Why is it that when TC becomes obvious to most market participants it stops working? - page 10
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The crowd rumour is not really a rumour, but a very specific collective delusion which has arisen as a consequence of the mathematical model of an efficient market. In this model, all market agents (i.e. the crowd of traders) have equal and instantaneous access to information, which is completely untrue. Another fundamental assumption of the model - price movement is the result of a huge number of small and independent influences of market agents. The result of this assumption is that price movement is a stochastic process to which the normal distribution applies. Everyone has already heard about this "applicability". Likewise, it is not difficult to understand that market agents are unequal. Crowd of traders is in fact a big pyramid at the base of which really is a crowd of "small potatoes", and at the top there is big capital. In between, of course, are bigger or smaller players. And which of all these agents invariably wins? I think you can guess at one time.
However, for things to be scripted, the crowd of small and even medium players really has to be completely stochastic, or even more accurately, chaotic. And for it to be so, it is very useful to have this collective delusion that there is nothing in the market apart from this crowd, and that this crowd is so big that it will eat up any organised movement. Which is actually nonsense. This crowd never runs ahead of the market, only behind it. Therefore, it is very easy and quick to get organised - after all, we are running after the money. If suddenly, an undoubtedly profitable TS is found and, moreover, it becomes public, the crowd of small and medium market players will turn from a crowd into a monolith. As a result, 1) the signals on the market, to which the TS was oriented, will disappear - because its character will cease to be random, 2) the total capital of the crowd will be comparable to the capitals of the top, that they (the top) does not need - it is easy to play against the crowd, and they already know how to do it, but it is risky to play against an equal or something like that. So, at least the top will change their strategy. Either of these aspects leads to the TS losing its profitability.
So there is no crowd and market opposing each other. The crowd of all traders is the market. Confrontation exists only between parts of this aggregate crowd. And the market lives only until this confrontation represents a dynamic equilibrium. Therefore, if one of the parts gets organized (for example, as a result of mass usage of one TS) and becomes dominant, the market simply ends. But since its existence is necessary for the modern financial and economic system, it cannot end, and therefore it will simply change its character so as to restore the dynamic equilibrium. That is, it will make this TS at least unprofitable.