Markets are proven to be fundamental after all?

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vergis92

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I have been through all the ups and downs of the markets and
in various trading styles, it annoys me when I hear things like:
'discipline is everything' or experience from a military job can
prove useful in the markets, or anything that comes from a technical analysis theory that claims to be 'The nearly perfect trader's tool'

The only real leading indicator is economic indicators releases and
fundamentals of certain types, Wall street does work fundamentally and it's a centrally traded market, even though it can act contrary to long term fundamentals...
then how on earth can you develop a winning strategy based on those expensive, completely technical charting software , ? I think it's a laugh!

My most recent experience in forex speculation , proves here too
forex even though openly traded and much less affected by the news
and yet technical studies fail catastrophically in front of presence of fundamental opinion,

Why on earth would EUR/USD care about your trend line or your
OB/OS momentum indicator, or other more complex, price derived indicator?
If a major exporting firm in Japan decides to suddenly
step in (not seen on my charts until it's too late) and buy Euros
the Euro will push higher no matter what that price derived indicator or that Bollinger band overbought signal told us...

Could it be that even 'sudden' events such as central bank and major exporter interventions could have been expected given
their monetary policy and therefore be roughly predicted?

source
MF Global Market Monitor - Your eyes and ears on the trading floor.
CHAMPION CAPITAL | Invest with Confidence in hidden value, strong US stocks!
 
Last edited:
This posts, of course, is going to shortly get ripped to shreads by those who favor technical analysis. I happen to be in the camp, but I'm not feeling up to letting it fly right now, so I'll leave it to others. :)

The only thing I will take to task right now is this: "The only real leading indicator is economic indicators releases and fundamentals of certain types". Any data we receive is already in the rear view mirror.
 
vergis92 said:
I have been through all the ups and downs of the markets and
in various trading styles, it annoys me when I hear things like:
'discipline is everything' or experience from a military job can
prove useful in the markets, or anything that comes from a technical analysis theory that claims to be 'The nearly perfect trader's tool'

The only real leading indicator is economic indicators releases and
fundamentals of certain types, Wall street does work fundamentally and it's a centrally traded market, even though it can act contrary to long term fundamentals...
then how on earth can you develop a winning strategy based on those expensive, completely technical charting software , ? I think it's a laugh!

My most recent experience in forex speculation , proves here too
forex even though openly traded and much less affected by the news
and yet technical studies fail catastrophically in front of presence of fundamental opinion,

Why on earth would EUR/USD care about your trend line or your
OB/OS momentum indicator, or other more complex, price derived indicator?
If a major exporting firm in Japan decides to suddenly
step in (not seen on my charts until it's too late) and buy Euros
the Euro will push higher no matter what that price derived indicator or that Bollinger band overbought signal told us...

Could it be that even 'sudden' events such as central bank and major exporter interventions could have been expected given
their monetary policy and therefore be roughly predicted?

source
MF Global Market Monitor - Your eyes and ears on the trading floor.
CHAMPION CAPITAL | Invest with Confidence in hidden value, strong US stocks!
Click to expand...

You are over simplifying the whole thing and dismissing a fundamental force that drives the markets. You forget that a large proportion of traders trade using technical signals, so if your said japanese company started buy Euros and pushed the price up lot of traders would sell those euros to that company if the Euro reached a well defined technical resistance. It would take a significant amount of buying on the japanese co's part to push the euro through that level as technical traders would likely meet the demand of the company. They will be selling euros at this level because they expect a technical bounce off the resistance lines.

Resistance/support lines are like self fulfilling prophecies.
 
vergis92 said:
I have been through all the ups and downs of the markets and
in various trading styles, it annoys me when I hear things like:
'discipline is everything' or experience from a military job can
prove useful in the markets, or anything that comes from a technical analysis theory that claims to be 'The nearly perfect trader's tool'

The only real leading indicator is economic indicators releases and
fundamentals of certain types, Wall street does work fundamentally and it's a centrally traded market, even though it can act contrary to long term fundamentals...
then how on earth can you develop a winning strategy based on those expensive, completely technical charting software , ? I think it's a laugh!

My most recent experience in forex speculation , proves here too
forex even though openly traded and much less affected by the news
and yet technical studies fail catastrophically in front of presence of fundamental opinion,

Why on earth would EUR/USD care about your trend line or your
OB/OS momentum indicator, or other more complex, price derived indicator?
If a major exporting firm in Japan decides to suddenly
step in (not seen on my charts until it's too late) and buy Euros
the Euro will push higher no matter what that price derived indicator or that Bollinger band overbought signal told us...

Could it be that even 'sudden' events such as central bank and major exporter interventions could have been expected given
their monetary policy and therefore be roughly predicted?

source
MF Global Market Monitor - Your eyes and ears on the trading floor.
CHAMPION CAPITAL | Invest with Confidence in hidden value, strong US stocks!
Click to expand...

From Market Wizards, interview with Marty Schwartz:
"Did you make a complete transition from fundamental to technical analysis?"
"Absolutely. I always laugh at people who say "I've never met a rich technician." I love that! It is such an arrogant, nonsensical response. I used fundamentals for 9 years and got rich as a technician"

To be fair, imho if you know what you are doing you can make money from fundamentals, technicals or both.
 
i've always thought it is a dangerous game to polarise things like this. Of course macro-fundamentals govern markets but technicals obviously play an important role given that a certain amount of volume in any book will be based on tech levels and this provides natural barriers etc. saying that resting orders can play both ways with stops and limits exaggerating moves.

it would be careless to take one line without acknowledging the existence of the other.
 
Just as Hoggums said.

Resistance/support lines are like self fulfilling prophecies.

If enough people do the same thing then it will happen, the amount you make or lose is dependant on how quickly you re/acted.
 
then how on earth can you develop a winning strategy based on those expensive, completely technical charting software , ? I think it's a laugh!
Click to expand...

It is being done every day on the Technical Trader Forum of this site. Grey1 spent weeks if not months posting his broker executions of his trades on US stocks. I cannot remember exactly how many days he did this but I do remember that he had only around 2 losing days in about 8 weeks which he also posted. Profits varied from around $2K up to $10K a day. If TA didn't work then this would not be possible for the length of time it was being done. Also he has successfully shown others how to do the same and recently gave an 8 hour live trading seminar that around 30 of us from this site attended. His approach is unique and not one that I have seen anything about anywhere else but it is primarily though TA.


Paul
 
Trader333 said:
It is being done every day on the Technical Trader Forum of this site. Grey1 spent weeks if not months posting his broker executions of his trades on US stocks. I cannot remember exactly how many days he did this but I do remember that he had only around 2 losing days in about 8 weeks which he also posted. Profits varied from around $2K up to $10K a day. If TA didn't work then this would not be possible for the length of time it was being done. Also he has successfully shown others how to do the same and recently gave an 8 hour live trading seminar that around 30 of us from this site attended. His approach is unique and not one that I have seen anything about anywhere else but it is primarily though TA.


Paul
Click to expand...


I agree, but that's one of the rare exceptions and not the rule!
I believe that all successful technicians do use economic and fundamnetal weekly, monthly 'roadmaps', to figure out the main trend, technical tools can help you increase your trading profits
and pinpoint tops and bottoms within the supposed trend.

Think they can rely exclusively on a technical strategy?

I just believe that floor traders don't use a mechanical approach,
only daytraders may do, their daily actions are unique, there's
no routine, there's no exact repeat process and they hardly use
any chart derived indicators.

Whenever I get a swing buy/sell signal which is opposite to what
a reliable flloor trader tells me, I 'm happy to see it as a failed to be 'mechanical' technical signal... certainly I'm not more far-sighted in the markets than they are.
 
vergis92 said:
I agree, but that's one of the rare exceptions and not the rule!
Click to expand...

You could very easily make the statement that ANY successful trader is the exception rather than the rule, even if they just used a coin toss to make their trades.

I believe that all successful technicians do use economic and fundamnetal weekly, monthly 'roadmaps', to figure out the main trend, technical tools can help you increase your trading profits and pinpoint tops and bottoms within the supposed trend.

Think they can rely exclusively on a technical strategy?
Click to expand...

Because of my work I get all kinds of information passing before me. Except for the occassional value based stock position, all of my entry and exit decisions are done technically. I will admit to using fundamentals to screen for stocks when I trade them, but if I'm trading forex or index futures or anything else, my decisions are not influenced by fundamentals at all because I have found that they make my decisions less effective, not more.

I just believe that floor traders don't use a mechanical approach, only daytraders may do, their daily actions are unique, there's no routine, there's no exact repeat process and they hardly use any chart derived indicators.
Click to expand...

Your implication is that all technical traders are mechanical, which is most certainly not true.

Whenever I get a swing buy/sell signal which is opposite to what a reliable flloor trader tells me, I 'm happy to see it as a failed to be 'mechanical' technical signal... certainly I'm not more far-sighted in the markets than they are.
Click to expand...

If you're attempting to use floor traders - guys who are often just market makers and certainly strongly inclined to go home flat at the end of the day - as a guide to swing trading, you're not making a level comparisson at all.
 
vergis92 said:
I agree, but that's one of the rare exceptions and not the rule!
Click to expand...

I doubt you'll get many people arguing that a majority of traders using TA are profitable, but would you argue that the majority of traders taking signals from news/economic releases are making money? I doubt it...

Just because few people can do something well, doesn't make it impossible. And if you're merely arguing that trading is hard, well, tell us something we don't know!
 
fifty2aces said:
I doubt you'll get many people arguing that a majority of traders using TA are profitable, but would you argue that the majority of traders taking signals from news/economic releases are making money? I doubt it...

Just because few people can do something well, doesn't make it impossible. And if you're merely arguing that trading is hard, well, tell us something we don't know!
Click to expand...

The best of the best are simply the best risk managers no matter what tools ,or combination of same they employ..they understand how to manage risk according to market conditions and have a good understanding of the psychology in the markets.
 
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