Last Exit for the Lost - Last Exit for the Lost Brett N....

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Last Exit for the Lost Brett N. Steenbarger, Ph.D. www.brettsteenbarger.com I’m encountering frequent tales of the demise of once-successful “daytraders” of the futures markets, which perhaps had me thinking of The Fields of the Nephilim when I titled this piece. Here is what I believe: As an increasing number of players swarm to a recognized trading “edge”, this creates new patterns of over-reaction and under-reaction in the markets and fresh sources of “edge”. The new sources of “edge” are always diametrically opposed to the old ones. Where the edge had been momentum plays with growth stocks, the new edge can be found in fading low volatility markets. The erstwhile edge in harvesting ticks from inefficient markets yields way to an advantage trading the more protracted overreactions of these short-term players. The insight I had on Friday was that the patterns defining the current edge are not resolvable into the terms of the previous advantage. They are emergent phenomena, to
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Last Exit for the Lost - Last Exit for the Lost Brett N....

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