Differentiating Between an Irrational Market or Strong Bull Market

(Last Updated On: January 30, 2012)
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Differentiating Between an Irrational Market or Strong Bull Market


These past two weeks have been tough as an options trader. Differentiating between trading an a possibly irrational market or bull market trend is sometimes very difficult to assess. We all know that the stock market can push us to


Someone is going to write this so it may as well be me.

Markets can remain irrational longer than you can stay solvent – John Maynard Keynes.

In the end, does it really matter which it is? By the way, that is a real question, not a statement.

I agree – and had mentioned that in the post I linked to. I think that even though the market is irrational (to some) there are rational reasons why investors are buying or selling. Even still there are extremes that don’t justify staying in even though the trend can continue.


after I wrote that I realized it almost had to be in the post you linked to; it was just too perfect not to be.

I write counter trend scalping algorithms, virtually all of which attempt to profit from market extremes. Contrary to what that statement might imply, those algorithms do not try to pick market tops/bottoms, simply over extensions.

As with any trade, especially algorithmic ones, the key is having good metrics to tell you when you are wrong. You might enjoy some of the Market Profile articles on unfair highs/lows.



NOTE I now post my TRADING ALERTS into my personal FACEBOOK ACCOUNT and TWITTER. Don't worry as I don't post stupid cat videos or what I eat!
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About caustic

Hi i there My name is Bryan Downing. I am part of a company called QuantLabs.Net This is specifically a company with a high profile blog about technology, trading, financial, investment, quant, etc. It posts things on how to do job interviews with large companies like Morgan Stanley, Bloomberg, Citibank, and IBM. It also posts different unique tips and tricks on Java, C++, or C programming. It posts about different techniques in learning about Matlab and building models or strategies. There is a lot here if you are into venturing into the financial world like quant or technical analysis. It also discusses the future generation of trading and programming Specialties: C++, Java, C#, Matlab, quant, models, strategies, technical analysis, linux, windows P.S. I have been known to be the worst typist. Do not be offended by it as I like to bang stuff out and put priorty of what I do over typing. Maybe one day I can get a full time copy editor to help out. Do note I prefer videos as they are much easier to produce so check out my many video at youtube.com/quantlabs