Do large banks and institutions use TA to profit?
- Thread starter londonkid
- Start date
of course it is. That is about the only thing that surf is right about. That aside, I have never seen anyone who makes consistent money use technical analysis. Not at banks, not at hedge funds, not in retail space. Do none exist? I can't tell I have not seen them all, but I am pretty sure that 95% of the guys who claim that TA works either (a) sell TA shit or (b) are failed life losers who have no idea what works and cling onto TA, in the same way they would read tea leaves if someone told them that it works.
Of course you will get 10 other opinions claiming TA works for them. Follow their posts for a while and let's see whether they know a thing or two and give an impression that they are successful. I have at least not come across such individual.
Good luck.
Of course you will get 10 other opinions claiming TA works for them. Follow their posts for a while and let's see whether they know a thing or two and give an impression that they are successful. I have at least not come across such individual.
Good luck.
rmorse
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It is my understanding that large "banks" that having proprietary trading desks use global dispersion models for options and are always hedging their equity positions. With the bulk of their capital, I don't think they take directional bets. (I'm assuming TA is technical analysis). Before Dodd Frank, which I don't claim to understand, many trading desks might have given an allocation toward traders that do other trading like directional trades.
Large institutions tend to make allocations toward hedge funds or managers. They often make directional bets but it seems they are mostly long or long/short. I'm betting they rely more on fundamental analysis than TA.
This does not mean you can't make money with other strategies. You are not trying to allocate large amounts of capital with each trade.
Large institutions tend to make allocations toward hedge funds or managers. They often make directional bets but it seems they are mostly long or long/short. I'm betting they rely more on fundamental analysis than TA.
This does not mean you can't make money with other strategies. You are not trying to allocate large amounts of capital with each trade.
Absoultely not!! lol
They have access to information that gives an edge which can't be seen in price charts
Systematic CTA's, managing up to $30bn - so large, use trend following models (moving average crossovers and the like). In general they don't use pattern recognition, elliot waves, fibonnaci, point and figure analysis, resistance, support, candlesticks or any of that stuff.
they certainly do not use simple moving average crossovers either. Maybe at the times the "turtles were born". But certainly not today. They call it "strategies with quantitative overlay". Sounds a lot better than "moving average crossover", no?
This issue was resolved awhile ago...not sure why it keeps continuing.
Some banks/institutions use TA while others do not. Yet, those that do use TA, they are not using it the way the typical retail traders use it and they are using it with other resources that the typical retail trader does not have access too. Simply, banks/institutions are not using TA as the sole reason for a trade decision whereas most retail traders that use TA are using it as the sole reason for a trade decision.
How do I know for sure ? I have several close friends and two relatives working in the industry. Some firms use it and others do not use it. An example of a firm that uses TA is Credit Suisse.
Surf is aware of this via a prior conversation with him in which I specifically gave the name of someone at Credit Suisse that has the job title "Strategist Technical Analyst" and Credit Suisse has won TA awards for their technical analysis.
The latter above isn't really important. The important issue to walk away with is that those professional firms that use TA are not using it the same way as most retail traders use it nor do they rely on TA the same way as most retail traders relies on it.
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Ahah are you serious?
I work in a large bank, as lot of colleagues and friends. Of course we don't have access to "special" information. Some hedge funds yes but banks and institutions no way.
For example, do you think banks and institutions knew about Volkswagen ? Nope. Only insiders. Or about Greek crisis ? Or any crisis? Nope.
Nowadays, TA is still not admitted as "enough serious" for banks and institutionals even if everyone uses TA tools and expressions. Quant tools are more popular, even if their accuracy and efficiency are close to zero.
Of course TA works ! But too many people don't want to work to understand its basis.
CM
Yes, they do. Every single bank and institution out there looks at price charts, so by my definition they are use TA in the decision making process to make profits. Only the losing firms like Victor Niederhoffer and his ilk don't look at charts. Amongst my hedge fund manager and managed accounts friends, all look at price charts. No exceptions.
Do they all look for cups and saucers and teaspoons and lumps of sugar patterns? No. Some might but i personally don't know any that do. I believe that Peter Brandt, a very successful manager (40%+ pa over decades) uses solely very traditional TA, like the stuff you find in Edwards and Magee. It works for him.
So if not looking at cups and saucers, what are they looking at? They are just looking at what the market has done. Maybe they are looking for trends, looking for points at which to start buying/selling and so forth. I assure you even die hard fundamentalists like Warren Buffett or Jim Rogers or Howard Marks look at a chart to see WHERE they would like to buy or sell even though the decision to buy or sell has been made from fundamental analysis.
Btw, AFAIK, there are NO proprietary desks of traders at banks. The Volcker rules finished that business off.
Do they all look for cups and saucers and teaspoons and lumps of sugar patterns? No. Some might but i personally don't know any that do. I believe that Peter Brandt, a very successful manager (40%+ pa over decades) uses solely very traditional TA, like the stuff you find in Edwards and Magee. It works for him.
So if not looking at cups and saucers, what are they looking at? They are just looking at what the market has done. Maybe they are looking for trends, looking for points at which to start buying/selling and so forth. I assure you even die hard fundamentalists like Warren Buffett or Jim Rogers or Howard Marks look at a chart to see WHERE they would like to buy or sell even though the decision to buy or sell has been made from fundamental analysis.
Btw, AFAIK, there are NO proprietary desks of traders at banks. The Volcker rules finished that business off.
Lol, you are talking nonsense.