TA or not TA? Tis the question

[jkplay]

Hello All,

Reading through various threads on this forum I see pretty much all of the regular posters seem to be very much chart based in their trading and in the justification of their decisions. Do you adopt technical analysis as a rule of thumb when placing trades or on certain instruments do the fundamentals sometimes weigh heavier, or even be the only point of focus? Do you feel that taking a technical approach is the most effective method (based on the failure of alot of the quant based funds I am starting to question this) or find a balancing point between TA/FA depending on a mix of current economical condition and instrument?

I trade mainly off the economical indicators and have grown to learn how various instruments react to various publications. When placing stops I do so a a level that has historically had alot of buying/selling interest that tends to bounce the market in the other way of my position.

Are there any pure chartists posting on here? Or do most on this board take a real mid/long term economical outlook when entering positions.

Im very interested to hear your approaches - your EDGE?? .

JK

 

[jkplay]

I think it is a tactic traders use mainly to justify spending so much time at their computers during the day while most people are working :cheesy:

JK

 

[nine]

If you are so convinced about fundamentals why not tell us about your edge?

 

[jkplay]

If you are so convinced about fundamentals why not tell us about your edge?

Im not here to sell a strategy or tell people how to trade - im just interested in the techniques you guy's use. I not convinced about 'funnymentals'' but what made cable go through the roof? What made the dow shoot up a month or so ago? Could you predict those movements with charts or are the moves purely fundamental?

Any real traders please let me know - I don't have a view but have adopted a strategy I find successful and am curious what other guy's are doing and how successful they are.

JK

 

[shadowninja]

Could you predict those movements with charts or are the moves purely fundamental?

May I be so bold as to suggest that this sentence hints that you don't understand the purpose of TA. It is not to predict the movement so much as to give you a probability of an event happening that you can base a trade on. That's my understanding, at least. As for sudden spikes, well, if they change the trend then your stops will be hit, take it on the chin, walk away and play tomorrow. (I trend trade, of course.)

I only use TA but I am aware of when news is being released so if I am considering opening a position I might hold off until the storm settles. I do have a macroeconomics book that keeps the other books straight...

 

[PIPmaker]

Ta!

For me: TA only!

Why?
Make an assumption of another assumed assumption. Later on half of the people will say "the market was crazy".
TA includes the results of assumptions and more important: it's actual actions!

Interestingly, many traders use TA to make even more assumptions instead of looking what the market really does. Big NO NO!

> Never assume the market will turn around! (i.e. follow the trend for a while).

It works every time. see the 3 weeks window ...

 

[Lightning McQueen]

Playground Fistycuffs!!

OK Guys I've cleaned up your mess

Continue the thread in a civilised way please.

Thank you

 

[shadowninja]

OK Guys I've cleaned up your mess

hehe I did think this thread was two pages last night. Thought I was going mad having just had 4 hours of sleep.

 

[Rhody Trader]

... Do you feel that taking a technical approach is the most effective method (based on the failure of alot of the quant based funds I am starting to question this) or find a balancing point between TA/FA depending on a mix of current economical condition and instrument?

You do realize that these quant funds are not just employing technically oriented strategies, right?

I trade mainly off the economical indicators and have grown to learn how various instruments react to various publications. When placing stops I do so a a level that has historically had alot of buying/selling interest that tends to bounce the market in the other way of my position.

This sounds like a combination of news trading and technicals.

As for me, it depends on the market. In stocks I want the fundamentals to agree with the technical direction I'm trading. In other markets I'm strictly technical.

 

[jkplay]

This sounds like a combination of news trading and technicals.

As for me, it depends on the market. In stocks I want the fundamentals to agree with the technical direction I'm trading. In other markets I'm strictly technical.

Hey Rhody,

Yeh it certainly is a mix of ta and fundamental but I tend to sway more towards the fundamentals when deciding to go long or short, or even when deciding what market to trade.

Have you seen the carry trades go flying down today? I would take the view that thats due to the fact that people are getting out of their long equity portfolios and becoming more risk adverse as the credit crunch starts to rear its ugly head again.

Based on those facts I can see several potential trades but if I was looking at a graph waiting for gbp/jpy to hit key support, in these condidions, I can't see it going up much until we see the dow heading back towards the 14000 mark.

I think it does certainly come down to timeframes and everybody adopts a different strategy.

Im glad you contributed.

JK

 

[jkplay]

May I be so bold as to suggest that this sentence hints that you don't understand the purpose of TA. It is not to predict the movement so much as to give you a probability of an event happening that you can base a trade on.

I only use TA but I am aware of when news is being released so if I am considering opening a position I might hold off until the storm settles. I do have a macroeconomics book that keeps the other books straight...

Hi,

I do understand the purpose of TA and am sure there are hundreds of traders making lots of money off it, in relatively normal markets conditions. It is a tool used to justify placing a trade and find key levels to get in/out.

I could never place a trade without taking the fundamentals into account, are there any on here that do?

JK

 

[Rhody Trader]

Yeh it certainly is a mix of ta and fundamental but I tend to sway more towards the fundamentals when deciding to go long or short, or even when deciding what market to trade.

I asked about "news" specifically because it sounded like you traded the reaction of the market to data releases and the like. To my mind, that's not fundamental trading so much as market reaction trading. You aren't trying to determine value or growth rates or anything like that.

That said, it does also sound like you do use more proper fundamental ideas in your trading.

 

[Rhody Trader]

I could never place a trade without taking the fundamentals into account, are there any on here that do?

When I trade forex I definitely do.

 

[nine]

Hi,

I do understand the purpose of TA and am sure there are hundreds of traders making lots of money off it, in relatively normal markets conditions. It is a tool used to justify placing a trade and find key levels to get in/out.

I could never place a trade without taking the fundamentals into account, are there any on here that do?

JK

End of day I've trade cotton, corn, wheat, rice, oats, crude, gas, bonds, four currencies and stocks using solely TA - never the faintest about the fundies. However if I was eod trading I would actually use fundies now for a bias and to avoid entry just prior to major news events.

I have traded estx50, bund, eurfx and hsi solely with TA intraday.

I currently trade spi, stw and sgxnk soley with TA intraday.

FWIW I don't use volume, its never spoken to me clearly, just price with mas. I don't even pay attention to news events with these contracts although I used to exit prior to US news with eurfx. This has been my living since 911.

 

[shadowninja]

I could never place a trade without taking the fundamentals into account, are there any on here that do?

TBH, I don't know enough about how one particular announcement would affect a currency; I just wait for a market reaction to whatever the news is, whether it's 10% increase in unemployment figures or head of fed wears frilly knickers, and ride the wave. I am like a surfer in that respect. I don't try to control the sea or even predict whether it's going to be the right weather. I sit on the beach and wait for the waves to start heading into the shore.

 

[salska]

Considering that 95% of traders lose money and they all probably use "TA", that to me would suggest that they have no edge worth following. If you are a trend follower, then you need to decide if there is a trend and jump on.

95% of traders don't do that. They will short it because they think they are contrarian. The principle of being a contrarian is a good one, but you need to have the tools to do that and I can assure you that using moving averages, ADX, stochs, MACD and all that other tripe will simply lose you money.

Even Elliott Wave theory is untradeable as there are always Two possibilities? Yeah we kind of guessed that the market can go up or down.

Check out some of my more recent posts where you will find a link to something that works quite nicely.

Good luck and apologies to the 5% of winning traders who can make money using TA. I am one of them but my system relies upon nothing more than a trendline and a spotcheck of the price bar on my chosen timeframe. Simple but effective!!

 

[nine]

To suggest that the losses of the 95% are caused by TA is disingenuous at best. Method is frequently blamed but rarely the cause. More grail deception.

At ET there is a P&L thread where those free to do so can post their blotters and it provides an opportunity for contemplation. A quick check of earlier posts shows that there is no FA in the strategy of those who have 10,000+ days or those who regularly pull over 2,000 a day. It also effectively addresses the "day trading doesn't work" myth.

 

[salska]

To suggest that the losses of the 95% are caused by TA is disingenuous at best. Method is frequently blamed but rarely the cause. More grail deception.

At ET there is a P&L thread where those free to do so can post their blotters and it provides an opportunity for contemplation. A quick check of earlier posts shows that there is no FA in the strategy of those who have 10,000+ days or those who regularly pull over 2,000 a day. It also effectively addresses the "day trading doesn't work" myth.

95% of traders lose money. I am not talking about people who paper trade and post their results on a BB. Trading with real money requires a method that is solid. If a trader were to follow a mechanical and unemotional method using any of the techniques that are common on most charting packages they will find themselves bankrupt very quickly. Backtest any mechanical TA-based method and you will see the results are appalling.

If someone asked you to swim across a lake and mentioned that 95% of previous swimmers were eaten by the crocodiles would you go for it?

Who am I to dispute or verify what people say they earn on ET? If you can consistently earn £2k per day by watching an assortment of lagging indicators then you are in the 5%. Nice one!

 

[Rhody Trader]

95% of traders lose money. I am not talking about people who paper trade and post their results on a BB. Trading with real money requires a method that is solid. If a trader were to follow a mechanical and unemotional method using any of the techniques that are common on most charting packages they will find themselves bankrupt very quickly. Backtest any mechanical TA-based method and you will see the results are appalling.

If someone asked you to swim across a lake and mentioned that 95% of previous swimmers were eaten by the crocodiles would you go for it?

Who am I to dispute or verify what people say they earn on ET? If you can consistently earn £2k per day by watching an assortment of lagging indicators then you are in the 5%. Nice one!

Won't disagree here, but would also say that technical analysis doesn't necessarily have to have anything to do with indicators.

 

[retired_brian]

TA is good

Can NOT agree with Salska that 95% of TA users lose money. (where did that come from?)

I Use TA almost exclusivly (with Fundamentals to back up longer term trades).

For shorter term trades or Spread bets Fundamentals are not much use, as I do not care what a company will do in 6 months or more.

I make profits NOT just a therotical position.