What Do Hedge Funds Think of Technical Analysis?

longandshort said:
Price, volume, volatility, options data, interest rate data, fx rates, etc.

Sure a pureplay momentum strategy only needs % chg on a periodic basis... but none of these people are using "technical analysis" in the retail sense (looking at charts, developing ideas on charts, etc.).
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Okay. So, by TA you're specifically talking about charts? That's not my definition of TA.

TA is simply using price history for trading decisions. Be that a predictive model or a trend-following/momentum based system.

I'm not sure how you can speak so general for all funds, though. I know at least one fund that strictly relies on charts. A net loser so far, though. But that's a different matter. A lot of hedge funds appear to lose money.
 
That many hedge funds are losers does not surprise me really. If you are really professional and have a high sharpe strategy developed you do not need any outside money or offering services to third parties. Just trade on your own to the max. limit order size what strategy can handle. That comes earlier than you think on high sharpes (within a few years or earlier), so then you need to look for more scalable strategies to grow more. A fund with lot of funds only makes the whole thing much more complicated. Of course this is different if your hedge fund is only filled with your own money. That is why you also need a good portion of distrust who is collecting money or offering any services in this industry to third parties. There is also a reason why passive ETFs funds got so popular in recent years.
 
TrAndy2022 said:
That many hedge funds are losers does not surprise me really. If you are really professional and have a high sharpe strategy developed you do not need any outside money or offering services to third parties. Just trade on your own to the max. limit order size what strategy can handle. That comes earlier than you think on high sharpes (within a few years or earlier), so then you need to look for more scalable strategies to grow more. A fund with lot of funds only makes the whole thing much more complicated. Of course this is different if your hedge fund is only filled with your own money. That is why you also need a good portion of distrust who is collecting money or offering any services in this industry to third parties. There is also a reason why passive ETFs funds got so popular in recent years.
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Sure.

But do keep in mind that many in the hedge fund industry literally get thrown money after them with little to zero personal risk. Quite a few of these also under-performed the general market.

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Laissez Faire said:
Okay. So, by TA you're specifically talking about charts? That's not my definition of TA.

TA is simply using price history for trading decisions. Be that a predictive model or a trend-following/momentum based system.

I'm not sure how you can speak so general for all funds, though. I know at least one fund that strictly relies on charts. A net loser so far, though. But that's a different matter. A lot of hedge funds appear to lose money.
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I’m talking about legit ones typically running 100MM+. Lots of dudes with 100k put together an llc and call themselves a hedge fund…

Trend following & momentum strategies use technical data, yes. I’ve not said *all* technicals are garbage.
 
TrAndy2022 said:
That many hedge funds are losers does not surprise me really. If you are really professional and have a high sharpe strategy developed you do not need any outside money or offering services to third parties. Just trade on your own to the max. limit order size what strategy can handle. That comes earlier than you think on high sharpes (within a few years or earlier), so then you need to look for more scalable strategies to grow more. A fund with lot of funds only makes the whole thing much more complicated. Of course this is different if your hedge fund is only filled with your own money. That is why you also need a good portion of distrust who is collecting money or offering any services in this industry to third parties. There is also a reason why passive ETFs funds got so popular in recent years.
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That’s like saying if you’re a really good cook just cook for yourself…

Sure, yes. But many styles of trading (like cooking) require an expensive tech stack, staff, and access, and aren’t net profitable below a certain aum threshold (call it ~100mm).
 
longandshort said:
We all have our hobbies.

I'm not saying one size fits all, just saying that hedge funds don't find technicals very useful.
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I don't mix work and hobbies, not good for the PnL.

But you seem to wiggling around about TA. Yes they use OHLCVI etc (aka as Technicals) but no they don't use Technicals. :confused:
 
longandshort said:
That’s like saying if you’re a really good cook just cook for yourself…

Sure, yes. But many styles of trading (like cooking) require an expensive tech stack, staff, and access, and aren’t net profitable below a certain aum threshold (call it ~100mm).
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You do not understand that you do not need any outside money when you have a high sharpe strategy and you do not need an ISDA contract with a large investment bank to make money. A high sharpe strategy can be created without expensive tech too. Then you get so fast to your max. limit size you can handle that is just pure nonsense to start a hedge fund etc.
 
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