Jack Alvarez25 said:I was only bringing up movies because they deal with attempts to manipulate the market...
Now, regarding what you said about price, I think you're absolutely spot on. I’d probably just add that market prices are ultimately driven by buyer psychology. You could have some fundamental analyst walking on his hands claiming a certain stock is worth way more, but if the market doesn't see it, well, it doesn't matter.
That's why I tend to rule out computer programs as being the "magic key" to trading. Sure, a program can beat a chess grandmaster at a game where the rules and goals are set, but I haven't seen a program that can calculate that, say, NVIDIA will hit a specific price in six months. How is a program supposed to know if some mess is going to break out in the Gulf of Mexico, or if some team of scientists is suddenly going to announce they've cracked cold fusion?
Honestly, I'd sooner bet on a psychic in Milan than on some algorithm. 😁
I think we're talking about investor psychology (what you call buyer behavior), and naturally, that dictates the strategies people choose.
While I don't believe computers are the ultimate authority—in my view, they aren't "trading" on their own, but rather executing based on preset buy or sell parameters, since I find it hard to believe they attempt any kind of actual forecasting, especially regarding the "distant" future even a few days out—I still wouldn't dismiss them entirely.
In that sense (without saying they shouldn't be singled out or excluded), I'd offer one example under one specific condition:
The condition being that price fluctuations are essentially stochastic in nature.
Here is an example: I recently read that police computers in the USA can predict when and where crimes will occur with impressive accuracy. The whole concept relies on experience—essentially historical data on crime patterns and locations combined with the laws of probability. Naturally, these computers house massive amounts of information that gets updated daily, using probability to calculate the likelihood of a crime repeating. I think we can all agree that crime (its frequency, type, timing, location, and method) behaves like a stochastic variable. It has reached the point where computers can predict the timing and location of events, allowing police to intervene preventatively, and the results have been anything but negligible.
My take is that in the long run (if not already!), computers might be able to predict not necessarily exact prices, but perhaps the best buy/sell ranges—maybe starting as advisory tools, and who knows what later... Certainly, the variables influencing price movements are far more complex and numerous than the patterns used to track crime, but hey, "they laughed at the guy who invented penicillin," too.