Daily tips

[Justin Thyme]

Hi

I've been trading for a few weeks now and apart from a sobering loss on crude futures recently, have had decent results using daily position tips from a subscription share-tipping service.

Thing is I don't really want to rely on their tips long term and with that in mind, have thought about buying a book about technical analysis as I've been told that this can be invaluable in deciding which instruments to trade.

I think a lot of the guys on here use technical analysis so I just wondered whether the concepts are particularly difficult to grasp. I mean, I'm not gonna need a degree in economics to make use of this stuff, am I ? The book I'm considering is "Technical analysis in your language" by Michael N. Kahn. If anyone's had any exposure to it, could you tell me if it was mind-bending ?

 

[Snownation]

I would say half your decision on a position is based on TA alone. The other half is information and tips, and fundamentals.

 

[shadowninja]

I'm a simpleton and I "get" TA... the main issue in trading is the beast within.

 

[Rhody Trader]

To be completely honest, I suspect that a great many of the folks here who use technical analysis do so because it's easier.

Now before anyone tried to jump all over me for saying that, or jump into technical trading with too feet as the easiest path the market profits, let me explain.

I am not saying that the application of, or trading with, technicals is easier than doing so with fundamentals (or anything else). All I am saying is that access to technical analysis tools and information is more readily available. After all, you can get charts with most of the commonly used indicators on just about every trading platform out there these days, and on loads of free websites too. Plus, there are packages like TradeStation and Metastock you can use that will let you do just about anything you can imagine.

Doing fundamental analysis takes a bit more work, especially for someone just getting started. Also, the fundamental information and/or the market's reaction to it doesn't always make intuitive sense, particularly if you haven't been around the block a few times.

The irony is that while I think most people will understand fundamental analysis (company earnings go up, stock price goes up), not as many will use it as technical analysis because of the ease in using the latter, but there are a lot of technical traders who don't really understand technical analysis.

As to the issue of picking which instruments to trade, I would argue that has little to do with your market analysis. It's a question which needs to be answered in large part seperately from your analytic methodology.

 

[Justin Thyme]

It looks quite difficult and on the tips I get, although it really does look as though the chartist has essentially just drawn a random line across the graph and built a strategy around it. Blinding them with science comes to mind . . .

it sounds as though you guys think it's fairly easy to learn technical analysis and whilst I would never rely on it solely to back my decisions, lots of folks swear by it so I guess it can't be worthless.

 

[dbphoenix]

It looks quite difficult and on the tips I get, although it really does look as though the chartist has essentially just drawn a random line across the graph and built a strategy around it. Blinding them with science comes to mind . . .

it sounds as though you guys think it's fairly easy to learn technical analysis and whilst I would never rely on it solely to back my decisions, lots of folks swear by it so I guess it can't be worthless.

Depends on what you mean by "technical analysis": price (and volume) action, chart patterns, and/or indicators. Depending on whom you talk to, some of it is indispensable, some of it worthless. And it can be difficult or easy. See http://www.trade2win.com/boards/showpost.php?p=363130.

Db

Incidentally, love the name. Do you have a brother named Basil and a sister named Rosemary?

 

[Justin Thyme]

Depends on what you mean by "technical analysis": price (and volume) action, chart patterns, and/or indicators. Depending on whom you talk to, some of it is indispensable, some of it worthless. And it can be difficult or easy. See Trade2Win Boards - View Single Post - How do technical traders fit into the greater scheme of things?.

Db

Incidentally, love the name. Do you have a brother named Basil and a sister named Rosemary?

Ah the name, yes . . came up with it after managing to duck out of the London property bubble at the end of August this year and still keep my scalp :cheesy:

I want to be able to look at a chart and spot indicators as to where a stock has a probability of moving next.

 

[DT]

it sounds as though you guys think it's fairly easy to learn technical analysis and whilst I would never rely on it solely to back my decisions, lots of folks swear by it so I guess it can't be worthless.

lots of people swear by homeopathy despite medical professionals and scientists pointing out that it is complete load of b0!!*cks

unfortunately a great deal of technical analysis is also complete rubbish IMO; subjective chart patters, elliot waves, fibbonacci numbers, the latest home made jesus indicator etc... people will swear/'believe' that these things work just as people 'believe' in homeopathy, astrology, creationism/intelligent design and many other forms of pseudo science despite there being no real evidence for alot of it.

If you want to learn about technical analysis then the murphy book would be a good purchase however - just be careful - looking at a chart and drawing some lines/adding some indicators is much easier than other forms of analysis which is probably why TA is so popular amongst retail investors - it doesn't mean it is all going to work though - alot of it probably won't.

 

[Dinos]

Justin

if your looking to understand TA, it can be a mindfeld for the untrained, what indicators to choose, which one does what etc. I use TA as a mainstay of my trading and employ different strategies dependant on the timeframe I am trading, long to short term swing to day trading.

If you are new to trading, have a look in trading strategies, for a system by Ceydababy, simple but effective, it can be used from the 1 min t/f for scalping through to the longer terms holds, I'm not saying you should trade that system, but simply have a look at the merits of paper trading such a system to try gain some idea how TA can help assist in making the right decision.

However, whichever system I employ, I always trade with the trend, if I get my entry timing wrong, theres a good chance I will get out unscathed, get it wrong against the trend, theres a good chance I'll get hammered.