Technical Analysis vs. Fundamental?

[wrbtrader]

Well you said it yourself you should have an idea of where the price is going to go. Also what do you mean then by exploiting the unexpected price change. How do you do that.

That's something you need to figure out on your own and it should have made sense to you when I said don't predict (trying to be right) when you should instead be prepare to exploit the price action when something goes wrong just as you would be prepare to exploit the price action when things go as you expected...that latter is someone trying to make money.

In contrast, the info you've provided about fundamental analysis is a good direction but only if you're profitable at it. I'll ask one more time...you profitable in fundamental analysis ?

If so (you're profitable) and your goal is to make money...you should stick with fundamental analysis.

 

[heavenskrow]

Well you said it yourself you should have an idea of where the price is going to go. Also what do you mean then by exploiting the unexpected price change. How do you do that.

I have a method, but I am not just going to give you the information. No one is going to hand out there methods of making money. Maybe for 100k I might sell it, but definitely not giving it out for free. Go back to library, read more books, test, think, etc.
The tools are already there, you just have to test what works for you. One thing you have going for you is you are keeping it simple. But I highly suggest exploring another arsenal of "tools" and more screen time before saying it doesn't work.

 

[Money Trust]

By what I've read here and elsewhere everyone believes the use of TA is 'to predict' where the Dow will be at year's end, or what the price of Apple will be on your dog's birthday.
Such usage, IMO, is the biggest pitfall of all, and leads to the failures that cause disbelief in TA.
Am glad to learn that there are at least two other people in the whole world who also recognize this.

Well, there are ways to ANTICIPATE where prices are LIKELY headed using T/A but predicting? Nah. I find that I'm also highly accurate in calling price targets in my method but I'm a short-term swing trader. Trying to predict where prices will be for the year is a fool's game, IMO.

By the way, what is this obsession that market players have with predictions? It seems like people are always being pressed, mainly in the financial media, to give a prediction. Then again, I guess the question answers itself.

 

[Xela]

By the way, what is this obsession that market players have with predictions?

It's a thorny subject, mostly because people discussing this in forums use the word "prediction" with (at least) two very different meanings.

Here's the thing: we don't need to be able to "predict" the outcomes of individual trades, to make a living from trading.

All we need to do (given adequate money-management and trade-management skills, and those are of course enormous assumptions) is to be able to predict to a small, overall, collective, statistical degree of outcome-probability.

For example, if you have a method with the same sized TP and SL, net of dealing costs, and it has a win-rate of 54% and a loss-rate of 46%, you can make a living from it - if its trading-opportunity frequency is high enough - simply because out of every 100 trades you use it for, you'll emerge on average with 8 net-profitable trades.

Some people think of that as "predicting"; others don't.

Hence all the confusion and talking at cross-purposes on the subject, in this and in other forums.

And most of the different perceptions about the issue, and therefore the traditional forum discussions on this subject, revolve around people's different perceptions of precisely that question.

In the end, it doesn't matter how you, or I, or anyone else defines "prediction": the collective outcomes for a trader (rather than for an investor) are inevitably both mathematical and objective.

The reality, of course, is that most amateur traders are losing money rather than making it, and that's commonly because their statistical/probabilistic understanding isn't up to the task they're trying to achieve: either their methods don't actually have a net positive expectancy at all (and that's very often the case), or if they do, they're mismanaged on the trade-management/position-sizing front so that the available overall profits don't actually materialize (and that's very often the case, too).

And all of that, of course, is without mentioning psychology and emotion at all ...

 

[i am nobody]

I predicted already some time ago that this item would reappear again. TA works clearly on ET.

Fundamental Vs. Technical
Discussion in 'Technical Analysis' started by keithclark, Oct 9, 2010.


I have a complete list of threads that will start over again in the months to come. So it is clear that patterns repeat themselves, not only in trading.

PM : I see now it is not the same. this time it is Technicals vs Fundamentals. So the opposite of last time. Maybe that makes a huge difference.
I propose to forbid restarting threads again after they were reanimated 10 times.
And the OPM is the very well unknown .... who never posted before and just created a new account.

 

[Xela]

it is clear that patterns repeat themselves, not only in trading.

This particular subject, I think, has perhaps experienced a series of double tops on its frequency-chart without ever declining far, and continues regularly to break through resistance (and there are reasons for that, too, and they're not terribly obscure ones, either).

 

[Stockmarketmap]

The advent and evolution of ETFs has changed the way an investor can produce alpha. In the late 80's and 90's, one had little choice but to use individual stocks as vehicles in order to produce alpha. Rydex was a pioneer in offering "index" products in the 90's and SPY was the first index product fully tradeable throughou the day. In the last decade, there have been excellent ETF options that can emulate a portfolio of highest decile performance growth names (QQQ) and provide exposure to small cap value ( the stock universe with the best alpha premium over the long run, VBR ) . Through the use of a third type of analysis, which involves mathematically and objectively derived calculations ( time series, mean reversion, seasonal election cycle anomalies, long period price / moving average crosses, etc. ) one can build a low frequency tactical allocation model that, applied over longer term time frame data, can produce more robust and reliable statistical outcomes vs. outcomes produced within short term "random" price movement and subjective analysis. Thus, stock selection process is eliminated, holding time increased, and "screen time" and the frequency of transactions is vastly reduced ( to the consternation of the brokerages ).

 

[Alpha Trader]

This particular subject, I think, has perhaps experienced a series of double tops on its frequency-chart without ever declining far, and continues regularly to break through resistance (and there are reasons for that, too, and they're not terribly obscure ones, either).

@Xela very witty indeed

 

[Handle123]

TA is a tool, Fundamentals is a tool, Price action is a tool, putting it all together so you can back test it is part of predicting whether it "might" have a chance to profit in real world.

You can have the best fundamental news of a stock and watch it go right into the toilet, because someone else had information that you didn't have, and spreadsheets can easily be altered, many CEO's get bonuses based on stock price.

Reason I don't use fundamentals is way too hard to back test them.

And when they run out of reasons when something tanks-"Profit Taking".

How come they never say when market going up it is because of "Profit Taking" ?

 

[learner2007]

By the way, what is this obsession that market players have with predictions?

Those of us who can read price movement have no need to predict where prices may go as we will usually be able to tell when an end to a run is near or has come. But for those who can't read price movement, I guess their feeling of uncertainty could only be relieved by having a favorable prediction in mind. And without such, they would hesitate to enter a trade. Prediction cures their fear of the unknown.