If trading can be reduced to a well defined set of rules, then market forecasting can also be defined by testable rules.
Many traders like to develop general market outlooks and use these opinions as a guide to trading. For example a trader may be very bullish on stocks because the overall economy seems to be growing or earnings reports from most companies are beating expectations. It is difficult to trade on such general guidelines, but a problem with opinions like this is that trading psychology can be severely impacted by holding strong opinions. Bullish traders may be reluctant to enter short trades, or may hold onto a losing long trade for too long. Systems trading requires following signals but it is human nature to want a market opinion that can be shared with others.
Not content with being simply bullish or bearish, traders are often trying to pick exact tops and bottoms. A number of studies have concluded that market timing doesn’t work. I








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