Why do we try to be fortune tellers?
One of the most common things in the world of the stock market is the divinatory desire of the majority of participants in it, starting with the analyst teams of the big corporations and their paraphernalia of “target prices” and recommendations to buy or sell each instrument.
In this world of those who try (we try) to guess where the price of certain assets will go during the time, we find a huge fauna, ranging from analysts already named to pure fortune tellers, that in certain places like some exotic countries can be found quite easily.
Something more difficult is to find them in Europe, for example, but surely there are some.
These types of fortune tellers are quite strong in countries like India, for example, where superstitions are still part of popular culture.
In an article in the Bussiness Today edition of that country they tell us the stories of two well-known stock market “forecasters” who base their predictions on astrological and esoteric facts.
On the subject of astrology and the stock market I wrote an article at the time.
Certainly, a topic that has more than it could at first glance, not so much because these people are correct in their predictions enough to believe them, but because, for example, the cycles of the stock market and the cosmos have more things in common that we could imagine.
That is one thing and another is to believe that certain people can beat markets through their readings of astrology, or the tarot, or any other similar thing.
The latter is easily understandable if we realize a simple detail: that these “stock market fortune tellers” would not have to be selling signals or similar services, for example, if their predictions were as good as they say.
For example, one of the characters named in the article mentioned is a Mumbai surgeon, who developed software that predicts the movements of the Indian stock market based on these issues.
The curious thing is that the article mentions that its ratio of success is 80 to 85%.
Well, nothing to object.
What you forget to mention is what is the average profit percentage and what is the loss percentage.
I can also get that, or you, without a doubt (winning with a ratio of 1:4, that is, when we lose we do it for an amount 4 times higher or more when we win).
The issue is that the article mentions this as if that profit ratio was something infallible and profit operations were equal to losses.
Do stock market of Forex fortune tellers have value?
As we see, if this man is capable of achieving something like that, then we would be talking about a miraculous system that would make anyone rich in a short time.
Moreover, we are talking about an intraday system, with which the gains could be even much larger, applying compound interest.
So, if your system is so good, why do you need to sell your predictions?
With a surgeon’s salary it should be enough for him to have saved enough money, to do day trading and to have a fortune in less than a year.
Let’s see it like that.
Imagine that this man risks 1% of his capital every day, and 15% of the days he loses and 85% of the days he wins.
If we remove 15 out of 85, there would be 70% of the days where this man would be earning 1% daily, easily.
If we consider that in a year we will have at least 200 days of stock market, this fortune-teller could earn 1% for 140 days.
If so, you could have a return of at least 300%. That is, investing $ 1,000, in a year would have 4,000. In 4 years he would have his capital multiplied by 64.
If instead of 1% you risk a little more, with 2%, you could multiply your account by 16 each year. Imagine what you could get in two or three years.
In any case we would be talking about an incredible system that would make you rich in 2 to 4 years, depending on the risk.
With such results, why bother selling signals?
If he tells me that he expects to earn 55% of the operations, it would make more sense, because it takes much longer to build capital like that, but with the figures he says, complicated.
This is the true picture of the stock market soothsayers.
If they were infallible and their systems were true, for which they would have to come backed by a few years of data, they would not need to be selling their skills as fortune tellers.
The same applies to sorcerers of all kinds.
If they say they are fortune-tellers, why are not they rich?
It’s obvious, is not it?
This does not mean that there are no esoteric influences, so to speak, but most of those who try to sell us something under that umbrella are not very confident.
And yet, something as obvious as the case commented does not prevent this man, and others like himself have hundreds or thousands of followers and people who support them.
Think about the power that gives you appear in a publication of national circulation like that with the announcement of 85% of winning trades and the hundreds of thousands of investors reading the subject; for sure they dropped a few more accounts.
Tarot for Stock Market prediction
The other funny case of that article tells us that for his predictions he uses Tarot, numerology and horoscopes.
Another bases his predictions based on planetary movements.
One of the cases in that article says something like this:
“When I recommend a particular action, I look at that person’s birth chart, that of the company and even the rivals.”
We also have curiosities that different planets influence certain groups of actions, such as Venus with the media and sugar, or the sun with companies related to the public sector.
Of course, we cannot say that they lack imagination.
Undoubtedly, in a market as superstitious as the Indian, this is something that can work, but beware; I say result, not for the good work of the systems, but the sellers of the same, because buyers will never be absent.
In Spain, for example, that market is much more restricted, but I imagine that in some Latin American countries there will still be a little more belief in the matter.
Fortune telling in the United States financial markets
Interestingly, the United States has quite a few cases of fortune tellers.
After all, Gann, one of the masters of technical analysis, was a believer in the influence of astrology on the stock exchange, and he designed systems based on those topics. Only the matter of Gann would give to write an article or even a book, because the guy gave everything: eclipses, planetary averages, the graph of Saturn, prices and zodiac, and so on.
We have to be clear about one thing.
If we think that in these subjects there is something true, perfect. Study and apply them.
If we find that they are wonderful, then the logical thing would be to put our money to work and start earning.
If you find people trying to sell you these issues saying that it has been winning for years, it is quite likely that it is not too reliable, although there is always the possibility that the person does not have money for personal matters, who knows?
However, it is best to stay away.
From a personal point of view I can tell you that those who are always talking about target prices, or trying to guess where the movement of an asset is going, are talking about talking, so to speak.
Nobody knows where the price of an asset will go on the next day, week or month.
Going to make cavaliers with the same thing is nothing more than speculation.
Doing these speculations is fine, provided it is from a probabilistic point of view. That is, saying something like this: look, I have no idea if it will go down or up, but I would say that there is a probability that it will continue to rise in the coming months. ”
That is something more realistic.
In addition, that is related to something extremely important in trading, for which we do not have to be fortune tellers, much less: we are talking about the trend.
When we have a strong tendency, the smartest thing is to start operating in favour of it.
For this you do not need “objective prices”, “predictions”, “riddles”, “letters”, “horoscopes” or weird things.
All you need to do is apply common sense and put yourself in favour of the tide.
That is one of the fundamental points of trading.
What to guess better let’s leave it for the fortune tellers of the bag, of which there is no shortage precisely, whether they are pure “tarotista” or more usual “tie”.
Greetings and good trading
Original article: Los adivinos en el trading