Does it matter who comes first?

After reading the ongoing fun in the 'when did the GBP crash' thread, I thought it deserved a thread of its own..........

In one camp, the technical analysts say the drop was already in full swing, yet the other camp says we wouldn't have dropped till the economy was really up sh1t creek, so.......

Did the tech come first and help the downslide or would it never have moved without the fundamental aspect. Can you have one without the other? Can price action be ahead of something like the last month for the GBP? Can TA/PA be relied upon without the FA, and to call a big drop before the news guys and galls catch up............?

As someone who ignores the news I would say that:
-Either can come to public awareness first but you don't need to know the news to trade the market's reaction to it.
- Price action is reflecting some significant group's understanding, expectations and knowledge but that knowledge may not be available to the public.
- Can TA be relied on? No, not if "relied on" implies that it works without risk. Yes, if it implies that it can give you a tradable edge - a bet worth taking.

Price Action does a pretty good job of painting a picture of the fundamental buying and selling that goes on at that instant.

I started off thinking pure FA and saw in TA what was in my head. ===> Losses

I now increasingly trade off TA with shorter time frames (totally ignoring news) ===> Winners


Depends on your time frame ultimately but with lessons learnt the hard cash way - my vote is for pure TA.

I think this posted chart by firewalker sums it up pretty well.

sweepylongbananafiend said:

I think this posted chart by firewalker sums it up pretty well.

Click to expand...

I invite those who think TA is a step behind, to post a chart where some report, economic figure or news release clearly illustrates how to get in before the public does.

I suspect it will be a long wait.

firewalker99 said:

I invite those who think TA is a step behind, to post a chart where some report, economic figure or news release clearly illustrates how to get in before the public does.

I suspect it will be a long wait.

Click to expand...

Definately.

Often the complete opposite of what the news release in theory says should happen to price, happens.

I totally ignore news or funnymental opinions, I mean thats all they are, right, all I need to know is what price on charts tells me loud and clear already, but then I am one of those right brain chappies.



Anyone remember fundamentals from the web bubble of the late 90's that tried to explain to us why we are in a new paradigm where an online clothes store like boo.com without a single cent in profits should be worth more than Airbus ?

Nonsense !

Anyone with half a brain can come up with an explanation for just about anything after the fact.

Thats pretty much all funnymentals are good for imo.

I think it's important to mention the difference between fundamentals and trading the news...

Take the cable example... those who are inclined to take fundamental positions (typically with a whole bunch of money, hedge funds and so on) will have their own researchers and economists pouring over proprietary data and models... it isn't fair to say "the fundamenls were pointing to a short at XXXX or YYYY", particularly if the XXXX or YYYY is just some economic release. Economists in a fund may argue that a fundamental short position in cable has been on the cards all year, its just that they are the only ones to see it, with their own research etc...

Also, if we are talking about currencies, then fundamental analysis can also include single currency analysis, rather than a pair... if Economists see Dollar weakness ahead, they might prefer to take a portfolio of positions to profit from that, including say, metals, T-Bonds, all sorts: none of which can be picked out from PA or TA...

MrGecko said:

Economists in a fund may argue that a fundamental short position in cable has been on the cards all year, its just that they are the only ones to see it, with their own research etc...

Click to expand...

But how is the public to know about their short positions? It's only by the time they start to close theirs for a profit, that the majority notices price has been falling and they jump aboard... but you're right obviously, distribution only occurs because some people (with the leverage to move the market) are no longer interested or feel it's not longer to their advantage to stay long.

Does it matter who comes first?

Click to expand...

I don't think so.








But the Mrs thinks differently!

Instant Rimshot

There was a similar thread over at FxF

The fundamental terrorists must be stopped.

A question to the fundamental traders:
How can you gain an edge using FA over the big/smart money who have millions to invest in FA?

fibonelli said:

How can you gain an edge using FA over the big/smart money who have millions to invest in FA?

Click to expand...

Does one include the bank analysts in that who were at the time touting internet stocks while with great excitement claiming a new paradigm where profits had magically become irrelevant ?

;-)

That fundamental interpretation of the status quo was patently wrong for anyone with half a brain, wasn't it ?

But ones fundamental opinion, ie that profits are still what sustains a business, lol, not just debt and revenues, were de facto just as irrelevant, weren't they ?

As far as that goes one was "right", but prices still roared right on up, didn't they, ignoring ones rightness and all ?

So the only ones who were right AND made money were the technical analysts, who didn't care about any funnymentals, they simply rode the trend up, and then right on back down.

Like Mr. Keynes rightly observed, you can be right as hell in your analysis (OK that part is mine), but the market can still stay irrational far longer than you can stay solvent.

So, funnymental opinions are just that, opinions that may be nice to have, but that should otherwise be stringently ignored in ones trading decisions, other wise you would have spent 5 years in the 90's watching others making excellent money while you were losing it hand-over-fist.

firewalker99 said:

I invite those who think TA is a step behind, to post a chart where some report, economic figure or news release clearly illustrates how to get in before the public does.

I suspect it will be a long wait.

Click to expand...

I think i've got one somewhere, just hold on...