How was life b4 TA?

[grubs50]

It seems that Technical Analysis (TA) is now such a big part of every traders armoury but how did the early stock traders trade(i.e did Warren Buffet start off using TA?) and does any serious or professional trader trade without using TA.........I'm just curious, hopefully someone will enlighten me.

 

[Newtron Bomb]

My neighbour trades short to medium term which for him is 6month to 12 months.

He does his research from reading the FT & other mags like IC & shares, gauging the perceived strength or weakness and then times his selections based on news related items.

I am amazed at his success and how he does it in the first place... but then when i have sat him down and showed him a chart of a stock he was looking at explaining my interpretation he has been equally amazed.

Regards
NB

 

[darrenf]

TA has been aroud for years. Candlestick charting has been used in Japan (originally by futures traders I beleive) and basic Dow theory etc has been around since the early 1900's. I would say TA has been around for at least 100 years in some form or another. Basically, for as long as modern financial markets have existed, TA has been there for those who wish to use it, whether paper based or more recently technology based.

Warren Buffet traded/ invested based on fundamentals. This comes back to the old argument of Fundamental v technical analysis.

IMHO, fundamentals/ value etc are more suited to LTBH investing.
For most shorter term "traders". ie those who speculate on a shorter term price movement (long or short) over usually several minutes to several days/ weeks, I am pretty sure that the vast majority will use TA of one form or another.

 

[grubs50]

so can one swing trade without TA?

 

[FTSE Beater]

Hi Grubs50

I would say no. In order to swing trade you need to know that there has been a swing in price. To do that you would either need to put it on a chart or remember the numbers of what is has done. If you do the latter then what your technically doing is drawing a chart in your mind

 

[grubs50]

but if it is done in d mind using figures based on what can be regarded as supply and demand.......i suppose supply and demand would represent support and resistance on a graph....

 

[Moriarty]

I think that swing trading is possible without charts, but certainly the easiest way to assimilate the oscillation of prices up or down is to look at a chart. In the book "How to trade in Stocks" by Jesse Livermore there is a sample of how he used to classify stock prices in terms of upward or downward trend, secondary rally or reaction and so on. He used to colour code his records to help him determine entry and exit prices. The old tape readers traded simply by reacting to the numbers coming off the tape, and I guess all they were doing was swing trading.

I must admit though, I wouldn't fancy it, give me a chart to misread any day.....

 

[TBS]

It seems that Technical Analysis (TA) is now such a big part of every traders armoury

It may surprise you to know that there are relatively few professional prop traders that use TA. Most cover very specific markets and become so involved that they basically know the levels that matter and the way the product trades

 

[Zenda]

Dan Zanger uses Patterns an Volume - Jesse Livimore - (1923) by Edwin Lefevre - Read the Tape and the board - But if we didn't have TA - the Bookshelves would be empty - the software manufacturers would not be selling trading platforms - it would cut down my emails daily by 70% - this site would not exist- Vince and Darren would be on the dole! All the spreadbetting companies would suffer (poor things) and we would lose such outstanding contributions to world finance like the Goldline System!!! (about £5 grand - The Midas System !!!- the MCI system!! (about 5K) the Trend following system as advertised on ADVFN (about £4K) Turtles and uncle Tom Cobbley ....................I'd even struggle selling CD's

 

[trendie]

Doji Darren could always get a job as a butler !!
His spiel is that he learnt from the masters by offering to cook and clean for them

"Turtles" ; I would rate them as OK - but their rules are free !

 

[Glenn]

People were plotting PnF charts by hand in the late 1880's I believe.
And some people still do
Glenn

 

[zarif]

The Japanese Candle sticks were used by the Japanese rice farmers circa 1500 onwards.Steve nison being one of the pioneers to bring it to the West. But the second part of the candlesticks called the IchiMoku system is still hardly known to the West.

 

[oatman]

How many rich Japanese rice farmers do you know? :cheesy:

 

[zarif]

Oatman -exactly not rich farmers -but the Shoya (the mney lenders/brokers) used this as futures trading for rice crops.The poor farmers didnot exactly have a good time specially when any samurai decided he needed sword practice.

 

[stevet]

fundamental trading was the predominant type of trading until relativley recently - but meant longer term trades whilst markets caught up with fundamentals - nowdadays markets trade off sentiment relative to envisioned fundamentals - so without TA - you'd be pretty screwed

 

[nobrainer]

TA.... Who needs it to trade?Its a waste of time.The money is on Level 2.....that's where the action is ..not on some dumb old chart.Daytrading is about emotion, sentiment, L2 ,newsflow and US futures.