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What Song Is The Stock Market Playing?

Wednesday, November 16, 2016 8:44
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(Before It's News)

By Chris Ebert

kid-pianoWhen I was an engineering major in college some decades ago, I was forced to take a course in music (against my will) as an elective in order to graduate. For my term paper in the course I researched why certain sounds seemed pleasing to most people, while others most would consider displeasing.

In the past 30 years since, I have pondered why there seem to be some naturally occurring patterns that tend to be pleasing. Upon becoming a trader I realized the pleasing nature of patterns did not just apply to music – just ask any trader who uses Fibonacci.

There are days when the stock market seems to act like a two-year old hitting random keys on a piano, and others when it plays like a professional concert pianist. The better part of my last 30 years has been spent waiting for the days when I can hear the concert pianist, because that is the best chance I have of hearing something pleasing. Moreover, If I know the rest of the audience is enjoying the music, there’s a much better chance the song being played is somewhat predictable, as opposed to the two-year old banging randomly on the keys – those are days I try to avoid trading.

The preceding is a post by Christopher Ebert, author of the popular option trading book “Show Me Your Options!” Chris uses his engineering background to mix and match options as a means of preserving portfolio wealth while outpacing inflation. Questions about constructing a specific option trade, or option trading in general, may be entered in the comment section below or emailed to OptionScientist@zentrader.ca

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