Failed setups: Inverse predictive power

摘要

Traders depend on the predictive power of price setups. But evenrnthe best traders face setups that fail. This is when the concept of inversernpredictive power comes into play.rnBuyers enter trades expecting to win: they expect prices to rise. Sellers also enter trades expecting to win: they expect prices to fall. Each buyer and seller in a trade expects to win and, therefore, expects his counter party to lose. While many futures market participants may be hedging a position and therefore don't care about the ultimate direction, they certainly are trying to execute that hedge at the best possible price.