What Do Hedge Funds Think of Technical Analysis?

[Frederick Foresight]

given a know hit rate

That's a big given, and not a just a single assumption. Maybe this Kelly stuff is just a bit too sciencey for me.

However, if you could point me to an example where it actually changes the risk/reward ratio, as you seem to be proposing, I'd love to see that math. But please understand if I am not sufficiently motivated to seek it out on my own, and so I'll understand if you're disinclined as well.

 

[Zwaen]

Look no further than the Madoff..How much money did he attract with imaginary low teen,stable returns??

So, do you mean this as a "yes, look at all the money it will attract" or "it looks nice, but it is too good the be true, so a con or eventually funds which strive for this will eventually blow up"?

(or both? )

 

[taowave]

Lol,seek and thou shall find

Fwi,it's very simple math..if I can get it,anyone can

That's a big given, and not a just a single assumption. Maybe this Kelly stuff is just a bit too sciencey for me.

However, if you could point me to an example where it actually changes the risk/reward ratio, as you seem to be proposing, I'd love to see that math. But please understand if I am not sufficiently motivated to seek it out on my own, and so I'll understand if you're disinclined as well.

 

[taowave]

Its a YES

So, do you mean this as a "yes, look at all the money it will attract" or "it looks nice, but it is too good the be true, so a con or eventually funds which strive for this will eventually blow up"?

(or both? )

 

[newwurldmn]

So, do you mean this as a "yes, look at all the money it will attract" or "it looks nice, but it is too good the be true, so a con or eventually funds which strive for this will eventually blow up"?

(or both? )

big hedge funds market themselves as low volatility investments - as a proxy for your fixed income portfolio.

 

[Concinnity]

I may have misunderstood, but I interpreted you saying you didn't understand how it was possible to day trade on anything other than technical information. As such, I wanted to highlight how two or three traders in Jack's most recent book didn't use technical analysis as the base foundation for their day trading.

I'm fairly sure they all must be using a chart when executing, though.

Ok, than I must have did a poor job of explaining. What I was saying is I find it difficult to believe someone trades only on fundamentals and is an active day trader getting in and out of multiple positions on the same instrument based on purely fundamentals. That is some pretty counter intuitive stuff in the grand scheme of things. I am sure we could find an exception or two, but it seems like an exceedingly difficult thing to do, because even if you do it effectively you're likely going to be missing out on the larger move, which fundamentals typically lead to larger and longer term moves.

 

[Concinnity]

Why do you think this is true.

Based on results of other traders I know who have had a long term successful career in day trading as their primary source of income and use TA as the primary focus. As well as the current results that I am seeing. It's not really about me thinking it, literally said what I did based on what I've seen and what works over and over regardless of the stability of the market and regardless if the market is buying to sell or selling to buy.

 

[longandshort]

Based on results of other traders I know who have had a long term successful career in day trading as their primary source of income and use TA as the primary focus. As well as the current results that I am seeing. It's not really about me thinking it, literally said what I did based on what I've seen and what works over and over regardless of the stability of the market and regardless if the market is buying to sell or selling to buy.

Hmm how long have you been in the markets for? I’ve been on the pro side (sales-trading, risk taking, and portfolio management) for ~10yrs across banks, hedge funds, and asset managers and that’s not at all the view there.

 

[Concinnity]

Hmm how long have you been in the markets for? I’ve been on the pro side (sales-trading, risk taking, and portfolio management) for ~10yrs across banks, hedge funds, and asset managers and that’s not at all the view there.

Not disagreeing there's other edges and ways to view the market. Like I said am constantly looking into other things, particularly hard math edges and have an open mind regarding additional things. Am very aware that I have not reached the pinnacle of what's possible.

With that said it doesn't take away from the fact that most people have very weak TA and lack the understanding on how to use TA they do know appropriately. It doesn't matter to me what others do or how they view things. Very few people know how to actually intra-day trade at a high level. If you have all this experience I am sure you're aware at how a lot of people are making money and it's generally from a low hanging fruit method.

I am totally fine if you don't believe what I am saying, that's cool. It's irrelevant. Just saying not impressed at all by what I've seen in the world of trading and I've met quite a few traders, including some that have or ran hedge funds. It's all good I am not trying to talk down to anyone or be rude. Just making it clear my stance.

 

[longandshort]

Not disagreeing there's other edges and ways to view the market. Like I said am constantly looking into other things, particularly hard math edges and have an open mind regarding additional things. Am very aware that I have not reached the pinnacle of what's possible.

With that said it doesn't take away from the fact that most people have very weak TA and lack the understanding on how to use TA they do know appropriately. It doesn't matter to me what others do or how they view things. Very few people know how to actually intra-day trade at a high level. If you have all this experience I am sure you're aware at how a lot of people are making money and it's generally from a low hanging fruit method.

I am totally fine if you don't believe what I am saying, that's cool. It's irrelevant. Just saying not impressed at all by what I've seen in the world of trading and I've met quite a few traders, including some that have or ran hedge funds. It's all good I am not trying to talk down to anyone or be rude. Just making it clear my stance.

Wouldn’t you think that the people that actually get paid and make money in the markets would use the most effective ways to make that money? If that was TA wouldn’t they use it? You’re saying an amateur trader making $20-30k a year is equivalent that the risk takers and traders pulling in…billions?

Idk dude, maybe you take the study of a rando as equivalent to a surgeon but I am not sure you’d like them operate on you…