Your ratio of technical vs fundamental analysis for your trading

[Zzzz1]

you are of course free to reply in whatever way it pleases you. But if I angrily replied each time someone called a quant trader a "nerd" then I would be extremely busy and would be in a very dark place. I acknowledge there are people who do things differently, and I am honestly very happy that there are a lot of people who set entries and exits at inflection points that TA generates. Judging from the many posts that those, who use TA, populate with trade entries and exits it just looks like their approach to markets has a negative edge. When someone loses more often then not then in my book something is not working. But as I repeatedly quoted Ed Sykota, "everyone gets what they are searching for in the market" (not a quote but paraphrase). Some people are in the market for the excitement, others are there to lose and they get what they look for, so in that they derive benefit from using their approach even if they lose money. If TA worked for many how come this "rather simple" approach is not used by the investing and trading titans the world over? It can probably be proven, based on circumstantial evidence, that most highly successful traders do not peruse TA and if it proved successful they would be using it. It is a simple logical line of reasoning. Intelligent people do things that work and if such proves simple and efficient then even better. But intelligent people usually only make mistakes once, learn from it, and move to those things that work better.

Arguing that something, that the most astute and successful traders do not use, works for some but not others is in my opinion a very flawed argument. Also, saying that just because something does not work for someone does not mean it does not work for others is also at best a half-truth. It is not about what works for a few, it is about something that works more often than not, has been proven to work to generate a positive edge. With proven I mean demonstrated by those who unarguably make money in the market. TA may have worked in the past but today, in 2016 I have not come across a single highly successful trader who proved that he uses TA and has proven to be highly successful. The opposite can be said about a myriad other approaches. Certain approaches to trading options have been proven successful over time, have been proven to work by the capital generated, and have been proven to work today, not 20 years ago. Of course it is rare to find proof in retail space. Any of us who consistently generate money guard our secrets closely. I find your line of reasoning flawed in that you say that "hey, I count myself as being part of the successful bunch and I use TA". You have not proven at all that it works for you to anyone. So, your statement is meaningless other than just for yourself. The story is different in professional space. Sitting next to other traders at a bank or hedge fund exposes each trader in a bloody honest way, everyone in the team knows who made or lost money and most traders know exactly which techniques and approaches are used to generate such PnL. If you have never worked in professional space my point may be hard for you to comprehend. But I believe anyone who has ever worked as bank or hedge fund trader will corroborate my points. I have in 15 years as bank and hedge fund trader never come across a successful trader who uses charts to generate trade entries or exits, nor used indicators, nor used any other of the generally known TA approaches. Does it mean such person does not exist at all? No, but given that most other long-term and career professional traders have not seen such individual either lends a LOT OF credence to my claim. Even if a few existed who use TA and trade long-term profitably, it must be such a few individuals that this approach to trading is negated as well. There are way more promising approaches to trading markets where there a are a lot more traders that prove with their track record that their approach is superior to TA. In summary, my point is that just because there are a very few who may be able to profitably trade based on TA approaches does not mean it is a suitable approach to trading for the masses. You are basically saying "there are a few rocket scientists who are working on ways to get us eventually to Mars, so hey see, there are some that are successful doing that, so it must be good for everyone to work on such". This argument I find very weak if not outright nonsense.

I am always learning. Never stops.

As far as the "dealing with it" because I get agitated by someone who makes a derogatory comment about TA. I can control my emotions and I am dealing with it quite well by telling the guy that makes the derogatory comment that maybe he should consider there are other ways to do things. Maybe it is you that should learn a thing or two from others with differing opinions.

I am not making this a TA bashing thing. Just stop shooting canon balls over the bow and I will stop firing back.

CHEERS

 

[victorycountry]

you are of course free to reply in whatever way it pleases you. But if I angrily replied each time someone called a quant trader a "nerd" then I would be extremely busy and would be in a very dark place. I acknowledge there are people who do things differently, and I am honestly very happy that there are a lot of people who set entries and exits at inflection points that TA generates. Judging from the many posts that those, who use TA, populate with trade entries and exits it just looks like their approach to markets has a negative edge. When someone loses more often then not then in my book something is not working. But as I repeatedly quoted Ed Sykota, "everyone gets what they are searching for in the market" (not a quote but paraphrase). Some people are in the market for the excitement, others are there to lose and they get what they look for, so in that they derive benefit from using their approach even if they lose money. If TA worked for many how come this "rather simple" approach is not used by the investing and trading titans the world over? It can probably be proven, based on circumstantial evidence, that most highly successful traders do not peruse TA and if it proved successful they would be using it. It is a simple logical line of reasoning. Intelligent people do things that work and if such proves simple and efficient then even better. But intelligent people usually only make mistakes once, learn from it, and move to those things that work better.

Arguing that something, that the most astute and successful traders do not use, works for some but not others is in my opinion a very flawed argument. Also, saying that just because something does not work for someone does not mean it does not work for others is also at best a half-truth. It is not about what works for a few, it is about something that works more often than not, has been proven to work to generate a positive edge. With proven I mean demonstrated by those who unarguably make money in the market. TA may have worked in the past but today, in 2016 I have not come across a single highly successful trader who proved that he uses TA and has proven to be highly successful. The opposite can be said about a myriad other approaches. Certain approaches to trading options have been proven successful over time, have been proven to work by the capital generated, and have been proven to work today, not 20 years ago. Of course it is rare to find proof in retail space. Any of us who consistently generate money guard our secrets closely. I find your line of reasoning flawed in that you say that "hey, I count myself as being part of the successful bunch and I use TA". You have not proven at all that it works for you to anyone. So, your statement is meaningless other than just for yourself. The story is different in professional space. Sitting next to other traders at a bank or hedge fund exposes each trader in a bloody honest way, everyone in the team knows who made or lost money and most traders know exactly which techniques and approaches are used to generate such PnL. If you have never worked in professional space my point may be hard for you to comprehend. But I believe anyone who has ever worked as bank or hedge fund trader will corroborate my points. I have in 15 years as bank and hedge fund trader never come across a successful trader who uses charts to generate trade entries or exits, nor used indicators, nor used any other of the generally known TA approaches. Does it mean such person does not exist at all? No, but given that most other long-term and career professional traders have not seen such individual either lends a LOT OF credence to my claim. Even if a few existed who use TA and trade long-term profitably, it must be such a few individuals that this approach to trading is negated as well. There are way more promising approaches to trading markets where there a are a lot more traders that prove with their track record that their approach is superior to TA. In summary, my point is that just because there are a very few who may be able to profitably trade based on TA approaches does not mean it is a suitable approach to trading for the masses. You are basically saying "there are a few rocket scientists who are working on ways to get us eventually to Mars, so hey see, there are some that are successful doing that, so it must be good for everyone to work on such". This argument I find very weak if not outright nonsense.

The traders who you are debating with are derivative traders. They trade for temporary buy sell imbalance (i.e liquidity driven, not fundamental driven). I am pretty sure stock traders will understand you better. Although I mainly trade in derivative markets, I only trade on fundamental info now. So I support your point.

By the way, It's Christmas, let's forget the debate. Wish you Merry Chrismas Zzz

 

[Money Trust]

I wouldn't dismiss it that quickly. I've known a few hedge fund traders and fx traders at big banks who primarily trade off of fundamentals. Jim rogers also only looks at a couple of technicals.

Having said that whatever works for one will not work for another so doing what works for you is the best option.

For me, trading off of fundamentals requires deep pockets because you could take a huge hit waiting for that scenario to occur.

 

[Visaria]

Tend towards fundamentals far, far more than ever before....TA is great, but fundamentals are king for me atm.

 

[ironchef]

Tend towards fundamentals far, far more than ever before....TA is great, but fundamentals are king for me atm.

If I venture to guess, you are not a day trader, you trade options?

 

[wrbtrader]

For me, trading off of fundamentals requires deep pockets because you could take a huge hit waiting for that scenario to occur.

If someone is using fundamentals and nothing else, why would they be in a trade and they wait for that scenario to show up ?

Why wouldn't they stay on the sidelines and then wait for the scenario to show up.

Last year there was talk here at the forum by one of the folks into "seasonal tendencies" involving the U.S. Elections. You just gotta wait (be patient) for the scenario to show up if/when it does show up...no need to take a "huge hit" regardless if is a small trade or large trade. Simply, money management is still a key component even for fundamental traders.

Merry Xmas

 

[eganon69]

you are of course free to reply in whatever way it pleases you. But if I angrily replied each time someone called a quant trader a "nerd" then I would be extremely busy and would be in a very dark place. I acknowledge there are people who do things differently, and I am honestly very happy that there are a lot of people who set entries and exits at inflection points that TA generates. Judging from the many posts that those, who use TA, populate with trade entries and exits it just looks like their approach to markets has a negative edge. When someone loses more often then not then in my book something is not working. But as I repeatedly quoted Ed Sykota, "everyone gets what they are searching for in the market" (not a quote but paraphrase). Some people are in the market for the excitement, others are there to lose and they get what they look for, so in that they derive benefit from using their approach even if they lose money. If TA worked for many how come this "rather simple" approach is not used by the investing and trading titans the world over? It can probably be proven, based on circumstantial evidence, that most highly successful traders do not peruse TA and if it proved successful they would be using it. It is a simple logical line of reasoning. Intelligent people do things that work and if such proves simple and efficient then even better. But intelligent people usually only make mistakes once, learn from it, and move to those things that work better.

Arguing that something, that the most astute and successful traders do not use, works for some but not others is in my opinion a very flawed argument. Also, saying that just because something does not work for someone does not mean it does not work for others is also at best a half-truth. It is not about what works for a few, it is about something that works more often than not, has been proven to work to generate a positive edge. With proven I mean demonstrated by those who unarguably make money in the market. TA may have worked in the past but today, in 2016 I have not come across a single highly successful trader who proved that he uses TA and has proven to be highly successful. The opposite can be said about a myriad other approaches. Certain approaches to trading options have been proven successful over time, have been proven to work by the capital generated, and have been proven to work today, not 20 years ago. Of course it is rare to find proof in retail space. Any of us who consistently generate money guard our secrets closely. I find your line of reasoning flawed in that you say that "hey, I count myself as being part of the successful bunch and I use TA". You have not proven at all that it works for you to anyone. So, your statement is meaningless other than just for yourself. The story is different in professional space. Sitting next to other traders at a bank or hedge fund exposes each trader in a bloody honest way, everyone in the team knows who made or lost money and most traders know exactly which techniques and approaches are used to generate such PnL. If you have never worked in professional space my point may be hard for you to comprehend. But I believe anyone who has ever worked as bank or hedge fund trader will corroborate my points. I have in 15 years as bank and hedge fund trader never come across a successful trader who uses charts to generate trade entries or exits, nor used indicators, nor used any other of the generally known TA approaches. Does it mean such person does not exist at all? No, but given that most other long-term and career professional traders have not seen such individual either lends a LOT OF credence to my claim. Even if a few existed who use TA and trade long-term profitably, it must be such a few individuals that this approach to trading is negated as well. There are way more promising approaches to trading markets where there a are a lot more traders that prove with their track record that their approach is superior to TA. In summary, my point is that just because there are a very few who may be able to profitably trade based on TA approaches does not mean it is a suitable approach to trading for the masses. You are basically saying "there are a few rocket scientists who are working on ways to get us eventually to Mars, so hey see, there are some that are successful doing that, so it must be good for everyone to work on such". This argument I find very weak if not outright nonsense.

Go back and re-read my posts about this. I never responded “angrily”. If you think somehow your words here on a forum can somehow unnerve me and make me all upset you give yourself WAAY too much credit. When someone responds and comments made imply those that use TA are foolish and all losers I get a bit irritated and annoyed, yes, but angry most definitiely not. I seem to recall having people who disagree with my political and economic beliefs calling me a “DEPLORABLE”. Was I annoyed and irritated yes,…but I came out on the winning end of that situation too…

I think we can agree to disagree which is perfectly fine. However, I don’t go about making derogatory comments in a thread that clearly has the LARGE majority of people taking the poll who support TA. If that is your view, fine, make a statement why it doesn’t work for you but no need to bash those that feel it does. Again, just happily go on your way, trade and collect our money if you are so arrogant as to believe that your way is absolute. I am a little more humble than that.

Your statement about TA being “rather simple” again shows your arrogance and ignorance of the subject at the same time. If it were easy then everyone would do it,…right? Yet YOU don’t do it so it MUST not be easy. Nothing in trading is easy. As you know >90% of people fail at TRADING,…..they lose money using options, fundamentals, scalping, arbitrage, and TA and any other way to trade. I did not just read some TA and become an overnight success. I studied and have thousands of hours of charting and watching the markets and losing lots of money before I ever got to a point that could break even. Then it took me a few more years before I made it profitable. Now I beat the market routinely and definitely most hedge funds. In fact most hedge funds fail to even beat the market. So your working for a bank or hedge fund does not exactly lend credibility to your claims. Now I have no doubt that using options can improve trading but just because I don’t use them currently I don’t make disparaging comments about how most people lose money using them.

As far as Ed Seykota and his quote “Everybody Gets What They Want”…I think it rather comical that you quote someone that you seem to know very little about. That quote is the CHAPTER TITLE and direct quote from an interview with Ed Seykota from the book “Market Wizards”. It happens to be a book I read when I first started trading and helped shape many of my views on trading. I doubt you ever read that book. You should. Because Ed Seykota happens to be a very wealthy successful, trader that uses,…wait for it……TECHNICAL ANALYSIS. In fact, most of the people intervewed in that book are major players in the trading world. MOST of them use TA in their trading. Paul Tudor Jones, Richard Dennis, Ed Seykota, Bruce Kovner are all interviewed and quoted in that book as using TA. In fact, even Jim Rogers says he trades mostly off fundamentals but does look at charts as well but not primarily. I encourage anyone that is interested in trading to read that book. I have decided to provide several pages from the paperback edition that you and others can go look up for yourself proving what I have said above. Pages 59, 129, 158, 265, 269.

I do not have to prove anything here to you or anyone about how successful I am at it. Is TA “for the masses” and “average trader” here on ET as you state? NO. But then again I am anything but average. That is not an arrogant statement that is just one of confidence in myself. If I gave up on everything in my life that people told me I would never achieve I would be working for someone else in a cubicle hating life. From the education I have received to the wife I married I was constantly told were “out of my league” and never gonna happen. They did happen. I have built a very successful business and career in less than 7 years to become a major player in my industry which happens to be VERY competitive and previously dominated by businesses with decades of experience and head start on me. Why? Because I was tenacious and never took failure as an option. I have yet to fail myself.

Of course I am sure you will say that TA worked years ago and that Market Wizards book was written 20 years ago and that has no basis on current markets. I am also sure you will say I am full of shit about my successes. That is fine too. I will sleep well knowing the truth and going home to my beautiful wife. You should just move on and accept there are others with differing opinions and not disparage those opinions. Just happily take my money if you think I am an addicted gambler using squiggly lines. I know I will smile each and every time I take yours.

This TA is stupid stuff is taking up too much space on ET and is quite sad. This will be my last response on THIS particular topic here.

Eganon

 

[Zzzz1]

Again you provided no logical reasoning whatsoever why TA works and in no single line critiqued all the logical arguments I made re professionals who resort TA to something they do not deem to provide enough utility to work with. That, I believe, stands on its own and tells it all.

Go back and re-read my posts about this. I never responded “angrily”. If you think somehow your words here on a forum can somehow unnerve me and make me all upset you give yourself WAAY too much credit. When someone responds and comments made imply those that use TA are foolish and all losers I get a bit irritated and annoyed, yes, but angry most definitiely not. I seem to recall having people who disagree with my political and economic beliefs calling me a “DEPLORABLE”. Was I annoyed and irritated yes,…but I came out on the winning end of that situation too…

I think we can agree to disagree which is perfectly fine. However, I don’t go about making derogatory comments in a thread that clearly has the LARGE majority of people taking the poll who support TA. If that is your view, fine, make a statement why it doesn’t work for you but no need to bash those that feel it does. Again, just happily go on your way, trade and collect our money if you are so arrogant as to believe that your way is absolute. I am a little more humble than that.

Your statement about TA being “rather simple” again shows your arrogance and ignorance of the subject at the same time. If it were easy then everyone would do it,…right? Yet YOU don’t do it so it MUST not be easy. Nothing in trading is easy. As you know >90% of people fail at TRADING,…..they lose money using options, fundamentals, scalping, arbitrage, and TA and any other way to trade. I did not just read some TA and become an overnight success. I studied and have thousands of hours of charting and watching the markets and losing lots of money before I ever got to a point that could break even. Then it took me a few more years before I made it profitable. Now I beat the market routinely and definitely most hedge funds. In fact most hedge funds fail to even beat the market. So your working for a bank or hedge fund does not exactly lend credibility to your claims. Now I have no doubt that using options can improve trading but just because I don’t use them currently I don’t make disparaging comments about how most people lose money using them.

As far as Ed Seykota and his quote “Everybody Gets What They Want”…I think it rather comical that you quote someone that you seem to know very little about. That quote is the CHAPTER TITLE and direct quote from an interview with Ed Seykota from the book “Market Wizards”. It happens to be a book I read when I first started trading and helped shape many of my views on trading. I doubt you ever read that book. You should. Because Ed Seykota happens to be a very wealthy successful, trader that uses,…wait for it……TECHNICAL ANALYSIS. In fact, most of the people intervewed in that book are major players in the trading world. MOST of them use TA in their trading. Paul Tudor Jones, Richard Dennis, Ed Seykota, Bruce Kovner are all interviewed and quoted in that book as using TA. In fact, even Jim Rogers says he trades mostly off fundamentals but does look at charts as well but not primarily. I encourage anyone that is interested in trading to read that book. I have decided to provide several pages from the paperback edition that you and others can go look up for yourself proving what I have said above. Pages 59, 129, 158, 265, 269.

I do not have to prove anything here to you or anyone about how successful I am at it. Is TA “for the masses” and “average trader” here on ET as you state? NO. But then again I am anything but average. That is not an arrogant statement that is just one of confidence in myself. If I gave up on everything in my life that people told me I would never achieve I would be working for someone else in a cubicle hating life. From the education I have received to the wife I married I was constantly told were “out of my league” and never gonna happen. They did happen. I have built a very successful business and career in less than 7 years to become a major player in my industry which happens to be VERY competitive and previously dominated by businesses with decades of experience and head start on me. Why? Because I was tenacious and never took failure as an option. I have yet to fail myself.

Of course I am sure you will say that TA worked years ago and that Market Wizards book was written 20 years ago and that has no basis on current markets. I am also sure you will say I am full of shit about my successes. That is fine too. I will sleep well knowing the truth and going home to my beautiful wife. You should just move on and accept there are others with differing opinions and not disparage those opinions. Just happily take my money if you think I am an addicted gambler using squiggly lines. I know I will smile each and every time I take yours.

This TA is stupid stuff is taking up too much space on ET and is quite sad. This will be my last response on THIS particular topic here.

Eganon

 

[Money Trust]

If someone is using fundamentals and nothing else, why would they be in a trade and they wait for that scenario to show up ?

Why wouldn't they stay on the sidelines and then wait for the scenario to show up.

Last year there was talk here at the forum by one of the folks into "seasonal tendencies" involving the U.S. Elections. You just gotta wait (be patient) for the scenario to show up if/when it does show up...no need to take a "huge hit" regardless if is a small trade or large trade. Simply, money management is still a key component even for fundamental traders.

Merry Xmas

Apparently we haven't read the same texts. You're talking about betting on a specific event, IE: The Elections. That's not what I'm talking about. The point that I'm making is, for instance, you have a lot of gold bugs who believe that the U.S. Economy is in the brink of collapse and as a result, the dollar is going to collapse as well, gold is going to the moon, the stock markets are going to crash, etc. I've been hearing these guys talk this way since 09. Such guys have been claiming to be short the markets and long gold and as we can see, they've gotten raped if they truly held those positions. They continue to say "one day it's gonna happen."

So, my point is this --- people who choose to trade based on what they believe about the economy and things of that nature, how exactly are you timing that trade's entry? Maybe one day those guys will get their crash but they can go broke waiting. That pretty much sums up fundamental investing...not event-driven investing that you referred to.

.....I have nothing more to say about it.

 

[wrbtrader]

Apparently we haven't read the same texts. You're talking about betting on a specific event, IE: The Elections. That's not what I'm talking about. The point that I'm making is, for instance, you have a lot of gold bugs who believe that the U.S. Economy is in the brink of collapse and as a result, the dollar is going to collapse as well, gold is going to the moon, the stock markets are going to crash, etc. I've been hearing these guys talk this way since 09. Such guys have been claiming to be short the markets and long gold and as we can see, they've gotten raped if they truly held those positions. They continue to say "one day it's gonna happen."

So, my point is this --- people who choose to trade based on what they believe about the economy and things of that nature, how exactly are you timing that trade's entry? Maybe one day those guys will get their crash but they can go broke waiting. That pretty much sums up fundamental investing...not event-driven investing that you referred to.

.....I have nothing more to say about it.

Correct, we're not reading the same text or talking about the same people. Actually, I'm talking about traders that use different tools together as a team to make their trade method. I've met a lot of people that do one (e.g. technicals) and no other tools. Just the same, I've met people that trade fundamentals and no other tools as a few noted in this thread that they're pure this or 100% that. If that works for them...more power to that although I believe the thread starter question was orientated towards people using both or different tools together.

In contrast, there are trades using different tools together. These traders use fundamentals, season tendencies or whatever. In addition, they aren't placing their bets on a "single" event but instead trade multiple events throughout the year.

The elections I mention was just "one" event.

I met a guy a few years back that traded different markets and had a total about 15 events...some were fundamentals, some were seasonal and some were technical. I believe he allocated 2% of his trading capital...there's that money management element. Thus, he's not taking a huge hit.

To answer your question...not sure "how they time" their entry considering each event are different. Also, not sure about the people you've mention placing their bets that gold is going to the moon, stock markets going to crash or whatever since 2009 as you've described. That talk that you specifically mention seems to me to be that type of talk that's heard "every year" or read about on the internet every year since the birth of the net...you'll probably hear them say the same thing next year about something.

The point is this...you don't need to take a huge hit if wrong and using good money management. Just as important, they probably have good patience and wait (patience) for the event to actually show up.

Yeah, I'm sure there are folks out their that do not wait and then they enter trades before confirmation the event is active, there's people with no money management and take "huge hits".

Just to be specific, the people I mention have "statistics" to back up the event they're trading. Thus, its more than what they "believe" or "think"...just about a typical conversation at any market website, forum, twitter, blogs or whatever...just read those that talk about the statistics to back up what they "believe" or "think" although there's never a guarantee.