Technical analysis and FA

[mike.]

Post moved from another thread...
Interesting reading the posts from today, Just to throw a spanner in the works, and sorry to take it slightly off topic, If you are trading solely using technical analysis like the majority of you do, would it not be fair to say that you could be trading any instrument on a chart ?

What i am trying to say is, Are you not just trading the chart ? be it forex, gold, oil, indices etc.

Would your analysis and strategy not just work just the same, irrelevant of the instrument. I understand some are more volatile than others but is there something im missing here, As I see it, Its only when you start to add the fundamental's that makes them react different from each other.

 

[Lee Shepherd]

Re: Anyone shorting the Dow Jones? pt 2

Interesting reading the posts from today, Just to throw a spanner in the works, and sorry to take it slightly off topic, If you are trading solely using technical analysis like the majority of you do, would it not be fair to say that you could be trading any instrument on a chart ?

What i am trying to say is, Are you not just trading the chart ? be it forex, gold, oil, indices etc.

Would your analysis and strategy not just work just the same, irrelevant of the instrument. I understand some are more volatile than others but is there something im missing here, As I see it, Its only when you start to add the fundamental's that makes them react different from each other.

Good point Mike.

In principle the answer is yes but unfortunately its not that simple.

Once one has knowledge on Tecnical Analysis (TA) then they can apply this to any chart but how that particular market behaves will have many different effects on the outcome.

Even if one goes down the strict TA route they must be at the least aware of the fundamental analyzing (FA) that is required and know when the FA can have an affect that could throw TA out the window. A recent example from yesterday on the world markets was the NFP results that came out. One needs to know when the news is due to break and make a decision based on previous history on when and how to react.

The example would be that you have a trade on and news is due out at 1pm. You would need to know when markets have previously reacted, a possibility is that the markets can react 15 minutes prior and can last 15 minutes afterwards etc. This is not definitive by the way and is just an example.

So, if you were purely using TA then this would have to be thrown out the window during this time. There are hedging techniques but I don't want to confuse the post at this time with that avenue.

 

[mike.]

Re: Anyone shorting the Dow Jones? pt 2

Good point Mike.

In principle the answer is yes but unfortunately its not that simple.

Once one has knowledge on Tecnical Analysis (TA) then they can apply this to any chart but how that particular market behaves will have many different effects on the outcome.

Even if one goes down the strict TA route they must be at the least aware of the fundamental analyzing (FA) that is required and know when the FA can have an affect that could throw TA out the window. A recent example from yesterday on the world markets was the NFP results that came out. One needs to know when the news is due to break and make a decision based on previous history on when and how to react.

The example would be that you have a trade on and news is due out at 1pm. You would need to know when markets have previously reacted, a possibility is that the markets can react 15 minutes prior and can last 15 minutes afterwards etc. This is not definitive by the way and is just an example.

So, if you were purely using TA then this would have to be thrown out the window during this time. There are hedging techniques but I don't want to confuse the post at this time with that avenue.

Thats what I was initially thinking Lee, Just many traders say that they wont entertain F/A.

 

[Lee Shepherd]

Re: Anyone shorting the Dow Jones? pt 2

@Mike - thanks for the rep

I use TA to find and filter out trades on equities. If you like I can give you an example with charts etc and my opinion on those trades if you think this will help. If not then let me know so I don't waste my time, I wont be offended. I'll include Risk v's reward, money management and trading patern's, entries, exits and anything else that's required to make a decision.

It may help or at least give you a little insight to the basics and also how I handle the trades etc.

If you want, throw me across the names of two equities that you would be potentially interested in and I'll do a quick demonstration for you. Hopefully I'll be able to do it tonight for you but to be fair to me and my family I am using a lot of time on here today. Although I am enjoying the conversations I've had.

Regards,

Lee

 

[barjon]

Re: Anyone shorting the Dow Jones? pt 2

Thats what I was initially thinking Lee, Just many traders say that they wont entertain F/A.

Mike

Even without the FA element different instruments often display different characteristics which means that the application of particular TA elements may be sound (in terms of outcome) for one instrument but not for the other.

 

[wackypete2]

Hi Mike,
coincidentally, I just answered your question here:
http://www.trade2win.com/boards/futures-options/168044-forex-futures-ta.html#post2090040

Very similar to what Lee and Barjon said.

Peter

 

[mike.]

Sorry for not replying guys, I'm away tonight, just had a look on my phone, yes lee, would be interested in the example you could show me. @ Pete, just going to look at your post now, thanks for replying.

 

[Brumby]

Interesting reading the posts from today, Just to throw a spanner in the works, and sorry to take it slightly off topic, If you are trading solely using technical analysis like the majority of you do, would it not be fair to say that you could be trading any instrument on a chart ?

What i am trying to say is, Are you not just trading the chart ? be it forex, gold, oil, indices etc.

Would your analysis and strategy not just work just the same, irrelevant of the instrument. I understand some are more volatile than others but is there something im missing here, As I see it, Its only when you start to add the fundamental's that makes them react different from each other.

Generally we are not trading the chart but our interpretation of human reactions as reflected in the price movements. The passage of time doesn't change fear and greed - 2 fundamental human emotions that drive prices in any instrument.

Specifically there may be uniqueness of price movement and patterns in specific instruments because of the presence of whales and how they trade. Understanding their presence and such behaviour helps.

Finally as for news events, not taking a position around such a window is also a sound strategy. A trader looks for an edge to take a trade and when we are dealing with the uncertainty of the news and how the market participants may react to the news, the edge may significantly degrade to no more than gambling.

 

[mike.]

Lee, with reference to the chart example you were going to show me, can something be sorted to hook up Thursday night ? I tried to p.m you but its turned off. Many thanks..