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Technical analysts are very confused

  • #41
  • Jun 9, 2007 4:47am Jun 9, 2007 4:47am
My understanding is that economic/political decisions move the markets.No bank or political entity has complete control on a global scale. Therefore, even these do not always know which way the markets will go.

unless Warren Buffet decides to move a few billion dollard across the ocean....then he moves the market

However, there are experienced, successful traders who know
the significance behind the fundamentals and how they interrelate
to sectors of the economy and currency markets. Having gained knowledge through experience, these ones merely use chosen indicators in conjunction with their broader based knowledge to accomplish their trading objectives. Indicators are thus used by them, if at all, as an adjunct not as a predictor or prime mover. I would like to see more of the experienced traders here explain these fundamental correlations.

i agree there are lots of successful traders out there. And i would also like to learn more about analysis and fundementals. Cause two weeks ago lots of experts where concerned on CNBC that the US economy is slowing down at rapid pace. Existing Housing Sales went down, New Housing Sales even more thus creating more unemployment. Retail sales werent good. GDP and CPI figures werent all that good. All in all it was the worst 1st Quarter in a long time for the US economy. So one would think that dollar was gonna get weaker especially after relative good Euro news. But on thursday the dollar made a come back gaining around 100pips. Can anyone explain that to me?

Just to get back to technical analysis again. My opinion is that people get so focused on their indicators (which is mostly lagging) that they forget about the bigger picture and common sense



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  • #42
  • Jun 9, 2007 7:49am Jun 9, 2007 7:49am
Quoting iandekoker
that is a very uncalled for statement. maybe you should have the decency to ask me how i do it. and maybe you can learn something. but if bashing is your style then i suggest you move on to the "Trading System" topics and bash the people there.
I'm sorry, I thought the original quote on the first post was a little bit of a bash of technical traders, no?

Seems to me it was.

And if you have the money, or are playing microlots or whatever to hold onto a position for months, then that is called position trading. Position trading is totally different than most people can trade.

As far as technical indicators, draw a fibonacci, they tend to work. The reason why? So many people THINK they work. Trendlines work. Draw one on a daily cable chart from about June of 2006. (roughly) That wasnt an imaginary line.

Fundamentals are fine. But people with a lot of money are always pushing it in a direction. Panic traders who pull the trigger everytime a rumor is released into the market, are nothing more than noise to these guys.

So my advice is this: learn TA, if you really can hold onto a 200 pip loser until it goes your way, thats fine. It also could validate your buying more at a lower price for instance.

But trying to figure out what Trichet meant a few months ago by leaving out "extreme vigilance" isn't trading in my opinion, it's trying to read a stranger's mind.

I lost some money this week in cable when it blew through that trendline mentioned above. I was buying it when it was cheap, so in essence, we are doing the same thing.

But ask yourself this: does a gut feeling about the value of a currency tell you when to buy? Does it tell you when to get out of a trade?

I am willing to bet the Yen at 122 is considered "exspensive" by some people. But if you draw a few lines on a monthly chart, you can see it really isnt in a historical perspective.

The greatest trend traders all use TA, and dont bother with much in the way of fundamentals. Charts dont lie. Analysts do. Imagine having a job where you have to have an opinion. So it's not a stretch to say that they wing some of it, if nothing else to make a deadline.
  • #43
  • Jun 9, 2007 8:13am Jun 9, 2007 8:13am
[quote=ybeidas;1462440]
Quoting narafa
" blaming technical analysis is no better than blaming the market for losses. A good trader must have the courage to blame himself and only himself for his trading losses"


Sorry about your loss, but i totally agree with your statement. Furthermore, i believe one should be open minded and not discount ideas so quickly, as we are the only losers when we do that. There is much to learn out there, and i believe one can learn something from everyone. I also look at mistakes as valuable lessons (i'm just a slow learner ), with silver linings, perhaps this mistake will prevent us from doing a bigger one in the future, who knows?..and perhaps the way one reacts to their mistakes is what makes a good trader even better.
Nader, u r too good to be on the losing side for long..
happy pippin all

Thanks my friend. A loss is a loss and we can't prevent losses, we can only minimize them and try to reduce their effect on our equity...I believe nobody is too good so he can't have losses...Despite the friday's loss, I am still doing fine since I don't over trade and don't have too many correlated trades at the same time...So don't worry my friend


Thanks,

Nader
  • #44
  • Jun 9, 2007 8:17am Jun 9, 2007 8:17am
Quoting iandekoker
I am reading technical analyses while i wait for my trades to close. Some of my trades take 2 months or more to close. So u can see i have lots of time on hand...lol

i am totally NOT into trading systems. I buy when the price is low and sell when the price is high. Easy as that.

I agree a trader can only blame himself if he looses a trade.

ouch on the double loss on friday. Hope you make it up again.

ps....what do u think of the inverse relationship between gold and the usd?
that is one of the fundamentals that i kinda believe....when usd is weak then gold trades higher...and i can understand the logic behind it....gold is always a safe haven....
I also believe in the inverse relation between Gold and the USD. However, this relation is not valid all of the time. I haven't done a statistic research on that, but I believe that in 75% of the time, gold and the USD go against each other and the remaining 25%, they move together in the same direction.

Good trading technique, I mean to buy when price is low and sell when it is high, but how do you define high and low? I think you must have a benchmark my friend


Thanks,

Nader
  • #45
  • Jun 9, 2007 8:36am Jun 9, 2007 8:36am
Quoting narafa
If technical analysis forecasts drives you up the wall, then don't listen to it or read it. It is as simple as that. The problem is not with Technical Analysis or any other method, the problem lies inside traders themselves. Please read "Market Wizards", you will fund a bunch of successful traders using completely different strategies and analysis methods.


If you think that technical analysis is a waste of time, then why waste your time reading it. But let me tell you, do you know why you actually waste your time reading it? Because everyone is trying very hard to find the brilliant analysis methodology which will reveal to him/her where is the market going to move next and based on this he/she will wither buy/cover or sell/short. This is why people who don't believe in technical analysis read technical analysis.


Thanks,

Nader
I guess you have missed my blog cause the last time I checked I thought I was doing better than most as technical trader.

Trust me mate if I could avoid reading some of it I would but that would be like trying to miss seeing Paris or Britney on TV. Your missing the point between technical analysis and technical traders.
  • #46
  • Jun 9, 2007 9:09am Jun 9, 2007 9:09am
Quoting turbokaos
I guess you have missed my blog cause the last time I checked I thought I was doing better than most as technical trader.

Trust me mate if I could avoid reading some of it I would but that would be like trying to miss seeing Paris or Britney on TV. Your missing the point between technical analysis and technical traders.
Technical Analysts differ from technical traders, of course I can understand this. I was referring to the fact that technical analysts are not future predictors. A technical analyst shouldn't be predicting that the market is going to go up or going to go down. A technical analyst should tell you, what is the probability the market is going down and what is the probability the market is going to go up and on what time frame. This is the real job of a technical analyst.

For example, if I am technical analyst and I am asked to write a technical report on the US market, the S&P 500 index for example, I would say that for the short term, the market is oversold and it has a higher probability to go up than to go down. This applies for the short term, meaning a few sessions. For the intermediate term, the market is experiencing weakness in momentum and probability of a correction is higher than up trend continuation. Saying that the market has a higher probability to go up over the short term does not contradict with its' higher probability to go down on the intermediate term.

Finally, I, as a technical analyst, must support what I am saying with evidence and numbers. This is what technical analysis can give you.

On the other hand, a technical trader is someone who is using technical analysis as a methodology to base decisions upon.

What I was saying in the first place is that people mock at technical analysts because they say the market is going up, but it can also go down, so not giving defined directions. Technical Traders use technical analysis coupled with their own ideas and money management tactics, so a technical trader is a technical analyst anyway.

I believe that there is no method which is better than another as long as it makes you consistently profitable.

Go check Ed Seykota performance if you believe that you are performing well relative to most technical traders. Relative performance is not measuring how much you make against how much another trader makes. Relative performance must take risk and draw down into consideration.


Thanks,

Nader
  • #47
  • Last Post: Jun 9, 2007 9:56am Jun 9, 2007 9:56am
Again, I'm going to pull out the weatherman analogy.

Weathermen are not in the business of predicting weather, they're in the business of forecasting weather. The slight difference is that the latter involves probability. A typical weather forecast doesn't say it will rain tomorrow, but that there's an x% chance of precipitation.

In the same way, technical analysts do not predict market direction, but forecasts it. And in the same way that the Farmer's Almanac forecasts weather for the entire following year, and the Weather Channel has 10 day and 2 day forecasts, technical analysts forecast market direction on different time frames. Those "analysts" who say they can predict market direction with absolute certainty don't know what they're talking about, and are most likely full of crap, so it is best to never listen to those type of people.

There are some technical traders who do in fact adjust position size according to strength of signal, or probability it will go in a certain direction. For example, if they get a weak signal, they may only risk 1%, but if they get a strong signal, they'll risk 3%.
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