What Do Hedge Funds Think of Technical Analysis?

[TheDawn]

When they are able to do insider trading, who needs technical analysis? LOL

 

[longandshort]

A trader and investor aren't even necessarily related. I have not seen one person on these boards who is an ACTIVE DAY TRADER and says they use fundamentals as their primary tool. It's so ridiculous, haven't even seen someone try and pretend that they do that. If you're looking to make a career out of active day trading, than it isn't even a conversation. TA is by far the more consistent and profitable path.

I am actively trading every day and use fundamental equity research. Among my peer group of traders, analysts, and portfolio managers, technicals are not seen as a serious or useful tool.

It’s kind of funny that you guys think hedge funders are just drawing lines and staring at charts. You have earned the right to be scammed lol.

 

[Peter8519]

I "think" hedge fund make chart pattern. Using 13F-HR report, one particular manager has about 6000 stocks in its portfolio and most exhibit similar chart pattern. They have enough resources to move price.

 

[Scataphagos]

Based on 25 years of conversations with many traders and quant hedge fund people I can safely say technical analysis provides a large body of very strong trading and market prediction ideas that many quant hedge funds consider all the time

That's ET HERESY, man!

 

[SunTrader]

That’s fair, but what you’re not getting is that the basis for technical analysis — that it is predictive of future flow or price — is wrong, unless you believe other retail traders like you drive a stocks price through a day, overtime, etc. In real life, retail day traders make up a fraction of dollar value trading, which means price impact is minimal (except pink sheet stocks etc.).
…

How it that?

The use of TA studies cover all PA flow, not just us retailers.

 

[TrAndy2022]

Momentum strategies are very common and broadly used, and purely technical.

 

[SunTrader]

Momentum strategies are very common and broadly used, and purely technical.

Yup amazin' how so many ignorantly lump drawing lines and stares at charts, that us sophisticated folks don't use, with all that encompasses TA. Much of what they do in fact use.

 

[SunTrader]

...
Just like how small-time home flippers can get in front of Zillow and blackrock…

Funny you mention that. Just read this morning:-

(Bloomberg)

US housing battle
In some areas of the US, first-time home buyers and small investors have the upper hand on supposedly sophisticated players that badly misjudged the property market. While big investors that leaned on algorithms — so-called iBuyers — are nursing losses, local flippers sold homes for 20% above their purchase price. They tended to buy distressed properties, though they also generally put more into renovations. The typical Phoenix homeowner is sitting on an additional $100,000 in home equity since the pandemic began, according to real estate data firm Black Knight Inc.

 

[prophet]

The point of TA is to piggyback on the activity of institutions, so why would institutions use TA in any major way?

For price improvement, to move large size and for market making. TA can reveal some fairly useful mean-reversion or stat-arb phenomena that can help an institution move more size and thus expand their AUM capacity.

TA can also reveal momentum phenomena with decent capacity.

 

[Laissez Faire]

The point of TA is to piggyback on the activity of institutions, so why would institutions use TA in any major way?

Really? Says who?

This is the definition of TA. No need to attribute your own interpretations to it.