What information does Technical analysis tell you ?
- Thread starter traderwald
- Start date
It's funny. I would love to agree with that in its entirety. TA is anathema to me, it violates the underlying premise of everything I worked on throughout my career. Unfortunately I don't, because I can not rationalize away the multitude of times where I was the order creating that support or resistance, just me there like fuckin' Gandalf, arms stretched out, magnificent flowing white robe, light emanating from my behind, saying 'thou shalt not pass' and in a thinner market, maybe this went on for days or weeks.
...and how many times, I'd come back to my desk, see a support/resistance line, get on my turret, and say 'tell me who the fuck is holding this @$x,' and 80% of the time get a specific name, and their size.
You have no idea how much I wish this wasn't true... but it is. So what am I missing? You have a captive audience in me, one who wants nothing more than to agree with you. You have no idea how happy I would be to call myself a moron.
The simplest form of TA is the observation that price has been moving in the same direction. This can be seen represented on a chart as a trend. The most likely next action of price within an established trend is continuation of the trend. This immediately gives an edge above random market selection and entries.
But most trends are not continuous movements without pause or retracement and this gives further advantages to the TA trader, as he can enter at a discount to the most extreme price reached and can monitor price for resumption of movement in the trend's direction, giving further confidence in the trade.
TA doesn't cause the market players who affect price to behave in a certain way, but it can suggest a range of possibilities for what they will do next and allow the trader to select the most probable of these.
Might be, the he just sells that idea, that it doesn't work. The less knows, the better for us.
Since joining the forum in early '18, feel like I've seen dozu888 talk "waste of time" on every trading thread. So I wasted the last several minutes of my own time on a dozu "waste of time" search.
Come on, guy... you're sounding like a broken record.
Give Robinhood another 50 mil of new accounts, that jumps into middle of TSLA uptrend, with life savings.
More volume, less spread, better entries for us
I think Dr Michael Burry offers an interesting perspective.Hard core value guy with a TA background.I think the naysayers are too black and white in their view and would benefit from taking a more holistic view. For me "TA" is a tool,not the grail..
“In futures, I learned a lot about TA. The frustrating thing was it worked. You could actually predict the moves. But slippage ate away everything. I was up big at times, never down big. I left with 98% of my original capital as soon as I realized I would have to quit my day job to do it right. The friend that got me into it did quit his day job and is doing OK. There’s a way to win at everything. It just has to be found.”
“As I’ve brought up on this thread before, I was a growth/technical analysis investor for quite a while. I studied TA pretty extensively. Hence, when I felt the market getting toppy last December and became a student of value investing, I found it hard to leave TA completely behind. Mainly I use it only to avoid falling knives and to find buy points at very solid support. I try not to use it to sell stocks because my horizon remains long term. With the market this toppy though, I find it hard to ignore when TA says sell after a fast rise. It’s the old take the money and run. It has helped me tremendously, and I have been hurt when I ignore it completely. The four companies I hold now I’m not even charting, though I would do so if one or more gains 40-50% in a few weeks, as WHX has done.”
“As for when to buy, I mix some barebones technical analysis into my strategy — a tool held over from my days as a commodities trader. Nothing fancy. But I prefer to buy within 10% to 15% of a 52-week low that has shown itself to offer some price support. That’s the contrarian part of me.“
When should you sell a stock?
“Tax implications are not a primary concern of mine. I know my portfolio turnover will generally exceed 50% annually, and way back at 20% the long-term tax benefits of low-turnover pretty much disappear. Whether I’m at 50% or 100% or 200% matters little. So I am not afraid to sell when a stock has a quick 40% to 50% a pop.”
“And if a stock — other than the rare birds discussed above — breaks to a new low, in most cases I cut the loss. That’s the practical part. I balance the fact that I am fundamentally turning my back on potentially greater value with the fact that since implementing this rule I haven’t had a single misfortune blow up my entire portfolio.”
“In futures, I learned a lot about TA. The frustrating thing was it worked. You could actually predict the moves. But slippage ate away everything. I was up big at times, never down big. I left with 98% of my original capital as soon as I realized I would have to quit my day job to do it right. The friend that got me into it did quit his day job and is doing OK. There’s a way to win at everything. It just has to be found.”
“As I’ve brought up on this thread before, I was a growth/technical analysis investor for quite a while. I studied TA pretty extensively. Hence, when I felt the market getting toppy last December and became a student of value investing, I found it hard to leave TA completely behind. Mainly I use it only to avoid falling knives and to find buy points at very solid support. I try not to use it to sell stocks because my horizon remains long term. With the market this toppy though, I find it hard to ignore when TA says sell after a fast rise. It’s the old take the money and run. It has helped me tremendously, and I have been hurt when I ignore it completely. The four companies I hold now I’m not even charting, though I would do so if one or more gains 40-50% in a few weeks, as WHX has done.”
“As for when to buy, I mix some barebones technical analysis into my strategy — a tool held over from my days as a commodities trader. Nothing fancy. But I prefer to buy within 10% to 15% of a 52-week low that has shown itself to offer some price support. That’s the contrarian part of me.“
When should you sell a stock?
“Tax implications are not a primary concern of mine. I know my portfolio turnover will generally exceed 50% annually, and way back at 20% the long-term tax benefits of low-turnover pretty much disappear. Whether I’m at 50% or 100% or 200% matters little. So I am not afraid to sell when a stock has a quick 40% to 50% a pop.”
“And if a stock — other than the rare birds discussed above — breaks to a new low, in most cases I cut the loss. That’s the practical part. I balance the fact that I am fundamentally turning my back on potentially greater value with the fact that since implementing this rule I haven’t had a single misfortune blow up my entire portfolio.”
It's funny. I would love to agree with that in its entirety. TA is anathema to me, it violates the underlying premise of everything I worked on throughout my career. Unfortunately I don't, because I can not rationalize away the multitude of times where I was the order creating that support or resistance, just me there like fuckin' Gandalf, arms stretched out, magnificent flowing white robe, light emanating from my behind, saying 'thou shalt not pass' and in a thinner market, maybe this went on for days or weeks.
...and how many times, I'd come back to my desk, see a support/resistance line, get on my turret, and say 'tell me who the fuck is holding this @$x,' and 80% of the time get a specific name, and their size.
You have no idea how much I wish this wasn't true... but it is. So what am I missing? You have a captive audience in me, one who wants nothing more than to agree with you. You have no idea how happy I would be to call myself a moron.
your wish is granted lol... actually there is no conflict.. in a thinner market sure you can have a couple of guys who want to buy/sell at certain levels and they will hold for a while if the order is big enough.
my views perhaps bias towards popular issues or indexes because that's all I do... very rare to see anyone big enough to hold any levels.... it's just the smart money picking the pockets of the dumb over and over, unfolding stories one after another.
Might be, the he just sells that idea, that it doesn't work. The less knows, the better for us.
Give Robinhood another 50 mil of new accounts, that jumps into middle of TSLA uptrend, with life savings.
More volume, less spread, better entries for us
that would actually be true
except it will never happen... everyday the number of people who pick up 'technical analysis 101' far out-number those who unlearn this garbage.
and here is another reason/example why it's so difficult to unlearn the garbage, because you have people who actually make some money, but cannot isolate how much of that profit was due to TA... in other words he made money while wearing white shoes, then the white shoes were useful?
stand-alone back testing over enough data is plenty to show that any conventional TA tool gives you 51% chance of winning, it's 51 not 50 because the market is not completely random, and these garbage tools dilute the tradable patterns enough to very close to random.
case in point - buying 10-15% within 52-week low, you can back test it long enough and confirm it is actually a LOSING strategy compared to random entry.
but he still made money I guess, DESPITE an inferior method.
a bull market papers over everything, including random and worse than random factors.
You can't serve 2 masters. (Just like the Pale Rider said... "You can't serve both God and mammon.")
If you believe in your assessment of the fundamentals, you must ignore technical conflicts.
If you believe in your TA, you must ignore fundamental conflicts.
(Yeah, I too wish it were more clear cut and easier... it's not.)
