technical Analysis - anyone follow it?

CityTrader

Established member
Excellent article on page m30 of today's FT- confirming what all market-makers already know, and most Hedge fund trader also, that... Technical analysis does not work.
Sorry if this is a blow to those selling TA software- but one has to ask the question " if the trading systems works so well, why are they selling it? Don't you think Goldman Sachs or Calpers( Or Morgans Stanley, FIDO etc, etc) would have snapped it up by now?

Wayno
 

Trader333

Moderator
This has to be a subjective view and also depends on the interpretation of what TA is. There are thousands of possible TA methods and systems and I am certain that no one would be able to analyse and test them all. There are a number of highly successful traders who use TA methods to make a very good living. They may well not disclose how they do it but that doesnt mean that it hasnt worked for them. Even with the same technical indicators, each trader would probably interpret them differently and manage a trade using them differently as well. To make a blanket statement that "It's official TA does not work" is somewhat naieve although I would agree that it hasnt worked for many who have tried to use it.


Paul
 

CityTrader

Established member
No. I have no idea why you hate the TMF thread.... there again, maybe I just got out of bed on the wrong side this morning.....
 

bonsai

Veteren member
all these neagative waves !

wayno, do tell, what does work ? for you ?

apart from insider trading, I mean .

waiting with anticipation !

lol
 

rossored

Senior member
Don't tell me TA doesnt work when you see something like this!!

You could see that coming a mile off.

Target price should of course read 9219, not 8219.....same result, anyway.
 

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Mr. Charts

Legendary member
Good morning Wayne,
Your experience as a MM in the City for all those years is a completely different ball game to those who use TA as one of several tools in their trading. Whereas you could move prices, many of us read sentiment using many approaches, of which TA is just one.
Anyhow, you of all people shouldn't believe everything you read in the FT, especially when it's comment, not news ;-)
Our mutual friend Norman H. from City days is coming over this afternoon, if you want to chat to him let me know.
Saying TA doesn't work is doing a Chirac...........;-)
Best wishes,
Richard
 

oatman

Senior member
I've read the FT article, no big deal.
On reflection though I can't believe that the non-believers have NEVER looked at a chart and formed an opinion......
and that's technical analysis :cheesy:
 

CityTrader

Established member
Sorry guys.. but I firmly believe TA will only tell you what you want it to... if the markets really were there open to interpretation, there would be.. no fund managers, no hedge funds, no salesman - as every pension fund would have the perfect TA software that would interpret every price move, and accurately predict the next.


Bonsai.. I'm not being negative- I just don't believe in it, which brings we to what works for me? in spite of your flippant attitude I will answer..I am shocked that you could be naive enough to suggest insider dealing. In 15 years of PA punting I have only ever had one stock that was subject to a take over and that was after I'd held it for some 15 months.
What works for me? Instinct and intuition. And flexibility. I realise the London market has undergone a significant change in sentiment in the last 4 weeks- momentum is a lot more important that previously. Where as 6 or 8 weeks ago, you could top slice outperformers on a day trading basis - there's now enough shorts panicking, and enough momentum trade to have stopped that trade. I am currently buying under-performers ona day by day basis, and shorting stocks I firmly believe have traveled too far. I (currently)trade maybe 4 or 5 times a week ( this week I have only initiated 4 new positions, and closed 3 of those within 2 days)
This is what works for me.. Having traded for 25 years in The City- the last 16 as a market-maker I'd like to think my instincts and intuition are fairly highly honed, and will last me well.

Richard - Kids party this afternoon - say hi to him for me? thanks..
Helen - sorry I thought you were implying I'd be better of on fool.co.uk

Wayno
 

Bigbusiness

Experienced member
I think Technical Analysis is highly subjective and hard to program in to a system that will work for a long period of time without constant monitoring. But if I see a head & shoulders and my target is a 100 point profit, from what I have read and observed, there is a greater than 60% chance of hitting my target before my 50 point stop gets hit. I can also move my stop to protect a profit and decide to increase my target price. I don't have to trade if I can't get a good entry price. Not easy to program but seems to work in practice.
 

bonsai

Veteren member
wayno

its saturday, relax
reference to insider trading was a joke !

instinct, intuition and flexibility eh ?

great stuff but then you go on to talk
about 'momentum' ; 'sentiment' ;'underperformers' ;
and 'travelled too far'

odd that !. All those terms appear in my T/A books.
you know the sort of thing 'overbought;'oversold' etc

perhaps you're just a closet technical analyst ?

or in denial ?

lol
 

oatman

Senior member
Wayno,

On recent performance I'm surprised that fund managers are still around. Pension funds are a mess. Salesmen will always be around. Hedge funds are different, they trade!

Cheers
 

CityTrader

Established member
Bonsai... you're right it's a Saturday. Sorry. I should be chilling out more.
Personally my trade books are more geared towards the physcology of trading. Sentiment is what you "feel" about a stock - for example I struggled massively to close a bear on Wednesday. I should have followed my gut instincts and gone long ( the stock closed 8% on Friday- massive bear squeeze)
Momentum traders are the bane of market- makers lives- using second tier brokers to tarde. And yet, now I find myself joing them!
Underperformers? - market's up (say) 2% and a market leader like ANL.L is unchanged on the day- tells you in a normal market there's something wrong with the stock or in this sort of market- just buy it, and it will come good.

Simple approaches- but works for me!
W
 

bonsai

Veteren member
I wasn't being critical at all of the way you trade.
God forbid.
It's only the T/A side of things being so 'put down' that triggered me .

On the contrary, I have nothing but admiration for you 'gut and instinct' traders.

On another board I use, the skill is honed down to a fine art
and is a marvel to watch as its nearly all shortish scalping trades.

But us poor mortals who are not NATURAL traders would be hopeless in that environment.

And anyway, I do think you are wrong.

What I really think is that NATURAL traders have no need of T/A.
So they tend to only give it a superficial study.

And that's a different discussion ?
 

CityTrader

Established member
Bonsai... what other board do you use?

As another discussion for " what makes a natural trader" - having seen and worked with trainee-recruits from back office clerks to PHD's -The answer is, no one actually knows. I do know however for cash trading the general skill set required was "sharpness" but that's something few graduates seem to possess ( presumeably the "sharp" kids go out an make their mark on the world at 16 or 18- having no need for further education?)

W
 

bonsai

Veteren member
NATURAL TRADERS

I suspect its something you are born with.
Many years ago, there used to be an army of cold call commission
only salesmen. They would sell anything from vacuum cleaners to
Life Assurance.

They all had one skill in common - knowing WHEN to close a sale !!

That was before traded options and futures appeared on the scene.

I would not mind putting a £ to a penny that it is that skill
which defines a natural trader. And that todays equivalent
people are trading markets.

Its not the entry thats important - its the exit !

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