What Do Hedge Funds Think of Technical Analysis?

[Frederick Foresight]

Ah you’re soooo close! Yes — gotta build a thesis to make a bet! Have to think you’re either getting a free coin flip, or that the coin is skewed to one outcome. Then make the bet. If you’re right you make money and if you’re wrong you lose money.

Soros was not building elaborate macro scenarios using price action on the chart. Soros built those macro scenarios with macro data and analysis and from there extrapolated to the chart.

Yeah, but that thesis in its barest form is one of direction, however it may have been arrived at. You can dress it up fancy or you can leave it bare. Regardless, it'll often be wrong. As for skew, that depends on how you ride it, doesn't it?

Yes, I know he didn't build scenarios based on charts. But the price (action) ultimately decided the trade, if not at the outset then certainly as the trade progressed. So...price.

 

[SunTrader]

Where did I say day traders don’t use charts? I am talking about hedge funds, which I can speak to.

I don't know? Where did you say day-traders don't use charts doh!

Yes you are talking hedge funds to - day-traders.

What is the point - with the apples to oranges comparison?

 

[longandshort]

Yeah, but that thesis in its barest form is one of direction, however it may have been arrived at. You can dress it up fancy or you can leave it bare. As for skew, that depends on how you ride it, doesn't it?

Yes, I know he didn't build scenarios based on charts. But the price (action) ultimately decided the trade, if not at the outset then certainly as the trade progressed. So...price.

okay I think we are getting a bit lost in communication.

It sounds like your prior post said (correctly) that George Soros would analyze macro and then figure out how various macro scenarios would impact price (direction). However this post makes it seem like he (incorrectly) is looking at price action to figure out macro scenarios.

This is what you do in macro:
“Yield curve is steepening” —> check economic data or fedspeak, conduct some analysis —> agree with steepening or disagree

*roughly* in stock markets:
“Stock is trading at x” —> check estimate data, upcoming catalysts (earnings), new information, conduct analysis of impact to price (earnings waterfall) —> go long or short

 

[taowave]

Because the excess return is most likely due to proper MM and Bet size...

I have no doubt that leverage was at play, but I don't see how that changes the story.

 

[deaddog]

If you pay to bet on a coin flip you just lose money, regardless of money management or risk control.

Is it fair to compare it to a coin flip? Coin flip I either win or lose a fixed amount. Speculating and taking advantage of money management and risk control, I am able to control the amounts that I win or lose.
I don't have to lose all my money when I lose and if things are going my way I can let my winning trades run.

 

[longandshort]

Is it fair to compare it to a coin flip? Coin flip I either win or lose a fixed amount. Speculating and taking advantage of money management and risk control, I am able to control the amounts that I win or lose.
I don't have to lose all my money when I lose and if things are going my way I can let my winning trades run.

it’s a mathematical property. If you can generate excess returns then it means you’re not taking a coin flip. But if I were to give you the price of a stock at any given time how accurate would you be at guessing the next print?

 

[deaddog]

it’s a mathematical property. If you can generate excess returns then it means you’re not taking a coin flip. But if I were to give you the price of a stock at any given time how accurate would you be at guessing the next print?

After a quick look at a chart I could make a decision as to whether I would be interested in speculating. If I was interested I would attempt to limit my downside.
I quess that's part of the arguement of TA, it's not really a coin flip.

 

[longandshort]

After a quick look at a chart I could make a decision as to whether I would be interested in speculating. If I was interested I would attempt to limit my downside.
I quess that's part of the arguement of TA, it's not really a coin flip.

What time frame of chart would you need?

 

[newwurldmn]

Sadly,and mercifully at the same time,thats as quanty as I get

me too.

 

[newwurldmn]

@taowave i can use TSIG <go> on bbg to run a backtest of a ma and rs strategy. Gimme the parameters and I’ll run it.

you mean I’ve been testing my MA strategies in excel like a sucker?