Technical analysis... a load of ********

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Old Aug 9, 2007, 11:10am   #1
 
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Technical analysis... a load of ********

I use RSI, Stochastics, Moving Averages, MACD and Fibonacci Retracements. Someone I know who has worked in investment banking and heads up a team of traders said that all these methods and the shapes were "a load of ********"; that the real price is the current price; that up and down movement is completely random.

Any thoughts? It seems to work for me, which has made me confused a bit.
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Old Aug 9, 2007, 11:24am   #2
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what does he say to the traders he heads?
alright lads you know its all random lets press a couple of buttons for no purpose whatsover go home and do the same again tommorrow
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Old Aug 9, 2007, 11:41am   #3
 
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shadowninja started this thread

He mentioned hedging but I don't really understand it so can't relay the info.
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Old Aug 9, 2007, 11:46am   #4
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cant much point in hedging a trade with no edge with another trade with no edge.
must be some kind of arb operation
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Old Aug 9, 2007, 12:21pm   #5
 
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It's quite possible that if you're trading market neutral strategies such as calendar spreads you may not need so many indicators.

If you're dealing in millions you can move the market.

I've seen far to many price patterns such as triangles, fib level rejections to dismiss them as random, or patterns in certain indicators which can actually forecast price movement.
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Old Aug 9, 2007, 12:23pm   #6
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All TA works some of the time, and at other times it does not. The trick is to have wins outnumber losses, if not in % of trades terms, then in bottom line profit.
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Old Aug 9, 2007, 1:09pm   #7
 
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Quote:
Originally Posted by shadowninja View Post
I use RSI, Stochastics, Moving Averages, MACD and Fibonacci Retracements. Someone I know who has worked in investment banking and heads up a team of traders said that all these methods and the shapes were "a load of ********"; that the real price is the current price; that up and down movement is completely random.

Any thoughts? It seems to work for me, which has made me confused a bit.
If whatever you're doing works for you, then it doesn't make a bit of difference what anybody else says.

Listen to the chart and tune out everything else and everyone else.

Db
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Old Aug 9, 2007, 4:26pm   #8
 
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Originally Posted by shadowninja View Post

that the real price is the current price; that up and down movement is completely random.

.
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Old Aug 9, 2007, 5:53pm   #9
 
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Quote:
Originally Posted by shadowninja View Post
I use RSI, Stochastics, Moving Averages, MACD and Fibonacci Retracements. Someone I know who has worked in investment banking and heads up a team of traders said that all these methods and the shapes were "a load of ********"; that the real price is the current price; that up and down movement is completely random.

Any thoughts? It seems to work for me, which has made me confused a bit.
I love it!!! How much is he paid?????

Since the Wall Street Crash, the value of the markets has gone up. Is that random good fortune?
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Old Aug 9, 2007, 5:56pm   #10
 
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Originally Posted by dbphoenix View Post
If whatever you're doing works for you, then it doesn't make a bit of difference what anybody else says.

Listen to the chart and tune out everything else and everyone else.

Db

I Agree!
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Old Aug 9, 2007, 6:35pm   #11
 
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shadowninja started this thread Yep, don't get it either. He's a professional and I'm a rank amateur so who am I to argue.
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Old Aug 9, 2007, 6:44pm   #12
 
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I wonder what a blind man would say about indicators when asked to land a 747 with 200 passengers on board?

The fault lies not with the indicators but....

Found this post which I'd saved from ages ago. Sorry I can't remember who wrote it.

The market has a language & many fail to interpret this language, in frustration some say: "the markets are random", "the markets are bigger than me & you", "the markets are impossible to beat". Some traders even resort to far flung theories, example: claiming that a powerful group of individuals are controlling the markets, as the reason why they are taking a pounding. It's very simple, either you get it or you don't get it. Trading is not suited for averyone, just as being an attorney is not for everyone.

Some traders defy the typical learning curve & excel from day one, that is an excellent gift to have. Unfortunately, for many, a rocky road is the price for learning this profession. Experience cannot be wished for & served on a hot platter, it must be earned.

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Old Aug 9, 2007, 7:53pm   #13
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Those who trade as individuals will not be able to trade in the same way as those trading for institutions. Based on this they will use different approaches to their trading as, in the main, they will be profiting based on small inefficiencies which when combined with the large size they trade will give profits.

The rest of us have to find approaches that exploit bigger inefficiencies but on a smaller scale that would just not interest the larger players. Grey1 has posted on exactly this topic and this is how he consistently profitably trades. He has developed an approach that finds large inefficiency that he can then trade knowing that the market will move back to an efficient system.

In my view to try and copy the large players will result in ongoing losses so it isn't worth considering.


Paul
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Old Aug 9, 2007, 7:56pm   #14
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I wonder what a blind man would say about indicators when asked to land a 747 with 200 passengers on board?
I have no idea.

Neither does anyone else.

What are you smoking....?
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Old Aug 9, 2007, 7:59pm   #15
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Originally Posted by shadowninja View Post
I use RSI, Stochastics, Moving Averages, MACD and Fibonacci Retracements. Someone I know who has worked in investment banking and heads up a team of traders said that all these methods and the shapes were "a load of ********"; that the real price is the current price; that up and down movement is completely random.
If it were completely random, you would expect most people to eventually lose due to slippage, commissions, costs etc. Basically, even if they got it right 50% of the time, at random, they'd lose to overheads.

But the thing is, they don't lose eventually, they lose very quickly. Most of them.

It isn't random.
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