Does Technical Analysis Really Work??
- Thread starter lokanathpai
- Start date
Re: Is Technical Analysis Really Works ???
hehehehehe, ur absolutely ryt buddy. But ur confused. say y???
Becs v r here not dicussing here investment, vr dicvussing short term trading.
And i can bet u, every fundamentaly strong company also fall. So called Fundamental investors are badly stuck in Sugar stock. Where as technical ppl wud hav exit at say a 5-10% loss. Not 50% or more.
Say wat now?????????
hehehehehe, ur absolutely ryt buddy. But ur confused. say y???
Becs v r here not dicussing here investment, vr dicvussing short term trading.
And i can bet u, every fundamentaly strong company also fall. So called Fundamental investors are badly stuck in Sugar stock. Where as technical ppl wud hav exit at say a 5-10% loss. Not 50% or more.
Say wat now?????????
Re: Is Technical Analysis Really Works ???
I can't wait for a bear market to see the blood of fundamental analysts/believers (who for some reason always seem to go against the established trend). Your buy hold strategy of fundamentally sound companies will go in for a sixer then. Everything works in a bull market, doesn't it?
I can't wait for a bear market to see the blood of fundamental analysts/believers (who for some reason always seem to go against the established trend). Your buy hold strategy of fundamentally sound companies will go in for a sixer then. Everything works in a bull market, doesn't it?
Re: Is Technical Analysis Really Works ???
the problem is that they start with earnings FY06 and then gradually go to earnings FY08 and 09 to justify buys...otherwise how can they ever be there in a momentum driven market...
oxy, they have their lines ready..the'll say "we told u so...valuations were expensive...its the technical analysts who told you to buy on stupid logic".
actually on a personal note, its a combination of technicals and fundamentals that truly provide trading signals. look at marty zweig's work..he has shown that some of the bear markets have started after changes in CRR, PLR etc. now he has charted them and correlated them with market indices...does that also become "stupid" technical analysis whereas all these funda guys study macro factors and come up with utter crap...the best being after 15 days "i told u so" and "i was expecting this".
the problem is that they start with earnings FY06 and then gradually go to earnings FY08 and 09 to justify buys...otherwise how can they ever be there in a momentum driven market...
oxy, they have their lines ready..the'll say "we told u so...valuations were expensive...its the technical analysts who told you to buy on stupid logic".
actually on a personal note, its a combination of technicals and fundamentals that truly provide trading signals. look at marty zweig's work..he has shown that some of the bear markets have started after changes in CRR, PLR etc. now he has charted them and correlated them with market indices...does that also become "stupid" technical analysis whereas all these funda guys study macro factors and come up with utter crap...the best being after 15 days "i told u so" and "i was expecting this".
Re: Is Technical Analysis Really Works ???
to add on to this...rkthomas and similar guys..dont bring up this unnecessary talk about TA vs FA. If u r good at any form of analysis, go ahead and use that for SUCCESSFUL TRADING/INVESTING. thats all that matters. if u dont believe in TA, so be it. if u want to learn, go ahead and post and read...if u think it is useless, why r u wasting your and others' time?
to add on to this...rkthomas and similar guys..dont bring up this unnecessary talk about TA vs FA. If u r good at any form of analysis, go ahead and use that for SUCCESSFUL TRADING/INVESTING. thats all that matters. if u dont believe in TA, so be it. if u want to learn, go ahead and post and read...if u think it is useless, why r u wasting your and others' time?
Re: Is Technical Analysis Really Works ???
BVP, the problem with half cooked fundamental analysts (as with some "half cooked" technical analysts,particularly "half cooked" pattern traders) is that these guys hear new terms such as "PE ratio" and "cost of capital" etc and try to show their subjective intelligence by relating these factors with historical market movements..."MANUALLY" (with literally no help from a computer). Putting it in simple words, they do this after the fact...a post mortem analysis. Their buy and hold profit in a bull market phase makes them more (rather, over) confident on their analysis, not realizing it is pure "luck".
As an author rightly put it, "Anything that cannot be programmed into a computer and backtested with reasonable historical data isn't wrong. It is worse than that...it is meaningless. There is no logic behind it and it goes purely by faith. This stands where prayer and witchcraft for curing diseases stood before medicine was introduced."
BVP, the problem with half cooked fundamental analysts (as with some "half cooked" technical analysts,particularly "half cooked" pattern traders) is that these guys hear new terms such as "PE ratio" and "cost of capital" etc and try to show their subjective intelligence by relating these factors with historical market movements..."MANUALLY" (with literally no help from a computer). Putting it in simple words, they do this after the fact...a post mortem analysis. Their buy and hold profit in a bull market phase makes them more (rather, over) confident on their analysis, not realizing it is pure "luck".
As an author rightly put it, "Anything that cannot be programmed into a computer and backtested with reasonable historical data isn't wrong. It is worse than that...it is meaningless. There is no logic behind it and it goes purely by faith. This stands where prayer and witchcraft for curing diseases stood before medicine was introduced."
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Re: Is Technical Analysis Really Works ???
Hello Oxus,
Although pattern trading is subjective, and difficult to backtest with computers, it doesn't mean the traders who follow pattern trade make their profits by mere luck.
First of all, IMHO computers are just a tool to aid help the traders to interpret the main element of trading - Price. As far as one interprets the huge information provided by the Price well enough, why we need to question their reliability.
Of course, indicators help to interpret the Price in more useful ways, but I feel interpreting price is more important. Even pattern traders will be using indicators when ever necessary.
As AJAY had told once in the chat room, remove all the elements from your chart - indicators, date, script name, time scale, etc. Just plot ONLY the price and try to interpret the message its telling.
Just my two cents.
Praveen.
Hello Oxus,
Although pattern trading is subjective, and difficult to backtest with computers, it doesn't mean the traders who follow pattern trade make their profits by mere luck.
First of all, IMHO computers are just a tool to aid help the traders to interpret the main element of trading - Price. As far as one interprets the huge information provided by the Price well enough, why we need to question their reliability.
Of course, indicators help to interpret the Price in more useful ways, but I feel interpreting price is more important. Even pattern traders will be using indicators when ever necessary.
As AJAY had told once in the chat room, remove all the elements from your chart - indicators, date, script name, time scale, etc. Just plot ONLY the price and try to interpret the message its telling.
Just my two cents.
Praveen.
Re: Is Technical Analysis Really Works ???
BVP, you seem to have misinterpreted my statment
I have edited my post so that it conveys what I actually meant.
Some of the greatest traders use discretionary trading...so do some of the consistent losers. The word "half-cooked" in this context obviously relates to one of the above 2 types of traders
BVP, you seem to have misinterpreted my statment
I have edited my post so that it conveys what I actually meant.
Some of the greatest traders use discretionary trading...so do some of the consistent losers. The word "half-cooked" in this context obviously relates to one of the above 2 types of traders
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