Hi, I’m a newbie and this is my first post, so hi to all... 
Please feel free to laugh, shout, tell me how stupid I am, I’m new and learning so I accept I will make mistakes, the secret is not to make the same ones again!!
I have been reading the threads about Technical Analysis and Strategies and I accept that a Strategy is imperative if you want to SB coherently, otherwise you will not be able to recognise your weaknesses or exploit strengths. However, I am not so sure about TA... my problems are these:
1. TA is backward looking and I want to look forward.
2. Can TA really identify the psychology that is driving the trader to make their decisions?
What I am trying to say is that if you are SB and are closing all your positions on the day and carrying nothing overnight then it is my belief that any change in market price that day will be driven by the underlying psychology of the traders and not any real movement in the balance sheets of the equities that make up any Index you may be trading/tracking.
I do realise that there are certain caveats to that statement such as external factors that can cause a shift in price pattern as opposed to a movement along a price pattern (such as breaking news stories; changes in interest rates, natural disasters; etc.)
Let me give an example, on the opening of the FTSE this morning I took a short position based on the following:
1. The announcement of the travel firm Flight Option going bust.
2. BHP’s hostile takeover announcement.
3. The general level of uncertainty in the market and the concerns over fading recovery and double-dip recession.
4. The previous day’s gains.
5. A few more bits and pieces, too obscure to mention.
This led me to believe that if I was a myopic professional trader and just saw a third travel company in a month go bust; a hostile takeover which if successful will result in the bidder paying a premium for the target, the bidder being a larger constituent of the FTSE; that I would take my previous day’s profit and cash out.
Now I’m no expert, and maybe I am interpreting things incorrectly, and maybe this morning was beginners luck?!? But I don’t think that TA can measure that sentiment – even if it existed – what is for sure is that the FTSE dropped on the 8am bell.
So my questions are thus:
1. Do you feel that intraday price movements are driven by investor sentiment more than underlying data (external shocks excluded)?
2. And if so, How do you measure that sentiment? Can it be done with TA?
3. And if it can be measured, Can you recommend any reading material that is worth the price of the postage?
Sorry if this is rather long winded; tell me to shut up now.
I look forward to your replies, thanks,
watty
Please feel free to laugh, shout, tell me how stupid I am, I’m new and learning so I accept I will make mistakes, the secret is not to make the same ones again!!
I have been reading the threads about Technical Analysis and Strategies and I accept that a Strategy is imperative if you want to SB coherently, otherwise you will not be able to recognise your weaknesses or exploit strengths. However, I am not so sure about TA... my problems are these:
1. TA is backward looking and I want to look forward.
2. Can TA really identify the psychology that is driving the trader to make their decisions?
What I am trying to say is that if you are SB and are closing all your positions on the day and carrying nothing overnight then it is my belief that any change in market price that day will be driven by the underlying psychology of the traders and not any real movement in the balance sheets of the equities that make up any Index you may be trading/tracking.
I do realise that there are certain caveats to that statement such as external factors that can cause a shift in price pattern as opposed to a movement along a price pattern (such as breaking news stories; changes in interest rates, natural disasters; etc.)
Let me give an example, on the opening of the FTSE this morning I took a short position based on the following:
1. The announcement of the travel firm Flight Option going bust.
2. BHP’s hostile takeover announcement.
3. The general level of uncertainty in the market and the concerns over fading recovery and double-dip recession.
4. The previous day’s gains.
5. A few more bits and pieces, too obscure to mention.
This led me to believe that if I was a myopic professional trader and just saw a third travel company in a month go bust; a hostile takeover which if successful will result in the bidder paying a premium for the target, the bidder being a larger constituent of the FTSE; that I would take my previous day’s profit and cash out.
Now I’m no expert, and maybe I am interpreting things incorrectly, and maybe this morning was beginners luck?!? But I don’t think that TA can measure that sentiment – even if it existed – what is for sure is that the FTSE dropped on the 8am bell.
So my questions are thus:
1. Do you feel that intraday price movements are driven by investor sentiment more than underlying data (external shocks excluded)?
2. And if so, How do you measure that sentiment? Can it be done with TA?
3. And if it can be measured, Can you recommend any reading material that is worth the price of the postage?
Sorry if this is rather long winded; tell me to shut up now.
I look forward to your replies, thanks,
watty
