Monthly Archives: April 2009

Confessions of a Day Trader, Part 2: The “Hot Hand” of the Stock Market

By Demian Perry | Published: 09 Apr 2009
Remember Smith’s invisible hand?  The market, Smith said, represents the collective efforts of all people to maximize their own wealth.  If people are all acting independently of one another, it’s possible that their collective behavior is truly random.  But what if they’re reacting to each other?
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Confessions of a Day Trader, Part 1: How Do We Test Technical Analysis?

By Demian Perry | Published: 08 Apr 2009
Greeks, elves, and flags oh my! The efficient market theory (the mainstay of any modern business school education), teaches us to view technical analysis with extreme skepticism. The theory goes like this: if investors predict that a stock will rise in the next week, they will immediately buy the stock and drive up the price to the expected future price (discounted for the time value of money, of course). But is it possible to spot something before everyone else and make a billion dollars before the market catches on? ...or are day traders just modern alchemists?
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