Market Detective

Innovative Technical Analysis Software for Traders

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Trading Philosophy

Attitude adjustments required for trading with the Market Detective Indicator:
I suspect that most of us are not the disciplined traders we think we are. We tend to wait too long for the market to do what we decided it is supposed to do. If it goes in a direction opposite to our forecast, our wounded egos make us even more obstinate, and we lose big money while we wait for the market to correct itself. This is the very attitude that is responsible for practically all the fortunes lost by investors. What we all need during these stressful market moments is a detached, unemotional, private consultant (like Mr. Spock from Star Trek) prompting us to be logical and to do the right thing. Seeing an explicit, mechanically computed trading signal at every candlestick on a chart is like having that private consultant right by your side advising you to take immediate action. I recommend trusting this private consultant. Ignore your emotions, ego, and abstract thoughts, and you will make money.

Taking the mechanical market timing signals will preserve your capital and maximize your profits:
The Market Detective technical analysis study was specifically designed for trading volatile stocks with a clear history of significant price moves on an end-of-day basis. It goes without saying that you should avoid trading all flat-line or low volume stocks, while the volatile stocks must be tracked daily with the same responsible attention that you give to your day job. To do otherwise is to be an undisciplined gambler, and you shouldn't even get in the game if that's the case. As a logical consequence of this serious daily attention, you have to be psychologically prepared to exit or reverse a trade you enter into today on the very next day. The entry day is always the most critical and stressful day, because about 10% of the time you will get a second consecutive 'R' reversal signal on the next candlestick. You have to be prepared for this condition, as it will require you to immediately exit with a loss - a very difficult task for any human. However, this immediate and occasional loss will be a good thing, because it will condition you to never get caught flat-footed in a market that rapidly swings against you. With the low commissions offered by the internet brokerages, there’s no excuse for holding a losing position for longer than one day. Most of the fortunes lost have been lost because of the wait and pray game played by so many long term traders and investors. The only good aspect of this type of trading is the praying part, which brings you closer to God. In fact, the only times you will experience losses using the Market Detective market timing signals is in tight congestion areas, or when you get two or three opposing reversal signals across adjacent bars. But, these losses will always be small compared to the capital gains you will experience in between non-consecutive reversal signals. After all, it is an irrefutable law of trading that you must take small losses to preserve your capital. The mechanical market timing signals provided by the Market Detective technical analysis study ensures that your losses will be small and very few, and that your gains will be large and numerous. This innovative study, should you decide to exploit its profit power, will eliminate the ifs, ands, or buts of timing the markets. Rather than second guessing the unmarked bars, candlesticks, or curves on your chart, just take the single character signals literally. If you get two consecutive opposing ‘R’ signals, take each in turn, and be at peace with the small loss. The much larger gain will be forthcoming shortly. If you get three consecutive opposing ‘R’ signals take each in turn again. By the way, three such signals in a row are as rare in volatile stocks as a no-hit baseball game. But don’t take my word for it. After all, I do have a conflict of interest, in that I want to sell my charting software. Simply test my Market Detective technical analysis study on all the volatile stocks in your portfolio, concentrating especially on your past losing trades. I think you will discover, as I did, that only a crystal ball could provide you with more profitable trading signals.

End-of-Day versus Real Time Trading Philosophy:
An earlier version of the Market Detective charting software handled and charted real time data from 1998 through 2002. It was interfaced to the version 2.0 Universal Market Data Server developed by Market Stream of Boca Raton, FL. This real time server was probably the most powerful server technology available in the 1998 to 2002 time frame. The Chicago Mercantile Exchange, to name one famous institution, was and still is employing a version of this server for a significant portion of its data handling duties. Since 2002 this server was upgraded and targeted only to institutional traders, making it impractical for sale and support to the independent trader market. This undesirable development adversely affected Market Detective's competitiveness and sales potential, although as a standard End-of-Day technical analysis program MD was still very useful. Stock data could be obtained for free from Yahoo and using the HQuote Pro software ( Candlesticks, and other standard studies could still be applied for end-of-day technical analysis and trading. In fact, I personally discovered that, while end-of-day charting is not a popular selling point with the masses, end-of-day charting software is dollar for dollar the most effective trading method that independent traders could use. Real time systems are an extreme expense to both the end user and the software developer. Several man years of programming energy and cost go into the development of bug free data server and charting programs. This cost must then be paid for by the average user, who, statistics show, is much less successful as an intraday trader than as an end-of-day trader. Yet most everyone wants real time charting to make those trading decisions mid-day instead of after the close. Ironically, trading intraday may be the downfall of many a trader who would otherwise make money in an end-of-day decision making scenario. See the My Best Methodology page for my analysis of the pitfalls of real time trading versus end of day trading.

If you have not been successful as a real time trader, then consider the simpler alternative of end-of-day trading. The software requires only a low one time purchase fee, and data collection is either free or a fraction of the cost of real time data. You have but to view several end-of-day charts of volatile stocks or futures to appreciate the profit potential of the Market Detective tecnical analysis study versus the profits provided by the most famous real time charting software. At Market Detective's low, low price, it's worth purchasing by current real time traders just for the second opinion.

Philosophical Summary:
Making the correct trading decisions is really not about being a prodigy genius type who can out guess and out smart the markets using superior brain power alone. Forecasting blunders have also been made by every major market guru that ever moved his lips. To think that you, the independent trader, will succeed on their every recommended stock trade just by subscribing to their newsletters and their intermediate or long term predictions is pure folly. No one really knows where the market will be a half year from now, even though it is a fun sport to debate the issue. Anyone visiting this website should be interested in making money weekly by trading the short term market movements on an End of Day basis. The correct trading decision is almost always the one that is based on a mechanical signal that overrules your human emotions and stubborn belief system. After all, a proven-to-be accurate, mechanical signal is, in effect, the market telling you where it is going. Any other method is ego-based and arrogant and indicates that you are telling the market where to go. That's the perfect setup for an eventual humiliating defeat. Having an educated opinion on the longer term direction of a market is normal human behaviour, just don't bet your mortgage money on it.

For a real life private lesson in what not to do when trading volatile stocks, please see my True Confessions page. I give an in depth discussion of some of my painful trading mistakes, prior to the development of my Market Detective market timing indicator. I display candlestick charts of the stocks I have traded to exhibit the superiority of my explicit Market Detective signals over my own personal judgment, and I would bet, over that of most other stock traders.