Is the stock market predictable? Many would argue YES... But the Efficient Market Hypothesis says that it's impossible to “beat” the market because all current and relevant information is already factored into the stock price.
Most traders defensively argue against this theory because if it were true, then that means they can’t outperform the overall market… So why even try?
It is up to you to decide for yourself...
We, on the other hand, are advocates of this theory that the markets are incredibly efficient. But we see it as a GOOD thing because we know that as long as we are trading liquid assets, the pricing is always very fair.
In this video, we show you a demonstration of Market Efficiency, and we also explain what this means to our trading.
Sky View Trading
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through her intense trading over the past couple of months, Beatrice has been able to amass on my behalf, funds to the tune of over half a million euros. This woman deserves all the props, she's doing the most right now.
If it's always efficient though, then why would there even be crashes like the great recession in 2008, or the dotcom bubble? If it's efficient, wouldn't all of that be priced in and the markets never wildly rise or fall at all? How does EMH handle blindside events like that?? Loving the content by the way. I intend to watch every video you've got up on this channel lol.
The market is predictable but not 100%
But you can research and see what happens
Its not just chance
Like warren buffet always beat market and so did other people did using his strategy
Synthetic stock is short plus long
Nothing is ever mispriced it is only bades on prople emotions take adv. Of this
Yo! your videos are great and very helpful, I remember you mentioning about predicting Volatility, is it Index VIX or individual stock you are talking about? and how to do it, knidly make a video about it if possible
Your presentation Ignores a lot of data that goes against the assumptions of the EMH. Even a brief study of the markets and human nature, will lead one to quickly see how people, their reactions and common errors affect how market behave. The field of behavioral finance can explain far better these market behaviors which mostly go against the assumptions of the EMH. If you believe the EMH, that's ok for you and your trading style. One should trade in a style that fits their beliefs. But describing the EMH as if it is a fact, and implying that no other styles of trading will work, nor have an 'edge', is either arrogant or ignorant. There is a very long list of very successful traders with audited results (aka Market Wizards), each using a wide variety of trading styles, that have found how to make their style work very consistently. Its ok if you have found your style based upon your beliefs...but that does not mean that other beliefs or styles are not just as successful, if not much more successful.
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James S -I’m sure here could have been a “Big Long” movie made should the result have worked out differently. I was sure there were other teams looking at the same data and making different conclusions.
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You forgot one very important fact. In order for all the information to move price to the "efficient" level someone or group of traders would have to have know the "information" before it gets to that level. Traders simply do not understand the drivers behind a market and that is why traders fail.
We just took a break to build the rest of our services and education out for our members to our website.
We'll be back to posting YouTube videos again soon! Thanks for the comment. Glad you're enjoying the videos!
Also, make sure you sign up to receive our free 3 video series. I think you'll enjoy those videos! www.skyviewtrading.com/free-lessons/
I have to say, as someone about to graduate with a degree in finance and someone who manages his own portfolio you just about nailed it.
The only thing I would add is that markets are not always efficient. One reason is because there is a herd effect in the market which causes short term misprizing. Another reason has to do with timing although markets are notoriously quick to correct.
I'm looking to learn more about options so I'll check out your other videos.
Again, great job! Thanks!
how are naked options affected by HFT activity?
I did a paper trade on NVDA and I saw it hit past my mark of 112 all the way down to 107, but on the weekly chart it shows the lowest price only hit 112.60
So what I'm asking is how would my naked 112 put have been affected by the few seconds/milliseconds that the price was at 107?
Yes, markets are run by people. Now try and create a systemic method of exploiting that. It sounds easy but no one has really managed to provide convincing proof with a statistically significant sample size going forward. I'm not a believer in EMH but I'd say most of the stock market is very efficient.
I love the videos first of all I I wanted to bring up a question. keith miller and john marshall are both hedge fund options traders they trade only out of the money options with 2 months or better time decay..and when implied and historical volitility are cheap what do you think about that strategy? everyone has their own strategy right?
I'm in the market for the right course. What information can you provide as to why I should choose this one? I'd like to hear some reviews and successes of your students, plus what you've managed to accomplish.
A lot of thought provoking points were made here, but i found the example of shorting the 2008 collapse a very strange one. You basically argued that: at anytime some people will be bullish some will be bearish, you didn't mention that these select few were bearish...were bearish for a very specific reasons...
I dont know if you've seen the big short, but the first charactor who gets the idea to short (Michael Burry) did so with logic and reasoning. He literally dissected mortgage bonds and inspected thousands of loans inside of them, and soon realized...these are crap, and once the new rates kick in during 2007 these CDO's will be garbage. That's not "luck" at all, and yes he did know information that hardly anyone else knew.
Another example: When Pokemon-Go was hot, many retail-traders immediately started buying up Nintendo stock. Anyone who knew Nintendo did not actually own the rights to this app. would know this stock is overvalued based on false assumptions.
Last example, Looking at a company like Sears, their financials...history....and lets even say you check out SEC filings and their own board members are cashing in stock. It sounds from this video that youre basically saying all of the above examples mean absolutely nothing.
Please make sense of these examples for me
Sky View Trading that’s a really good point. Like there is no sth like “perfect competitive market”. I assume there doesn’t exist a perfectly efficient market either. However, what caused this inefficiency and how can we make use of that is really sth we might want to dig into and could be constructive
Possibly. But remember, I'm not necessarily arguing this. I'm just pointing out what the Efficient Market Hypothesis would suggest :)
However, I would say that it's easy to attribute 'reasons' after the fact (and then make movies about it, of course)... but you do have a good point. There are actually a few pretty valid arguments against the Efficient Market Hypothesis and we plan on showing both sides in a future video.
Still, I'd say the markets are mostly efficient, though. Are there some pricing inefficiencies? Maybe. But are we, as retail traders, going to be able to spot them and take advantage of them? I doubt it. Just my opinion and you are free to choose how strongly you believe in this theory. Some believe strongly against it. Many believe it is true to an extent. And some are efficient market theorists to the bone and you can't convince them otherwise.
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