What Do Hedge Funds Think of Technical Analysis?
- Thread starter SunTrader
- Start date
no.. they do not. please point me to a few funds that use technicals for their long term positions...
@longandshort
When someone asks what you think about a stock, what is the first thing you look at.
For me it's a daily candlestick chart. (1 year) This tells me at a glance what the price is doing and has done and what interest traders have taken in the stock.
When someone asks what you think about a stock, what is the first thing you look at.
For me it's a daily candlestick chart. (1 year) This tells me at a glance what the price is doing and has done and what interest traders have taken in the stock.
i have charts on my monitor too, doesn't i use them for idea generation. it's helpful as a head check and to see what's going on, but is not what's used to develop a view or make a trade.
price vs peers, estimate revisions, and then calendar (upcoming catalysts). there's no "one thing" that'll tell me everything i need to know quickly, but those data points speed up my process.
What you have described is the use of technical analysis.
Tudor was fairly technical in his approach..I think when you step outside the equity arena,trend following may be a more prevalent approach
On a smaller scale,the Modified Canslim crowd is pretty technical,though its predominantly viewing the landscape with MA's and drilling down to RS,consolidation/breakout formations,with some volume sprinkled in
On a smaller scale,the Modified Canslim crowd is pretty technical,though its predominantly viewing the landscape with MA's and drilling down to RS,consolidation/breakout formations,with some volume sprinkled in
okay you're just arguing semantics at this point.
do hedge funds use price data? yeah sure you can do a lot with it. vast majority of hedge funds (ex-quants) won't use that data as the basis for a price target or thesis, though. the quants who do use it are basing their view on statistical studies.. so sure you can call it technical by extension, but it's not what you do lol.
do hedge funds look at "technical indicators" like rsi, macd, etc., / "chart patterns"? no
let's put it this way -- guys like al brooks, or other popular "technical analysts", would struggle to get hired. e.g. the value of their skill set is extremely low. However, if you know how to put together a financial model, can integrate a variety of data into your analysis, etc., then you probably have a chance (see the job postings lol).
Here is something that needs to be addressed though-----the vast majority of hedge funds under-perform the overall market.
true, a lot of old "macro" guys used candlesticks and charts but that was in the 80s and early 90s when that *was* the quantitative analysis piece. There was a good quote on market efficiency... the first to level of market efficiency makes technicals useless, the second level makes fundamentals useless, and the third level makes insider information useless. I believe we are closer to the third level lol.