Wall Street = Casino. Minus Sum Game.

[DionysusToast]

Yes, it's probably not surprising that spreadbetting companies are falling over themselves to provide clients with information and training about TA, and more indicators than you can shake a stick at.

I imagine they do not do this out of a sense of philanthropy, but I could of course be mistaken.

Spot on !

It makes people trade more for one thing and does little to get them on the right side of the trade.

All the time - the SB company captures the spread. I would wager that most don't need to lay off the bets as most punters would get stopped out by the 'wiggle' even if they got the direction right.

Also - let's not forget that money can be made without predicting the direction too, yet the whole industry focuses most on giving people crystal balls.

 

[GladiatorX]

DionysusToast - What is your point about earnings ?
I watch them and evaluate them for the stocks i'm watching, but i don't see any particular profit in the trading of the actual earnings - The institutions and the people that care have better connections and algorithms to react to that news too quick for the retail traders, earnings and there effects are very very efficient; usually it happens overnight too which makes it even harder.

So; You believe earnings are important to watch ? But for what purpose ? To identify a stock that, having had good earnings and gapping up has the POTENTIAL for momentum.

I'm just wondering the context of what you are saying; i totally agree with you as of yet, and i try to follow a lot of what you have said in my own trading - But are we talking about using fundamentals to identify potential movers for the days trading in trading INDIVIDUAL STOCKS OR to get a guage of sentiment OR to establish a fundamental trend for longer term trading of a market ?

What particular topic are you talking about ? - Day trading stocks and how you need fundamental filters to find movers for the day .... Or futures and how you need news to give sentiment and to identify the weight of a move or ?

Cheers.

:medieval:

 

[arabianights]

Dionysus, methinks you're wasting your time, most don't wanna be told

 

[GladiatorX]

Dionysus, methinks you're wasting your time, most don't wanna be told

arty: Isn't she lovely.

Because being random, is ok.

:medieval:

 

[arabianights]

arty: Isn't she lovely.

Because being random, is ok.

:medieval:

Not you old boy, I think you can be told

 

[GladiatorX]

Not you old boy, I think you can be told

I was just being random; nothing to do with the context of the thread.

:medieval: (Hopefully this sticks... although so far it doesn't seem too cool)

(OMG HE WINKED AT ME )

 

[DionysusToast]

DionysusToast - What is your point about earnings ?
I watch them and evaluate them for the stocks i'm watching, but i don't see any particular profit in the trading of the actual earnings - The institutions and the people that care have better connections and algorithms to react to that news too quick for the retail traders, earnings and there effects are very very efficient; usually it happens overnight too which makes it even harder.

So; You believe earnings are important to watch ? But for what purpose ? To identify a stock that, having had good earnings and gapping up has the POTENTIAL for momentum.

I'm just wondering the context of what you are saying; i totally agree with you as of yet, and i try to follow a lot of what you have said in my own trading - But are we talking about using fundamentals to identify potential movers for the days trading in trading INDIVIDUAL STOCKS OR to get a guage of sentiment OR to establish a fundamental trend for longer term trading of a market ?

What particular topic are you talking about ? - Day trading stocks and how you need fundamental filters to find movers for the day .... Or futures and how you need news to give sentiment and to identify the weight of a move or ?

Cheers.

:medieval:

I used earnings as an example.

- Earnings are one of many things you should watch.
- The guidance that comes alongside those earnings is more interesting.
- Market makers/specialists do mark earnings stocks up/down at the open so that if they do become seller/buyer of last resort, then they do so at a price that doesn't get them kiled. Note that they only become best bid/ask if no-one else does. When they become inside bid/ask, they control the price
- if an MM/specialist does become buyer/seller of last resort - they will try to make their losses back
- Algos do nothing to stop you making money from a move, even an earnings move - check out Mr Charts thread
- Earnings can be used in a number of ways - swing traders may want to avoid an entry around earnings time.

Earnings is just an example of 1 predictable thing that can affect price. Understanding the markets will show you that there are many such things.

How you use such information - day trading, swing trading is up to you.

Not using it can cause you losses that you could have foreseen.

 

[DionysusToast]

From another thread but quoted because it is put so eloquently

As they say:
"A million here, a million there, and pretty soon you're talking about real money.”

(Widely quoted, e.g. in the article linked below)​

Offshore Asset Protection BLOG - Bob Bauman: Millions, Billions, Trillions - You're Talking Real Money


According to Gary Norden ("Technical Analysis and the Active Trader") the reason technical traders are always going on about their psychology is that TA is so unreliable. The majority of retail traders (and especially newer traders) are trading technically. Most trading "education" (especially that pushed by the brokers) is in technical trading. People are encouraged to believe that everything they need to know about the market is contained within the price. They come to believe, and are not discouraged in this belief, that technical analysis has been "proved" scientifically. (He quotes several studies which tend to disprove this). Since the majority of (especially new) traders lose, and since the majority are using TA, and since they have been told that TA "works", they think to themselves "It must be me who's at fault. My psychology is all wrong. I need to get into the zone ..." (or whatever).

As I've said elsewhere, I think he somewhat overstates his case (not all technical traders are alike; not all technical traders use the indicators or particular patterns he is so critical of; etc). Nevertheless it gives one pause for thought.

 

[Xeno]

the reason technical traders are always going on about their psychology is that TA is so unreliable.

I don't think anyone is denying that TA is hyped and people are encouraged to use it etc, but people need to be clear about things. TA itself is not unreliable. It is what it is, and what it tells you is true. What is unreliable is using TA to trade when you have no confidence that your system has an edge. In that case, or if you don't even know what an edge is, yes, it really is psychology to blame (with apologies to those people whose psychology is fine but they're just stupid ;-)

 

[DionysusToast]

I don't think anyone is denying that TA is hyped and people are encouraged to use it etc, but people need to be clear about things. TA itself is not unreliable. It is what it is, and what it tells you is true. What is unreliable is using TA to trade when you have no confidence that your system has an edge. In that case, or if you don't even know what an edge is, yes, it really is psychology to blame (with apologies to those people whose psychology is fine but they're just stupid ;-)

I disagee.

TA tells you what has happened so far. It does not tell you what will happen.

 

[Xeno]

I disagee.

TA tells you what has happened so far. It does not tell you what will happen.

Re-read my post. I said what it tells you is true. That is a fact. At no point did I say it tells you what will happen next.

A moving average is just that. A moving average. The only thing it tells you is the value of the moving average, but what it tells you is true.

 

[DionysusToast]

DionysusToast - What is your point about earnings ?
I watch them and evaluate them for the stocks i'm watching, but i don't see any particular profit in the trading of the actual earnings

OK - keep an eye on KMP today. There has been a big build up in price - so the technicals were 'predicting' a good earnings result. They released last night below expectation. So - high expectations & poor earnings. You may well find this is one you can get on board.

If a better example comes up - that I can also post here, unedited, before the open - I will do.

 

[DionysusToast]

Re-read my post. I said what it tells you is true. That is a fact. At no point did I say it tells you what will happen next.

A moving average is just that. A moving average. The only thing it tells you is the value of the moving average, but what it tells you is true.

Xeno - explain this :

"What is unreliable is using TA to trade when you have no confidence that your system has an edge."

Surely that implies that you think a pure TA based system can have an edge ? This also implies that TA is predictive.

 

[DionysusToast]

XLNX too - price droped before earnings but earnings & guidance up - let's hope the employment numbers don't put a damper on things.

 

[Xeno]

Xeno - explain this :

"What is unreliable is using TA to trade when you have no confidence that your system has an edge."

Surely that implies that you think a pure TA based system can have an edge ? This also implies that TA is predictive.

Well, yet again this is the crux. The difference between an indicator predicting what happens next with a good degree of certainty and TA being used to develop a system that has a definable edge is the difference between the losing majority and the winning minority.

Yes TA is predictive, but only in the probabalistic sense you so love. There's no contradiction between an indicator's predictive power being described as unreliable, and a TA system having an edge defined by testing over a very large sample.

 

[DionysusToast]

Well Xeno - I have seen zero evidence that any combination of indicators can produce a winning system.

All indicators are derived from a very limited set of information - mostly price & volume, so I'm lost as to how combining a number of things that all work on the same data set could possibly provide an edge.

I think the edge is discretion.

 

[Xeno]

Well Xeno - I have seen zero evidence that any combination of indicators can produce a winning system.

Really? I thought you'd read market wizards ;-)

Surely you'd be the first to say that just because you haven't seen it it doesn't mean it doesn't exist.

So, out of interest, just how much work have you put into trying to produce a pure TA system with an edge?

 

[arabianights]

Well Xeno - I have seen zero evidence that any combination of indicators can produce a winning system.

Have a look at the MLM index; decent evidence for trend followers (and the definition is very simple, involves a couple of moving averages if I recall) earning excess risk premium in certain asset categories.

 

[temporarilylight]

Is the case that, unless your TA system works on all instuments and over a very large sample set over a long period of time, then it is just coincidence/luck that it is currently making money on say, the ES, and will stop soon?

 

[arabianights]

Is the case that, unless your TA system works on all instuments and over a very large sample set over a long period of time, then it is just coincidence/luck that it is currently making money on say, the ES, and will stop soon?

Probably; depends upon the instrument. Certain instruments "ought" to trend, such as foreign exchange and commodities, others "ought not", such as the stock market and thus ES (once we adjust for risk, of course).