Replies to post #27 on The "Stock Trading Riches" Investment Sy

[PraveenP]

I think if everyone started using a contrarian system, the markets would have less volatility.

Because I think that is why contrarian systems work so well - when you use them, you are fulfilling the economic role of the speculator, which is to regulate markets by soaking up excess supply (buying when everyone wants to sell) and feeding demand (selling when everyone wants to buy).

So then rebalancing systems would not give big buy and sell signals. Then, the "weak hands" will say the system doesn't work, and they will go back to trading some other system, and then volatility would return :-)

So I'm not worried about too many people learning these systems.

[w0od]

Probably only a theoretical discussion as the mentality of the "herd" is unlikely to change

i have a question i always like to ask and its along these same lines. do charts work because they show something about the price of a company that makes it attractive or do charts work becuase everyone is looking for the same "thing" and when that comes along everyone "knows" its time to buy. i trade by charts alot and even though it usually works and i make money at it it still kind of upsets me because it is crazy that they work and i think the only reason they work is because everyone reads the same books and every knows "when to buy"...ok maybe not everyone but enough to make the chart self fulling

what if someone came out with a new formation of a chart pattern and said this is the absolute best time to buy a stock. would it actualy become the absolute best time to buy the stock just because now everyone is looking for it and buying into it?