Trading terminology
Discussion
I've been following a particular share that I have an interest in, and have started receiving articles that try to sound scientific but I'm not convinced. They also seem to be written by the same person, or at least in the same odd semi-academic, semi-sales-spiel style.
So far I've had mention of Moving Day Averages, the Wilder Moving Average, the Mesa Adaptive Moving Average, the Fractional Moving Average, the Aroon Oscillator (which is the difference between Aroon Up and Aroon Down, and represents Aroon Momentum), the Awesome Oscillator, the Commodity Channel Index, the Relative Strength Index, the Williams Percent Range, the Average Directional Index, the Chikou Line, the Chaikin Oscillator, the Percent Price Oscillator, the Average True Range, the Stochastic Oscillator, the Hilbert Transform Discriminator, the Parabolic Stop And Reverse, the Money Flow Index.
Are all these indexes and charts reliable and useful, because it smells of a desperate attempt by traders to convince the people who pay them that they know what they're doing. All of the indicators above are about predicting the behaviour of people, seemingly nothing to do with the value or performance of a company.
The reason I bought this share is simply because it has dropped a lot recently, I think unfairly as nothing much has really changed, so I'm thinking it will go back up again. I have called that the Archibald Diatonic Inference Calculasia.
So far I've had mention of Moving Day Averages, the Wilder Moving Average, the Mesa Adaptive Moving Average, the Fractional Moving Average, the Aroon Oscillator (which is the difference between Aroon Up and Aroon Down, and represents Aroon Momentum), the Awesome Oscillator, the Commodity Channel Index, the Relative Strength Index, the Williams Percent Range, the Average Directional Index, the Chikou Line, the Chaikin Oscillator, the Percent Price Oscillator, the Average True Range, the Stochastic Oscillator, the Hilbert Transform Discriminator, the Parabolic Stop And Reverse, the Money Flow Index.
Are all these indexes and charts reliable and useful, because it smells of a desperate attempt by traders to convince the people who pay them that they know what they're doing. All of the indicators above are about predicting the behaviour of people, seemingly nothing to do with the value or performance of a company.
The reason I bought this share is simply because it has dropped a lot recently, I think unfairly as nothing much has really changed, so I'm thinking it will go back up again. I have called that the Archibald Diatonic Inference Calculasia.
ScotHill said:
I've been following a particular share that I have an interest in, and have started receiving articles that try to sound scientific but I'm not convinced. They also seem to be written by the same person, or at least in the same odd semi-academic, semi-sales-spiel style.
So far I've had mention of Moving Day Averages, the Wilder Moving Average, the Mesa Adaptive Moving Average, the Fractional Moving Average, the Aroon Oscillator (which is the difference between Aroon Up and Aroon Down, and represents Aroon Momentum), the Awesome Oscillator, the Commodity Channel Index, the Relative Strength Index, the Williams Percent Range, the Average Directional Index, the Chikou Line, the Chaikin Oscillator, the Percent Price Oscillator, the Average True Range, the Stochastic Oscillator, the Hilbert Transform Discriminator, the Parabolic Stop And Reverse, the Money Flow Index.
Are all these indexes and charts reliable and useful, because it smells of a desperate attempt by traders to convince the people who pay them that they know what they're doing. All of the indicators above are about predicting the behaviour of people, seemingly nothing to do with the value or performance of a company.
The reason I bought this share is simply because it has dropped a lot recently, I think unfairly as nothing much has really changed, so I'm thinking it will go back up again. I have called that the Archibald Diatonic Inference Calculasia.
If you know of anyone that can accurately forecast (at better than chance alone) the future path of a share price send me their CV and I'll get them an interview at a top hedge fund. Genuine offer.So far I've had mention of Moving Day Averages, the Wilder Moving Average, the Mesa Adaptive Moving Average, the Fractional Moving Average, the Aroon Oscillator (which is the difference between Aroon Up and Aroon Down, and represents Aroon Momentum), the Awesome Oscillator, the Commodity Channel Index, the Relative Strength Index, the Williams Percent Range, the Average Directional Index, the Chikou Line, the Chaikin Oscillator, the Percent Price Oscillator, the Average True Range, the Stochastic Oscillator, the Hilbert Transform Discriminator, the Parabolic Stop And Reverse, the Money Flow Index.
Are all these indexes and charts reliable and useful, because it smells of a desperate attempt by traders to convince the people who pay them that they know what they're doing. All of the indicators above are about predicting the behaviour of people, seemingly nothing to do with the value or performance of a company.
The reason I bought this share is simply because it has dropped a lot recently, I think unfairly as nothing much has really changed, so I'm thinking it will go back up again. I have called that the Archibald Diatonic Inference Calculasia.
ScotHill said:
Are all these indexes and charts reliable and useful, because it smells of a desperate attempt by traders to convince the people who pay them that they know what they're doing. All of the indicators above are about predicting the behaviour of people, seemingly nothing to do with the value or performance of a company.
The reason I bought this share is simply because it has dropped a lot recently, I think unfairly as nothing much has really changed, so I'm thinking it will go back up again. I have called that the Archibald Diatonic Inference Calculasia.
If you're buying because you think the price will go up and therefore allow you to sell at a profit then behaviour of people is what you need to predict. Some of this 'technical analysis' does seem to work for some people, but it's partly a self fulfilling prophecy. The interpretation of charts can be surprisingly subjective and I do wonder if the successful traders are subconsciously guided by experience and interpret the charts as telling them what they expect to happen anyway.The reason I bought this share is simply because it has dropped a lot recently, I think unfairly as nothing much has really changed, so I'm thinking it will go back up again. I have called that the Archibald Diatonic Inference Calculasia.
If you're buying because you think it's currently a bargain given the likely company performance then those indexes and charts aren't relevant. You need to look at the company accounts and see what the economy is doing.
ScotHill said:
I've been following a particular share that I have an interest in, and have started receiving articles that try to sound scientific but I'm not convinced. They also seem to be written by the same person, or at least in the same odd semi-academic, semi-sales-spiel style.
So far I've had mention of Moving Day Averages, the Wilder Moving Average, the Mesa Adaptive Moving Average, the Fractional Moving Average, the Aroon Oscillator (which is the difference between Aroon Up and Aroon Down, and represents Aroon Momentum), the Awesome Oscillator, the Commodity Channel Index, the Relative Strength Index, the Williams Percent Range, the Average Directional Index, the Chikou Line, the Chaikin Oscillator, the Percent Price Oscillator, the Average True Range, the Stochastic Oscillator, the Hilbert Transform Discriminator, the Parabolic Stop And Reverse, the Money Flow Index.
Are all these indexes and charts reliable and useful, because it smells of a desperate attempt by traders to convince the people who pay them that they know what they're doing. All of the indicators above are about predicting the behaviour of people, seemingly nothing to do with the value or performance of a company.
The reason I bought this share is simply because it has dropped a lot recently, I think unfairly as nothing much has really changed, so I'm thinking it will go back up again. I have called that the Archibald Diatonic Inference Calculasia.
The most accurate indicator is to stick some tea leaves up your arse and then throw a dart. So far I've had mention of Moving Day Averages, the Wilder Moving Average, the Mesa Adaptive Moving Average, the Fractional Moving Average, the Aroon Oscillator (which is the difference between Aroon Up and Aroon Down, and represents Aroon Momentum), the Awesome Oscillator, the Commodity Channel Index, the Relative Strength Index, the Williams Percent Range, the Average Directional Index, the Chikou Line, the Chaikin Oscillator, the Percent Price Oscillator, the Average True Range, the Stochastic Oscillator, the Hilbert Transform Discriminator, the Parabolic Stop And Reverse, the Money Flow Index.
Are all these indexes and charts reliable and useful, because it smells of a desperate attempt by traders to convince the people who pay them that they know what they're doing. All of the indicators above are about predicting the behaviour of people, seemingly nothing to do with the value or performance of a company.
The reason I bought this share is simply because it has dropped a lot recently, I think unfairly as nothing much has really changed, so I'm thinking it will go back up again. I have called that the Archibald Diatonic Inference Calculasia.
Is it a small cap stock? If so then charting is brilliant for predicting what has happened but going forward it really boils down to whether the company grows market share or profits or whether the community of small cap punters dive on it and ramp it up, how good the Board are at lying etc.
Limpsfield is a charting guru and can probably help with some of the indicators but if you’d like to post what the stock is and the source of the articles it would help shed some light.
You are probably getting machine generated near garbage where a load of verbiage is attached to automatically generated 'indicators'. Google search picks these up and treats them as actual news.
These search 'hits' are a PITA because they make it harder to keep a lookout for real news on a company.
Best ignored IMHO. If you work for the company (and it's smallish) then you have a far better insight into how it's doing than any computer generated garbage.
Most of the indicators they discuss can be looked up on: www.investopedia.com
These search 'hits' are a PITA because they make it harder to keep a lookout for real news on a company.
Best ignored IMHO. If you work for the company (and it's smallish) then you have a far better insight into how it's doing than any computer generated garbage.
Most of the indicators they discuss can be looked up on: www.investopedia.com
As you mentioned Technical Analysis predicts the traits of people. People behave like lemmings when it comes to shares and the more people who use TA the more it's relevant... TA is good for large mcap companies with plenty of shares floating around who don't bring out massive RNS of new deals etc. Think of Banks. It's absolute s
te for small AIM based business's where aholes constantly short, naked short, promise the world then don't deliver, constantly raise money and dilute the shares. Think of most AIM based oilers......
Some say TA is good for these ste companies, by saying that news can be factored in to a share price before the news is released, I guess some of this is true, i.e insder dealing weeks before a deal is anounced would affect the TA view of things, but then also, like some recent pharma company waiting for FDA approval on a drug, which is rejected out of the blue, cannot possibly affect the TA view of things.
If you think the business your looking at is more like the later, then don't bother..... if it's more like the former, ie it's stable, well financed, good shareholder base, then it's worth having a look at.
If you do use TA i would pick a few key indicators and ignore the rest. I tend to use the 26/12day MACD, RSI and Money flow in/out. MACD can show long term bull/bear trends, RSI whether a share is over/under sold, and money flow whether people are moving in or out of the share....
Either way good luck.....
te for small AIM based business's where aholes constantly short, naked short, promise the world then don't deliver, constantly raise money and dilute the shares. Think of most AIM based oilers......Some say TA is good for these s
te companies, by saying that news can be factored in to a share price before the news is released, I guess some of this is true, i.e insder dealing weeks before a deal is anounced would affect the TA view of things, but then also, like some recent pharma company waiting for FDA approval on a drug, which is rejected out of the blue, cannot possibly affect the TA view of things.If you think the business your looking at is more like the later, then don't bother..... if it's more like the former, ie it's stable, well financed, good shareholder base, then it's worth having a look at.
If you do use TA i would pick a few key indicators and ignore the rest. I tend to use the 26/12day MACD, RSI and Money flow in/out. MACD can show long term bull/bear trends, RSI whether a share is over/under sold, and money flow whether people are moving in or out of the share....
Either way good luck.....
And a quick follow up - analysts seem to like setting a target price, what do they intend by that? Is that what they think it should currently be valued at, or what they think it will go up to based on current market behaviour? If they all value the share higher than it currently is, then why is that not already reflected in the market price?
The range is anything from +25% to +100% the current price - I should be happy about that but it's already dropped 10% since I bought it.
The range is anything from +25% to +100% the current price - I should be happy about that but it's already dropped 10% since I bought it.
ScotHill said:
And a quick follow up - analysts seem to like setting a target price, what do they intend by that? Is that what they think it should currently be valued at, or what they think it will go up to based on current market behaviour? If they all value the share higher than it currently is, then why is that not already reflected in the market price?
The range is anything from +25% to +100% the current price - I should be happy about that but it's already dropped 10% since I bought it.
What type of analyst though? Some penny share spunker, one of the pointless non jobbers at an unheard of and irrelevant firm or the leading analyst for the blue chip sector? The range is anything from +25% to +100% the current price - I should be happy about that but it's already dropped 10% since I bought it.
It sounds as if the company that you work for (ergo should never invest in as you are massively increasing your overall risk profit to a level that statistically will never be covered by the returns) is in the small cap arena. If so the most likely reason for the share price not responding to anything the analysts are writing is because they are all s
t at their jobs which is why they’ve been left to cover small caps, they know nothing and no one pays any attention to them. Their only purpose for existing is to assist in the peddling of stock issues to retail gamblers. - - -
It sounds as if the company that you work for (ergo should never invest in as you are massively increasing your overall risk profit to a level that statistically will never be covered by the returns)
- - -
I’m interested in this bit – if I think a company is undervalued and think it will rise a reasonable amount in the near-to-mid future, what difference does working for them make?
(no not small cap)
It sounds as if the company that you work for (ergo should never invest in as you are massively increasing your overall risk profit to a level that statistically will never be covered by the returns)
- - -
I’m interested in this bit – if I think a company is undervalued and think it will rise a reasonable amount in the near-to-mid future, what difference does working for them make?
(no not small cap)
ScotHill said:
The reason I bought this share is simply because it has dropped a lot recently, I think unfairly as nothing much has really changed, so I'm thinking it will go back up again. I have called that the Archibald Diatonic Inference Calculasia.
It sounds like that you are trading the price drop. - Why do you think nothing much has changed?
- What makes you think the price will go back up again?
- What is your timeframe?
It sounds as though that this is more speculation [punt] and you are now trying to understand short-term stock movements. What are the stock fundamentals i.e. current valuation levels, profit (decreasing, flat, or increasing year upon year), debt levels, growth potential (short/medium/far)?
How affected is this stock by the current macro situation e.g UK PMI for May is <50 (49.4) - if this stock is in the manufacturing sector, sentiment may be driving the price down.
^ Investing in an individual stock is riskier than investing in the broader market (index fund if company fundamentals deteriorate. If you are dependent on the company for both your income and investment, this increases the risk because if company fundamentals deteriorate i.e. your assumption proves to be incorrect, then you are horribly exposed.
Edited by putonghua73 on Monday 3rd June 10:02
ScotHill said:
- - -
It sounds as if the company that you work for (ergo should never invest in as you are massively increasing your overall risk profit to a level that statistically will never be covered by the returns)
- - -
I’m interested in this bit – if I think a company is undervalued and think it will rise a reasonable amount in the near-to-mid future, what difference does working for them make?
(no not small cap)
Concentration risk. The average household isn’t awash with liquid capital so concentration risk is a very valid risk to always consider. It sounds as if the company that you work for (ergo should never invest in as you are massively increasing your overall risk profit to a level that statistically will never be covered by the returns)
- - -
I’m interested in this bit – if I think a company is undervalued and think it will rise a reasonable amount in the near-to-mid future, what difference does working for them make?
(no not small cap)
Your mortgage is underwritten by your salary. You’re fall back to smooth over this risk is your savings. If you place your savings into the exact same exposure as your salary then you’ve just created a huge default risk event for no comparable upside.
Then there is the more subjective side and that is that in reality, the employees of a firm rarely have the insight that they think they have. Hedge funds for example, very rarely include talking to staff to find out the true status of the business. And from my personal experience I’ve not seen good results from employees buying stock in their own companies.
A really good example of this concentration risk at the moment is TSLA. 45.000 employees who have mortgages backed by a salary that could now go at any time but who have just lost significant percentages of their wealth as their stock option are now valueless and many were buying company stock privately because they all believed the hype.
Frankly, the upside is rarely of any relevance anyway. However, if all the employees are of the opinion that the company is screwed then sell the crap out of it.
Thanks, yeah that all helps and the overexposure makes sense. The money, which isn’t a lot, could sit in there anything from 6 months to 10 years, we have low financial commitments and flexible careers so not really worried about things going pear-shaped. Most of savings/pension is in global trackers so yes this is a punt but nothing wrong with that.
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