud while they rape us, for now.
If we can. We'll be all reach 😈
Dammit flip-floppers. Hold yer damn cryptos!
Edit: Pump Swan - donald trump's introduceyourself post
rofl
Hell yeah!
good read, thanks @cyberwolf!
great content.. and the graphics tooooo!! it adds up to the fun.. :D
I feel that shameless plug here is appropriate...
https://steemit.com/crypto/@aterso/dot-com-bubble-and-the-genesis-of-the-geniuses
Awesome article.
Here I explain how and why Technical analysis in trading is bullshit
https://steemit.com/psychology/@kyriacos/why-technical-analysis-in-trading-is-100-bullshit
I find articles like this too often disregard the utility of the items being traded and focus only on speculators. Those without credit cards will always need so much bitcoin (denominated in dollars) in order to pay for services on the Internet. Wikileaks will always use bitcoin for donations.
You are right, but the truth is that 90 percent of transactions now are speculative.
If we could we would be millionaires by now.
Just wanted to know if your logic is based on Nassim Nicholas Taleb's ideas?
No, but thanks for the tip, I will explore.