Menu
Sister Sites

  • New Paper Says That Chart-Obsessed Technical Analysis Traders Are Fantastic At Losing Money

    From businessinsider.com

    There are two schools of financial market analysis: 1) fundamental analysis, which is concerned economics, financial statements, earnings, and anything else that you would assume would justify a value in a real-world sense and 2) technical analysis, which attempts to forecast prices by studying past price movements. Fundamental and technical analysis aren't totally mutually exclusive. But the folks who focus on the latter are more easy to identify as they dedicate a larger amount of their time pining over charts. Fundamental analysts tend to spend more time bashing technical analysts than vice versa. So, they were ... (full story)

It's so true.
Certainly based on the typical rsi, and macd crap I would agree, you have to be much clever than that.
I knew there was a good reason for sticking to fundamentals.....
Carbon-Dioxide: the gas of life!
  •  Guest
  • | IP XX.XX.170.137
any ideas about that wicked spike down on S&P well after Yellen press conference? fundamental or technical reasons? for once I got stopped out, was unable to move my stop down fast enough.

http://finance.yahoo.com/q?s=%5EGSPC
That's funny, I make nice profits on T.A. while ignoring fundamentals. However, I do look to the news to see how the market reacts.
I'm not saying a word
Come with me if you want to live....
Quoting Ill-b-back
I'm not saying a word
Ok, just a few.
I like the timing of this article where Fundamentals and technicals are pointing in opposite directions on Gu and EU.

Pick your weapons gentlemen...
Come with me if you want to live....
Technical works well, but you must respect the occasional interference fundamental, that's what makes the market dynamic
Damn.. Fundamentals are so uncertain.I always prefer technicals over them but sticking with chart makes you crazy and psycho
Quoting Ill-b-back
Ok, just a few.
I like the timing of this article where Fundamentals and technicals are pointing in opposite directions on Gu and EU.

Pick your weapons gentlemen...
those who run the game only see the order flow....
Quoting dpfxworld
Technical works well, but you must respect the occasional interference fundamental, that's what makes the market dynamic

Would agree with this.
"Overall, our results indicate that individual investors who report using technical analysis are disproportionately prone to have speculation on short-term stock-market developments as their primary investment objective, hold more concentrated portfolios which they turn over at a higher rate, are less inclined to bet on reversals, choose risk exposures featuring a higher ratio of nonsystematic risk to total risk, engage in more options trading, and earn lower returns."

So, basically it's just poor trading itself and not the role of technical analysis. It's not mutually exclusive. You can use tech analysis and be a crap trader as much as the fundie that thinks AAPL sold 71 million iPhones but only sold 54 million.

Furthermore, you can be an amazing analyst and a horrendous trader. I think the scope is rather limited, and it doesn't give you any indication on what kind of tech analysis or trading used.

Let's face it, it's all speculation. The fundie speculates a stock is worth XYZ as much as I think EURUSD is going to XYZ.
When the facts change I change my mind, what do you do sir
It's not the analysis (fundamental or technical) that makes (or loses) the money.

It's the STRATEGY utilizing the analysis that should be judged.
I'm not trying to convince anyone. I'm not in the "convincing" business.
There are only technical analysis traders, because trading is a short-term speculative activity. Fundamental analysis cannot lend itself to trading decisions, because the fundamentals don't change quickly enough.
So, a trader can only be a technical analysis trader.
Which therefore reduces the statement to: traders are fantastic at losing money.
Which is about right really, because it's very difficult to make money with short-term speculative trading, even more so when you're using high amounts of leverage, which nearly all traders do.
I have no clue what I'm talking about.
Three types of analysis:

Technical
Fundamental
Psychological

Know 'em, embrace 'em, and profit because of 'em...
A trader should have good knowledge about Fundamental and Technical analysis . Avoiding any one is not good decision .
MA provides the market's current direction and strength.
what's freely available to all is fundamentally flawed
Quoting Boy Wonder
There are only technical analysis traders, because trading is a short-term speculative activity. Fundamental analysis cannot lend itself to trading decisions, because the fundamentals don't change quickly enough.
So, a trader can only be a technical analysis trader.
Which therefore reduces the statement to: traders are fantastic at losing money.
Which is about right really, because it's very difficult to make money with short-term speculative trading, even more so when you're using high amounts of leverage, which nearly all traders do.
Yes exactly, there is no such thing as a short term fundamental trader, fundamentals don't change overnight anyway...

TA doesn't work all the time but it works often enough to give the traders who know how to use it properly an edge.
"Where you want to be is always in control, never wishing, always trading.
I use a mixture of both and have done for many years, but I do not use any indicators other than MA's, but as a short term trader n forex, I prefer to trade news. I make a nice income from it. BUT I am out of the market 90% of the time until I see a nice set-up.
All charts are technical, but fundamentals are the game changers,
Both go hand in hand in a succesful trade.
[quote=Spec_And;7352196]fundamentals don't change overnight anyway...
[quote]

huh? Of course they do. If war breaks out suddenly somewhere and risk assets slump, the USD and JPY surge, maybe gold goes up, too - did you see that coming on your charts? If the Fed springs a fund rate hike out of the blue and equities dive, did you see that coming because your TA is tight?

Of course not.

In a broad sense, fundamentals determine what you see on your charts.
"If The Fool persists in his Folly he will become wise." - William Blake
  •  Guest
  • | IP XXX.XXX.9.22
Why can't you good people use both? Use tech for timing, use news for direction.
Not to burst any bubbles here, both are needed to trade, as for the big boys they dont care much, as long as they can eat the small fish they make money, that is my view, just for my 2c here, there was divergence yesterday on the dow chart.
He who fears being conquered is sure of defeat - Napoleon Bonaparte
Quoting dpfxworld
Technical works well, but you must respect the occasional interference fundamental, that's what makes the market dynamic
Actually there are at least four elements to the market, IMHO.
- there is technical analysis
- there is fundamental analysis
- there are events
- there is market sentiment.

As described by The Fool above, the outbreak of war etc is an event which changes the fundamentals, and probably the sentiment.
JMO
Carbon-Dioxide: the gas of life!
Everything that's known about the market is already priced in!

So fundamentals are flawed LOL

It's good to know there are still dumb fundamental traders around in this zero sum game, all the more money for me ROFL
Astrology works better, he..he.. Or flipping coin... (hmm) forget it, my comment only show my stupidity. T_T
Don't blame the tools. Blame the carpenter.
Quoting Jj1459
Damn.. Fundamentals are so uncertain.I always prefer technicals over them but sticking with chart makes you crazy and psycho
aint that the truth and when those nice men in white coats give me back my pencil I'm writing to the papers about it
Surely it is the balance between fundamental technical psychological that produces the most high probability low risk trades. One cannot ignore magor news items some of which are not factored in as they are sudden like earthquakes etc.One cannot ignore the levels of the charts which show where the institutions are waiting to buy or sell. One has to have the correct mind set and psychological make up to be successful at any profession and trading has some very challenging emotional issues to overcome.Someone once said that the mind of the trader is not the mind of the guy in the street ingeneral society.I think that is probably a valid observation.
Personally I use a mixture of fundamental/technical and often this seems to work well for me.There are as many ways as traders however overall it is balance and travelling the middle way that seems a reasonable way to go.
Happy trading
  •  Guest
  • | IP XX.XXX.114.78
In any broad sense of fundamentals EURO shouldn't even exist or at least should be around parity.

Plus wars(traditional or financial) are no sudden events but they boil enough on the right instruments to know they're coming well before they hit the news. In fact when they hit the news it's almost over.

Last but not least it's hillarious to assume as correct a study from unknown origin and size of sample.

P.S. You'll never hear a pure technician say "the market is rigged". Ever.
[quote=The Fool;7352368][quote=Spec_And;7352196]fundamentals don't change overnight anyway...
Quote

huh? Of course they do. If war breaks out suddenly somewhere and risk assets slump, the USD and JPY surge, maybe gold goes up, too - did you see that coming on your charts? If the Fed springs a fund rate hike out of the blue and equities dive, did you see that coming because your TA is tight?

Of course not.

In a broad sense, fundamentals determine what you see on your charts.

Rofl. Heard of front running? Ever wondered why gold was already moving higher way before the crimean crisis hit the news? Ever wondered why stocks/options would sometimes move sharply higher before the announcement of a buyout offer? Also wonder why stocks, bonds, gold or whatever don't always react to economic reports/headlines the way people think they should?

News (fundamentals) is more often than not, worthless once it becomes news on my bloomberg terminal, it most likely was already priced into the instrument before news release.

You'd be dead broke if you were trading stocks in 2009-2013 and you relied on fundamentals to make your trading decisions. Trading news and fundamentals is the reason why Joe six pack always buy high and sell low.
"Where you want to be is always in control, never wishing, always trading.
Quoting boon2
Everything that's known about the market is already priced in!

So fundamentals are flawed LOL

It's good to know there are still dumb fundamental traders around in this zero sum game, all the more money for me ROFL
Exactly!
"Where you want to be is always in control, never wishing, always trading.
Is this another article about traders from people who don't trade.
Quoting Spec_And
...You'd be dead broke if you were trading stocks in 2009-2013 and you relied on fundamentals to make your trading decisions. Trading news and fundamentals is the reason why Joe six pack always buy high and sell low.
I am pausing to think whether my success in the stock market since 2009 is due to fundamental analysis or something else. Most people would call it a recovery-play, and that was based on examining the stats and management behaviour of my hot-picks. Certainly I called 'up' on the US housebuilders about a year after I got into UK housebuilders. Squeeze will now appear and slag me off if that is not correct.

...and if not I apologize for being a visionary...
Carbon-Dioxide: the gas of life!
Being impatient with losses, and patient with winners goes a long way regardless of analysis used.

Btw Long NZDUSD because... YES.
"To hold, you must first open your hand. Let go." - Lao Tzu
2) technical analysis, which attempts to forecast prices by studying past price movements.


It's a wrong definition of TA. The majority of TA traders don't even do back-testing.
I found a penny today. That's +100 pips for me.
  • New Comment
  •  Guest
  • | IP XX.XXX.111.121
Join FF
  • Story Stats
  • Posted: Mar 19, 2014 3:30pm
  • Submitted by:
     Newsstand
    Category: Educational News
    Comments: 35  /  Views: 7,116