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Information is the driving force of all markets; information has no power until someone acts on it. Understanding human nature is key to understanding the totality of the auction process. The following behavior is applicable to all independent timeframes: (Chapter Two and Chapter Seven of Markets in Profile and Chapter Six of The Tipping Point offer further elaboration on this topic.)
1. The innovators are the first to act and the hardest to detect; they are mostly individuals and hedge funds that are not driven by committee decisions. They are generally very low-keyed and shy away from publicity.
2. The early adopters are next and climb aboard a trend early in the process. (Remember: these concepts are applicable to all timeframes independently.) They are also less likely to be driven by communal decisions. They can become very aggressive.
3. The early majority are generally the more astute larger organizations and individuals. This group represents the heart of the bell shaped curve.
4. The late majority is led by the larger, slower moving institutions and individuals; those who require substantial information prior to making a commitment or decision. They tend to be more committee based if they are institutional.
5. The laggards are those that are extremely late to the auction; they enter just when the innovators are packing up to go home or have already faded the current auction.
The model assumes that the markets are highly inefficient, as information slowly penetrates the different segments of investors.
Mass Psychology (How Investors Can Make Money Using Mass Psychology: A Guide to Your Relationship with Money)
by James Dines
This is a great book Mike.
"The primary thing required to obtain what you want from life, is simply the will to pursue it, and the faith to believe it is possible." - Author Unknown
"The ability to maintain discipline and stick to the rules is the hallmark of the experienced successful trader" - Curtis Faith
