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October 29, 2009 9:43 EDT
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Street Smarts
In-depth interviews with the movers and shakers of the financial world, hosted by Kevin Cook or Jud Pyle.
Predictions are pointless and narratives are needless, but what works?
Kevin Cook fires off another round of questions to Jeff Quinto of ElectronicFuturesTrader.com in Questions for Quinto.
Traders are often plagued by personal predications and several “should be’s”. Jeff Quinto of ElectronicFutureTrader.com says two words explain this phenomenon: pointless predictions.
“The fact is that we have this need to predict things,” Quinto said. “We talk about the market not being helped by our predictions but we still do them.”
Predictions taints views of the market, and traders miss the significant half of many pieces of information, according to Quinto. Many traders believe new lows will come to the stock market in October, but the market hasn’t seen them. Traders continue to look for a great fall, but the fact is they could overlook what is actually happening in front of them.
Daily chatter is also a long-standing issue for traders, said Kevin Cook, market analyst for ONN.tv.
Quinto calls this particular phenomenon a “needless narrative” effect. He adds that traders rely too much on “did you hears” and news from chatter on the floor. Traders could become reluctant, but they should concentrate on the actual occurrences in the market.
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