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There are no pure fundamentalists when markets correct everyone starts looking at the charts.
Plus the 200 day is a big phycological level, no doubt most of the algos were programmed to watch for a break of that level too.
Pick up yesterday's chart of the SPY and have a look at what happens to the selling volume as soon as it breaks that mark.
Plus the 200 day is a big phycological level, no doubt most of the algos were programmed to watch for a break of that level too.
Pick up yesterday's chart of the SPY and have a look at what happens to the selling volume as soon as it breaks that mark.
twinturboz said:
There are no pure fundamentalists when markets correct everyone starts looking at the charts.
Plus the 200 day is a big phycological level, no doubt most of the algos were programmed to watch for a break of that level too.
Pick up yesterday's chart of the SPY and have a look at what happens to the selling volume as soon as it breaks that mark.
Probably just hit some fund stop losses.Plus the 200 day is a big phycological level, no doubt most of the algos were programmed to watch for a break of that level too.
Pick up yesterday's chart of the SPY and have a look at what happens to the selling volume as soon as it breaks that mark.
twinturboz said:
There are no pure fundamentalists when markets correct everyone starts looking at the charts.
Plus the 200 day is a big phycological level, no doubt most of the algos were programmed to watch for a break of that level too.
Pick up yesterday's chart of the SPY and have a look at what happens to the selling volume as soon as it breaks that mark.
Still not clear to me. The only strategies that it is possible to make money from are ones that are not in the public domain, once everyone knows it the inefficiency is lost - would genuinely be interested to know if anyone makes money by using simple TA.Plus the 200 day is a big phycological level, no doubt most of the algos were programmed to watch for a break of that level too.
Pick up yesterday's chart of the SPY and have a look at what happens to the selling volume as soon as it breaks that mark.
Derek Chevalier said:
Still not clear to me. The only strategies that it is possible to make money from are ones that are not in the public domain, once everyone knows it the inefficiency is lost - would genuinely be interested to know if anyone makes money by using simple TA.
There are many ways to skin a cat in this market. Not everyone uses the same strategy, one person might look at a chart and see one thing the other something different. On top of that there are so many different technical analysis methods, some people use elliot wave theory, others fib lines, darvas boxes and so on. You just need to find what works for you.
Think someone already said TA isn't an exact science it just helps you to navigate.
Totally off topic but came across this, I know its ancient but I found it interesting. http://www.profitube.com/documentaries/legendary-1...
Here he is again.... http://www.telegraph.co.uk/finance/personalfinance...
twinturboz said:
There are many ways to skin a cat in this market. Not everyone uses the same strategy, one person might look at a chart and see one thing the other something different.
On top of that there are so many different technical analysis methods, some people use elliot wave theory, others fib lines, darvas boxes and so on. You just need to find what works for you.
But do any of these strategies in the public domain actually work?On top of that there are so many different technical analysis methods, some people use elliot wave theory, others fib lines, darvas boxes and so on. You just need to find what works for you.
Derek Chevalier said:
But do any of these strategies in the public domain actually work?
Very few people can make money on a long term basis out of them in my experience. I can't offer much evidence to back that up, but I suggest considering the following points:Having worked as a trader on some of the larger trading floors of 500+ people, I have very rarely found anyone that does more than take a cursory glance at technical levels. Given that these are some of the brightest and most qualified people, surely if this worked they would be all over it?
The barriers to entry to trade privately are virtually zero these days. Anyone can try with just a few quid and millions do, globally. Trading is highly scalable - if you can make a profit on a £1 a point trade, you could make a huge profit on the same trade in a thousand times the size. There is a limit to liquidity, but in the major markets, it is vastly greater than any private trader actually uses. Even if 5% of private traders could make this work reliably, they would become hugely wealthy (billionaire territory) within a few years. How many very wealthy individual traders do you know, or have you heard about?
There are certainly some scalpers out there who can take out more than they put back, often using their experience of the markets to get it right a little more than 50% of the time, but they are in a real minority. Lots of people give it a go, and most stop which must say something.
I do think it is possible for the average person to take money out of the market in the long term, IF you have money to invest and you take a long enough view, due to above inflation returns from stock markets. I do this myself and it seems to work, but it is no get rich quick scheme.
Define TA then? Support and resistance levels are very obvious and in my experience can be incredibly accurate. Bounces off support levels, which can then be shorted and closed at that level again happen pretty frequently.
One time I will find my Paris Rapeseed futures chart. For about 6-8 weeks earlier in the summer it followed a lovely technical pattern and almost every move was up or down to Fibonacci levels where it encountered resistance/support. It also hardly ever went outside the Bollinger bands, and every time it did it retreated back inside. Gave me something to do while other stuff was quiet.
Each to their own, but most people I know who trade will look at charts and trade off the back of them, while also holding a long term view. As someone said above, fundamentals do always win, but they can be weeks or months in the making. TA is a way of taking advantage of the short/medium term moves in a index. Properly done, with stop losses and profit takes, you can easily manage your risk and set up several scenarios to watch them play out. Nobody said TA has the answers, it just gives you an idea as to what might happen. How you trade off the back of that is the skill of the trader.
One time I will find my Paris Rapeseed futures chart. For about 6-8 weeks earlier in the summer it followed a lovely technical pattern and almost every move was up or down to Fibonacci levels where it encountered resistance/support. It also hardly ever went outside the Bollinger bands, and every time it did it retreated back inside. Gave me something to do while other stuff was quiet.
Each to their own, but most people I know who trade will look at charts and trade off the back of them, while also holding a long term view. As someone said above, fundamentals do always win, but they can be weeks or months in the making. TA is a way of taking advantage of the short/medium term moves in a index. Properly done, with stop losses and profit takes, you can easily manage your risk and set up several scenarios to watch them play out. Nobody said TA has the answers, it just gives you an idea as to what might happen. How you trade off the back of that is the skill of the trader.
335d said:
Trading is highly scalable - if you can make a profit on a £1 a point trade, you could make a huge profit on the same trade in a thousand times the size. There is a limit to liquidity, but in the major markets, it is vastly greater than any private trader actually uses. Even if 5% of private traders could make this work reliably, they would become hugely wealthy (billionaire territory) within a few years. How many very wealthy individual traders do you know, or have you heard about?
I totally disagree with this. You are forgetting psychological barriers and also the market needs to have sufficient vol to make that kind of money. Billionaire traders within "a few years" are almost non-existent in the history of trading, so it's nothing to do with TA or not.That aside, I agree most traders pay a passing glance at TA but in fact the rely for 90% of their trades on something else (momentum, stat arb, relative value etc etc).
I'm confused, I can expect non traders to question if TA works or not but those of you who trade in this thread are you seriously telling me your trading day to day with no TA.
I guess as someone who predominantly trades day in day out with TA I just can't see a way of trading without it. How are you identifying buy or sell targets? When this recent correction hit how did you identify where support levels were? Do you totally ignore oversold/overbought conditions. Are trend lines totally irrelevant then.
Are you saying your trading purely based on fundamentals? Try that approach on stocks like Amazon, Tesla etc they don't follow the fundamentals at all. I guess I find it hard to believe day traders aren't using some form of TA, there have been many a time where I've seen a stock bounce off a moving average or prior support point, point in case just take the SnP 500 last 2 days why did it find resistance at the prior 200 day ma when bouncing back from 1920.
Google yesterday another example, after earnings why did it bounce at 503, pick up a chart and you'll see it bounced perfectly there which happens to coincide with the same support levels which last occurred in October and November 2013.
I guess if your argument is would TA predict the move down to 503 then I can agree that its useless in that sense it can only help you to navigate i.e. on a move up or down what sort of levels you might see.
I guess as someone who predominantly trades day in day out with TA I just can't see a way of trading without it. How are you identifying buy or sell targets? When this recent correction hit how did you identify where support levels were? Do you totally ignore oversold/overbought conditions. Are trend lines totally irrelevant then.
Are you saying your trading purely based on fundamentals? Try that approach on stocks like Amazon, Tesla etc they don't follow the fundamentals at all. I guess I find it hard to believe day traders aren't using some form of TA, there have been many a time where I've seen a stock bounce off a moving average or prior support point, point in case just take the SnP 500 last 2 days why did it find resistance at the prior 200 day ma when bouncing back from 1920.
Google yesterday another example, after earnings why did it bounce at 503, pick up a chart and you'll see it bounced perfectly there which happens to coincide with the same support levels which last occurred in October and November 2013.
I guess if your argument is would TA predict the move down to 503 then I can agree that its useless in that sense it can only help you to navigate i.e. on a move up or down what sort of levels you might see.
Edited by twinturboz on Friday 17th October 11:09
R11ysf said:
I totally disagree with this. You are forgetting psychological barriers and also the market needs to have sufficient vol to make that kind of money. Billionaire traders within "a few years" are almost non-existent in the history of trading, so it's nothing to do with TA or not.
That aside, I agree most traders pay a passing glance at TA but in fact the rely for 90% of their trades on something else (momentum, stat arb, relative value etc etc).
The fact that there are (virtually?) no billionaire TA traders, even after decades of trading is exactly my point. It trading from TA was a strategy which could be made to work with a decent success rate, traders would be getting very rich very quickly, given the short term nature, and hence high frequency of TA opportunities. Liquidity is not a significant issue on major markets. From my investment bank days I know that tight spreads on very large sizes are available to big players.That aside, I agree most traders pay a passing glance at TA but in fact the rely for 90% of their trades on something else (momentum, stat arb, relative value etc etc).
twinturboz said:
I'm confused, I can expect non traders to question if TA works or not but those of you who trade in this thread are you seriously telling me your trading day to day with no TA.
I guess as someone who predominantly trades day in day out with TA I just can't see a way of trading without it. How are you identifying buy or sell targets? When this recent correction hit how did you identify where support levels were? Do you totally ignore oversold/overbought conditions. Are trend lines totally irrelevant then.
Are you saying your trading purely based on fundamentals? Try that approach on stocks like Amazon, Tesla etc they don't follow the fundamentals at all. I guess I find it hard to believe day traders aren't using some form of TA, there have been many a time where I've seen a stock bounce off a moving average or prior support point, point in case just take the SnP 500 last 2 days why did it find resistance at the prior 200 day ma when bouncing back from 1920.
Google yesterday another example, after earnings why did it bounce at 503, pick up a chart and you'll see it bounced perfectly there which happens to coincide with the same support levels which last occurred in October and November 2013.
I guess if your argument is would TA predict the move down to 503 then I can agree that its useless in that sense it can only help you to navigate i.e. on a move up or down what sort of levels you might see.
Yes I trade for myself and I pay no attention to TA at all. I rely entirely on fundamentals, relative value and to a lesser extent trends. I certainly do not claim to be able to be able to predict where Amazon or Tesla are going to be in 10 minutes or even 10 weeks time. I take longer term positions and I stick to products I have a reasonable understanding of. I ignore individual tech stocks entirely, as I don't know enough about them, although I have a leveraged fund investment in that sector. I trade a number of stocks, some CoCos, make some direct investments in unlisted companies or commercial projects. I guess as someone who predominantly trades day in day out with TA I just can't see a way of trading without it. How are you identifying buy or sell targets? When this recent correction hit how did you identify where support levels were? Do you totally ignore oversold/overbought conditions. Are trend lines totally irrelevant then.
Are you saying your trading purely based on fundamentals? Try that approach on stocks like Amazon, Tesla etc they don't follow the fundamentals at all. I guess I find it hard to believe day traders aren't using some form of TA, there have been many a time where I've seen a stock bounce off a moving average or prior support point, point in case just take the SnP 500 last 2 days why did it find resistance at the prior 200 day ma when bouncing back from 1920.
Google yesterday another example, after earnings why did it bounce at 503, pick up a chart and you'll see it bounced perfectly there which happens to coincide with the same support levels which last occurred in October and November 2013.
I guess if your argument is would TA predict the move down to 503 then I can agree that its useless in that sense it can only help you to navigate i.e. on a move up or down what sort of levels you might see.
Edited by twinturboz on Friday 17th October 11:09
Sadly I am not a billionaire, and will never be one as these products are relatively slow moving, but my aim which appears to be achievable is to generate enough money for my family to live well. It helps that I started off with the proceeds of a 10 year trading 'career'.
335d said:
Yes I trade for myself and I pay no attention to TA at all. I rely entirely on fundamentals, relative value and to a lesser extent trends. I certainly do not claim to be able to be able to predict where Amazon or Tesla are going to be in 10 minutes or even 10 weeks time. I take longer term positions and I stick to products I have a reasonable understanding of. I ignore individual tech stocks entirely, as I don't know enough about them, although I have a leveraged fund investment in that sector. I trade a number of stocks, some CoCos, make some direct investments in unlisted companies or commercial projects.
Sadly I am not a billionaire, and will never be one as these products are relatively slow moving, but my aim which appears to be achievable is to generate enough money for my family to live well. It helps that I started off with the proceeds of a 10 year trading 'career'.
Semantics I guess but isn't trends a form of TA. But I get the gist of what your saying, I think TA becomes more applicable in day trading or very short term trading at least in my opinion. Sadly I am not a billionaire, and will never be one as these products are relatively slow moving, but my aim which appears to be achievable is to generate enough money for my family to live well. It helps that I started off with the proceeds of a 10 year trading 'career'.
twinturboz said:
Semantics I guess but isn't trends a form of TA. But I get the gist of what your saying, I think TA becomes more applicable in day trading or very short term trading at least in my opinion.
I should have been clearer in my language. I don't draw any lines on charts, by considering trends, I just mean for example that I take notice of the relative outperformance/underperfornace of one sector or product and consider whether I expect that to continue - i.e. can it be justified by fundamentals?I should probably add that I look at markets for typically 10-12 hours a week, unless something significant is happening, so I am perhaps not what some would consider to be a trader. I do no other paid work.
Edited by 335d on Friday 17th October 13:21
twinturboz said:
Google yesterday another example, after earnings why did it bounce at 503, pick up a chart and you'll see it bounced perfectly there which happens to coincide with the same support levels which last occurred in October and November 2013.
Edited by twinturboz on Friday 17th October 11:09
Derek Chevalier said:
twinturboz said:
Google yesterday another example, after earnings why did it bounce at 503, pick up a chart and you'll see it bounced perfectly there which happens to coincide with the same support levels which last occurred in October and November 2013.
Edited by twinturboz on Friday 17th October 11:09
Derek Chevalier said:
Just to be clear, you were able to predict ahead of time what the share price was going to do? I am meeting someone later today that runs a stat arb hedge fund so will see what his views are (I'm not saying the market is 100% efficient, but to predict with greater success than by chance alone takes massive effort, IMO)
Not quite, looking at what the options were pricing in your able to gauge what sort of move you can expect in terms of a % swing either way. Then using simple support or resistance levels you can identify levels where the stock may hit. Doesn't help you to identify which way the move was going to happen. What it did was allow me to place a limit order around that 503 level after hours. Gassing Station | Finance | Top of Page | What's New | My Stuff