Most stock market participants view charts with disdain..

[CityTrader]

A view I have always had, and frequently mention whenever anyone ever asks me, BUT todays ( Sat) Times, page 57 Robert Cole commentary claims that his contacts have finally found a use for charts- to cover up his insider dealings! his view of charts :-

" I thought he would agree with me (and most of the rest of the stock market community) in viewing charts as hocus-pocus"

Now I guess the Insider dealing argument is a whole different ball game, but and interesting article never-the-less..

CT

 

[Splitlink]

A view I have always had, and frequently mention whenever anyone ever asks me, BUT todays ( Sat) Times, page 57 Robert Cole commentary claims that his contacts have finally found a use for charts- to cover up his insider dealings! his view of charts :-

" I thought he would agree with me (and most of the rest of the stock market community) in viewing charts as hocus-pocus"

Now I guess the Insider dealing argument is a whole different ball game, but and interesting article never-the-less..

CT

Charts, in themselves, are not hocus-pocus. They are a graphic history of price. What are hocus-pocus are most of the indicators that chartists use to forecast future price movements.

IMO, what is logical about charts is a fact that, over a certain period of time, every time "x" occurred the price made a significant move. From that fact a deduction can be made that the same will happen again. There can never be any guarantee that a favourable outcome will result., however, only that, if it is correct "y" times out ten, the system will be profitable.

Thats great, but chartists will persist in using "help" in the form of historical data made into indicators which, frankly, can have no use, at all, except to give added mystery to TA to the extent that it has become a useful sideline industry for those selling their systems and writing books.

Fundamentalists work with historical data and can be wrong about future prospects but I don't think that they use so much rubbish as chartists do to define whether shares will go up or down.

Split

 

[Lightning McQueen]

A view I have always had, and frequently mention whenever anyone ever asks me, BUT todays ( Sat) Times, page 57 Robert Cole commentary claims that his contacts have finally found a use for charts- to cover up his insider dealings! his view of charts :-

" I thought he would agree with me (and most of the rest of the stock market community) in viewing charts as hocus-pocus"

Now I guess the Insider dealing argument is a whole different ball game, but and interesting article never-the-less..

CT

Another telling quote from the article.

"Because the really useful thing about charts is that you can make them say exactly what you want them to say."

I have noticed this frequently on this board, people posting their trades, showing their charts giving their interpretation on them, often being wrong and trading in the wrong direction. Is this why the failure rate for new traders is so high.

we as newbie wannabe traders are sucked straight in to a world of charts from the start is there another way forward without charts? Is it really all just "hocus-pocus"?

 

[Charlton]

Nearly lunchtime !

Charts, in themselves, are not hocus-pocus. They are a graphic history of price. What are hocus-pocus are most of the indicators that chartists use to forecast future price movements.

IMO, what is logical about charts is a fact that, over a certain period of time, every time "x" occurred the price made a significant move. From that fact a deduction can be made that the same will happen again. There can never be any guarantee that a favourable outcome will result., however, only that, if it is correct "y" times out ten, the system will be profitable.

Thats great, but chartists will persist in using "help" in the form of historical data made into indicators which, frankly, can have no use, at all, except to give added mystery to TA to the extent that it has become a useful sideline industry for those selling their systems and writing books.

Fundamentalists work with historical data and can be wrong about future prospects but I don't think that they use so much rubbish as chartists do to define whether shares will go up or down.

Split

If I am searching for a restaurant in an area I don't know I use a street map. This is a representation having a frame of reference that is consistent with my current purpose.

I do not use the restaurant review to find my way. It was a suitable starting point to alert me to the good restaurant in the first place, but it is now too far removed from my current frame of reference and purpose, which is to navigate the streets.

However, if I have been to the restaurant many times before I need neither review nor map for my current purpose.

Charlton

 

[counter_violent]

A picture paints a thousand words .......visual representation of price....thats all we need to know ...what is there to discuss here?

C V

 

[Splitlink]

If I am searching for a restaurant in an area I don't know I use a street map. This is a representation having a frame of reference that is consistent with my current purpose.

I do not use the restaurant review to find my way. It was a suitable starting point to alert me to the good restaurant in the first place, but it is now too far removed from my current frame of reference and purpose, which is to navigate the streets.

However, if I have been to the restaurant many times before I need neither review nor map for my current purpose.

Charlton

I'm not quite sure that I understand you. Using a street map to find a fixed point on it is one thing and is based on the fact that the positions of all those points are known.

But watching a person aimlessly walking the streets will give the observer no clue as to where that person will end or, by watching a radar screen, will not guarantee where another ship will be in fifteen minutes, if that other ship alters course or reduces speed.

Split

 

[Lightning McQueen]

A picture paints a thousand words .......visual representation of price....thats all we need to know ...what is there to discuss here?

C V

visual representation of price is causing a thousand interpretations thats whats apparent

 

[Charlton]

I'm not quite sure that I understand you. Using a street map to find a fixed point on it is one thing and is based on the fact that the positions of all those points are known.

But watching a person aimlessly walking the streets will give the observer no clue as to where that person will end or, by watching a radar screen, will not guarantee where another ship will be in fifteen minutes, if that other ship alters course or reduces speed.

Split

Split

The streetmap is like a chart. It is a graphical representation that helps you decide where to go based on the information you can derive from it and observing the real world. It provides direction.

The restaurant revew is like an indicator. It alerted you to a possible opportunity, but it does not comprise the right information at the right level to enable you to determine where you are and where you need to go right now. In addition it has a more subjective nature than the map. There are many different reviews with contrary opinions and some of these are written by the restaurant owners themselves !

Back to my third point - when you know the territory you can abandon both

I hope that clarifies the analogy a little

Charlton

 

[Splitlink]

visual representation of price is causing a thousand interpretations thats whats apparent

But that's why we are all different and why there's a market...

Split

 

[Lightning McQueen]

But that's why we are all different and why there's a market...

Split

Hi Split yes I see that now thanks for your help

 

[dbphoenix]

The streetmap is like a chart. It is a graphical representation that helps you decide where to go based on the information you can derive from it and observing the real world. It provides direction.

Not the best analogy. A streetmap is finite. A chart of price movement is not. A streetmap also provides a level of predictability that a price chart does not. What the two have in common is that the best of each are connected to reality. However, don't make more of the analogy than it can provide.

 

[neil]

fluid and concrete

Not the best analogy. A streetmap is finite. A chart of price movement is not. A streetmap also provides a level of predictability that a price chart does not. What the two have in common is that the best of each are connected to reality. However, don't make more of the analogy than it can provide.

And the street is going to be in the same position this week and next year - unlike price

Good luck

 

[PurplePerson]

Most stockmarket participants view charts with disdain..

says the thread title.



Elsewhere in this forum are threads declaring

Most Stockmarket Players Lose Money.

Is this anything more than a coincidental correlation??
Or might these be the same people?

 

[TWI]

What you have to understand is that the guys who sit in the banks do not look at charts because they see so much customer flow business through their books. There is a vast difference between trading in an environment where you see flow and one where you do not. It is definitely easier seeing flow, a lot of people who have years of good performance in flow environments fall on their face when taken out of it to non-flow environements. The chart is the best interpretation you have outside these environs and price action is the next best thing.

 

[Splitlink]

What you have to understand is that the guys who sit in the banks do not look at charts because they see so much customer flow business through their books. There is a vast difference between trading in an environment where you see flow and one where you do not. It is definitely easier seeing flow, a lot of people who have years of good performance in flow environments fall on their face when taken out of it to non-flow environements. The chart is the best interpretation you have outside these environs and price action is the next best thing.

Yes, I can see that. I was very interested in your post- thanks. However, before the money starts flowing the fundamentals of the company must tell "fundamental" investors whether it is cheap,or not.

I've got shares in a company, SUY , that I believe is one of the best of the high street retailers. Nevertheless, fundamentals are telling me that there is not much to attract a buyer at the present price. I was told by someone, who is to supposed to know (and whose opinion I still respect, regardless, but which goes to show that one is on his own at decision making time) that they should be sold when they were 380. Friday they hit 507 in a 37p rise. A big purchaser bought 12% of the shares and, probably, MM's were trying to attract sellers. Should I have been one? Perhaps- we'll see.

My point to this post is "What is going to tell me to sell, fundamentals, moneyflow or the chart?

Split

 

[CityTrader]

What you have to understand is that the guys who sit in the banks do not look at charts because they see so much customer flow business through their books. There is a vast difference between trading in an environment where you see flow and one where you do not. It is definitely easier seeing flow, a lot of people who have years of good performance in flow environments fall on their face when taken out of it to non-flow environements. The chart is the best interpretation you have outside these environs and price action is the next best thing.

Yes, having spent 20 odd years as a flow trader ( AKA Market maker) to go from that enviroment to trading on my own, has been a huge period of adjustment- so much so, that my intitial plan a - to day trade lasted about 2 weeks, when I realised I'd go insane within 3 months sitting in an office, on my own, all day long trying to beat the market.

I don't agree at all ( obviously from my post) about Charts- I look at nothing but price action, and some basic fundamentals.. but to each their own...

CT