What Do Hedge Funds Think of Technical Analysis?

[easymon1]

@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.

Can you include price action at ma in your backtest?

 

[deaddog]

What time frame of chart would you need?

1 year daily then 5yr weekly if I'm interested.

 

[easymon1]

1 year daily then 5yr weekly if I'm interested.

 

[longandshort]

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

 

[Frederick Foresight]

However this post makes it seem like he (incorrectly) is looking at price action to figure out macro scenarios.

I think you'll find that if you reread my post you'll see I never said that.

 

[Frederick Foresight]

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

I don't think leverage changes the risk/reward skew. The ratio remains the same.

 

[taowave]

If one is accurate forcasting their win rate ,the compounded return of the account will have an optimal ratio of profit target vs stop loss..

Of course it's theoretical,but if one is accurate,its has a major impact on returns and outperformance..

QUOTE="Frederick Foresight, post: 5756775, member: 488296"]I don't think leverage changes the risk/reward skew. The ratio remains the same.[/QUOTE]

 

[Concinnity]

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.

Well from what I am seeing you don't need as much information as you may think to reach the level you're speaking of, referring to the trading of equity future's contracts which is all I trade. Totally can appreciate the more high quality information you have, particularly hard math or even fundamental analysis is helpful and I do use some forms of that and am always looking to improve. With that said there is a lot of information just in a blank chart and pure pa movement, that can allow for sizable edges, if you're in tuned and know what to look for.

 

[Concinnity]

I've seen you mention this a few times and to broaden your horizon two of the interviewed traders in Jack Scwager's newest book are day traders who don't rely on technicals, but more on fundamentals and event plays. Of course, when that is the case, it goes without saying that they don't necessarily trade every day, but will wait for catalysts, policy changes, etc.

Another one I think was a strict news trader, but had a sophisticated custom programmed system to exploit that.

It doesn't go without saying for other people though, at least that's not what I inferred or understood by others questions and comments. If you're just trying to help me broaden my horizons that's appreciated. But your statement is basically just repeating what I was saying or at least was trying to say.

It's a much easier and consistent path to learn and use high quality TA generally speaking. That was my whole point if you're 100% or mostly fundamentals, it's difficult to be actively day trading it every day, not that it matters if you're making monthly or yearly bank. Unless maybe you're in the extreme minority like the last guy you were mentioning.

 

[longandshort]

Well from what I am seeing you don't need as much information as you may think to reach the level you're speaking of, referring to the trading of equity future's contracts which is all I trade. Totally can appreciate the more high quality information you have, particularly hard math or even fundamental analysis is helpful and I do use some forms of that and am always looking to improve. With that said there is a lot of information just in a blank chart and pure pa movement, that can allow for sizable edges, if you're in tuned and know what to look for.

Why do you think this is true.