What is the psychology behind the Dead Cat Bounce Pattern and how can it be traded?
You are correct, a possible Dead Cat Bounce is forming on the stock markets. If it does form it will mean that prices have not reached their bottom, as this pattern is a bearish continuation pattern. For a Dead Cat Bounce to form prices will need to break through support formed by the lows last week. If prices bounce off the support and go back up it could become a double bottom pattern, which is a reversal pattern. The double bottom would be confirmed if prices break above the recent high a couple of days ago. Regarding the psychology of the dead cat bounce pattern, is that after a distinct and quick reversal of prices from recent highs you have 2 groups of market participants who create demand in the market. Firstly you have those who were short covering their short positions to take profits, and secondly you have those who are looking for a bargain buying at what they think is the low. So for a few days you have the bulls taking over the bears.  Then as more less positive news comes in, the bears hit the market again. These are more participants opening short positions, but more so those who missed out in selling previously because prices fell too quickly, seeing another opportunity to sell at a better price. So the bears take over again.  Unless there is very good news around the corner it is likely that the bears will stay in control and prices will fall further. How to trade a dead cat bounce (assuming you have been stopped out of your long possistions already)? If you are aggressive you can go short as prices start reversing from the top of the bounce (with your stop loss just above the top of the bounce). If you are more conservative you would place your entry for a short position just below the support at the start of the bounce (with your stop above the top of the bounce). You could also place an order for a long position above the top of the bounce if a double bottom eventuated. A One Cancels the Other (OCO) would be an appropriate order for such a situation.
&gt;Is it illegal to support the president of the United States? You act like people aren't allowed to have differing opinions from you.  A whole heap of people who think we should let bygones be bygones and unite behind our Orange Overlord seem to be the same people who wouldn't be caught dead supporting the president during Obama's terms. Basically every GOP member of Congress and their entire voting base. So where was the call for unity and civility from 2008-2016. "This is the best tl;dr I could make, [original](http://www.reuters.com/investigates/special-report/usa-bodies-brokers/) reduced by 98%. (I'm a bot) ***** &gt; Few state laws provide any oversight whatsoever, and almost anyone, regardless of expertise, can dissect and sell human body parts.  &gt; &amp;quot;There is a big market for dead bodies,&amp;quot; said Ray Madoff, a Boston College Law School professor who studies how U.S. laws treat the dead. &amp;quot;We know very little about who is acquiring these bodies and what they are doing with them.""  &gt; Generally, a broker can sell a donated human body for about $3,000 to $5,000, though prices sometimes top $10,000.   ***** [**Extended Summary**](http://np.reddit.com/r/autotldr/comments/78gdhw/each_year_thousands_of_americans_donate_their/) | [FAQ](http://np.reddit.com/r/autotldr/comments/31b9fm/faq_autotldr_bot/ ""Version 1.65, ~234179 tl;drs so far."") | [Feedback](http://np.reddit.com/message/compose?to=%23autotldr ""PM's and comments are monitored, constructive feedback is welcome."") | *Top* *keywords*: **body**^#1 **broker**^#2 **part**^#3 **state**^#4 **funeral**^#5" They've been around long enough now for there to be past performance figures you can google for. I think you'll find the results aren't very encouraging. I personally don't think there's a huge risk that the robots will lose all your money, but there's every reason to expect they aren't likely to perform better than traditional managers or beat the market. At the end of the day the robots are employing a lot of analysis and management techniques that traditional managers have been using, and since traditional managers use computers to do it efficiently there's not much gain IMO. Yes in theory labour is expensive so cutting it out is good, but in practise, in this case, the amount of money being managed is huge and the human cost is pretty insignificant. I personally don't believe that the reduced fees represent the cost of the human management, I think it's just marketing. There might be some risk that the robots can be 'gamed' but I doubt the potential is very great (your return might in theory be a fraction of a percent less over time because it's going on). The problem here is that the algorithms are functionally broadly known. No doubt every robo adviser has its own algorithms that in theory are the closely guarded secret, but in reality a broad swath of the functional behaviour will be understood by many people in the right circles, and that gives rise to predictability, and if you can predict investment/trading patterns you can make money from those patterns. That means humans making money (taking margin away) from the robots, or robots making money from other robots that are behind the curve. If robo advisers continue to take off I would expect them to under perform more and more. "First lets understand what convexity means: Convexity -  convexity refers to non-linearities in a financial model. In other   words, if the price of an underlying variable changes, the price of an   output does not change linearly, but depends on the second derivative   (or, loosely speaking, higher-order terms) of the modeling function.   Geometrically, the model is no longer flat but curved, and the degree   of curvature is called the convexity. Okay so for us idiots this means: if the price of ABC (we will call P) is determined by X and Y. Then if X decreases by 5 then the value of P might not necessarily decrease by 5 but instead is also dependent on Y (wtf$%#! is Y?, who cares, its not important for us to know, we can understand what convexity is without knowing the math behind it). So if we chart this the line would look like a curve. (clearly this is an over simplification of the math involved but it gives us an idea) So now in terms of options, convexity is also known as gamma, it will probably be easier to talk about gamma instead of using a confusing word like convexity(gamma is the convexity of options). So lets define Gamma: Gamma - The rate of change for delta with respect to the underlying asset's price. So the gamma of an option indicates how the delta of an option will change relative to a 1 point move in the underlying asset. In other words, the Gamma shows the option delta's sensitivity to market price changes. or Gamma shows how volatile an option is relative to movements in the underlying asset. So the answer is: If we are long gamma (convexity of an option) it simply means we are betting on higher volatility in the underlying asset(in your case the VIX). Really that simple? Well kinda, to fully understand how this works you really need to understand the math behind it. But yes being long gamma means being long volatility. An example of being ""long gamma"" is a ""long straddle"" Side Note: I personally do trade the VIX and it can be very volatile, you can make or lose lots of money very quickly trading VIX options. Some resources: What does it mean to be ""long gamma"" in options trading? Convexity(finance) Long Gamma – How to Make a Long Gamma Position Work for You Delta - Investopedia Straddles & Strangles - further reading if your interested. Carry(investment) - even more reading." Link only answers aren't good, but the list is pretty long. It's a moving target, the requirement change based on a number of criteria. It usually jumps to force you to sell when you hold a losing position, or when your commodity is about to skyrocket. I have watched the ticker when I have made a transaction. About ¼ of the time my buy (or sell) actually moves the going price. But that price movement is wiped out by other transactions within two (or so) munites.  Is your uncle correct? Yes. Will anyone notice? No. "It means price movements in the past do not affect price movements in the future. Think of the situation of a coin, if you flip it once, and then you flip it a second time, the results are independent of each other. If the first time, you flipped a HEAD, it does not mean that the coin will remember it, and produce a TAIL the second time. This is the meaning of ""memoryless"". FYI, stock markets are clearly not memoryless. It is just an assumption for academic purposes." A few things: time in trade, price maximum move against you during that time, price maximum move for you during that time, Where you got out in relation to maximum of the move (how much of the move did you capture in that trade -- from lowest to highest), what was your risk to return (R) -- return / risk.