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  • #41
  • Sep 20, 2009 8:00am Sep 20, 2009 8:00am
Tdion, has Germany robbed you of an open mind?
The technical vs fundamental reminds me of the sales tactic of saying do you want the cheaper or more expensive car, which pre-supposes there are only two options. Information flow, sentiment, quant, correlation, news... none of these require a chart or the blindest bit of knowledge of the state of the economy.

My only guess as to why very few (retail?) traders trade in other ways is because of the enormous amount of work you've got to do to get anywhere as other methods (can be) much less discretionary. It looks much easier to toss a few lines on a chart and trade off that instead.
  • #42
  • Sep 20, 2009 8:28am Sep 20, 2009 8:28am
Quoting triphop
It looks much easier to toss a few lines on a chart and trade off that instead.
I think you've hit the nail on the head
  • #43
  • Sep 20, 2009 9:05am Sep 20, 2009 9:05am
Quoting pipmutt
Nope, not even if you are wrong, there's absolutely no reason to get wiped out.

For example I'm going to start building a short from around 1.4825, hopefully it goes up to 1.50 so I can build a decent position. I'll plan on a stop above 1.60 and have a target around 1.35 and scale out, maybe close some trades along the way and re-open them on retracements, but it's all good because the worst can happen is it breaks above 1.60 and I get stopped out but it's no biggie, I planned for that before I opened the first trade, the chance of getting...
A very good point of planning first. My question is what if the worst happens and breaks 1.60 you loss it, will you short again at this level? What's plan B?
  • #44
  • Sep 20, 2009 9:39am Sep 20, 2009 9:39am
Hope to hear more from tdion of his views on the fundamentals of currency pairs, cheers !!
~*~*~*~*~*~*~*~*~*~ Yesterday's pips once more
  • #45
  • Sep 20, 2009 11:52am Sep 20, 2009 11:52am
Quoting tandoorichi
My question is what if the worst happens and breaks 1.60 you loss it, will you short again at this level? What's plan B?
I guess that will depend on what's happening and what's happened, nothing is set in stone, I'll see what Trichet (ECB) is hinting, and what Redeker and another couple of analysts are saying and whether they change their view from June when Eur/Usd was at ~1.41, they were saying they expect it's going to top out around 1.45-1.48 in the next quarter (July-Sept) and then by the end of the year be 'significantly lower compared to current levels'. If they change their view then I've still got 500 pips from the first part of their analysis which was spot on, I can use that to offset losses although I don't really want to give it all back!
  • #46
  • Sep 21, 2009 1:23am Sep 21, 2009 1:23am
FA and TA are both formal fields of trading and it is really an individual choice how one pursues each. However you really need to understand the core of each (depending on which you use), that meaning if you trade fundamentally you really need to understand what effect each report will have, plus have some sort of knowledge as to what goes into each report. It is no use trading fundamentally a rates announcement without understanding the core reason for what it is and how it is going to impact the future. Same goes with TA, there is no reason trading signals without some understanding of the process.

In each case, both require a dedication of time to understand. There has definatly been a shift in focus from FA to TA since the computer era has boomed. There has also been, in my honest opinion a shift in the honesty of FA. It was not that long ago that some of the government reports (treasury etc) where BS'd with people like Bernake and Co trying to place a silk sheet over the situation. Where there is a human element that can gain from the milking of such reports, there will be corruptable circumstances.

Me personally, I prefer to decipher the info contained in a daily or weekly Pin bar and trade that. It is how I was bought into the trading world and it is all I see. If im wrong, im wrong and I just move on but I do see it time and time again, good results vs one country yet the price moves the other way or not at all. The reasons for why this is is irrelevant to me, but that because unless its rates or NFP I just dont need to know, my chart will usually paint the picture for me

Razor
  • #47
  • Sep 21, 2009 3:23am Sep 21, 2009 3:23am
let's list famous fundamental analysts (could be TV pundits or columnists)
  • #48
  • Sep 21, 2009 4:22am Sep 21, 2009 4:22am
Quoting tdion
let's list famous fundamental analysts (could be TV pundits or columnists)
Chuck Butler?
Ashraf Laidi?

BTW: I agree with you.
  • #49
  • Sep 21, 2009 4:35am Sep 21, 2009 4:35am
Quoting tdion
let's list famous fundamental analysts (could be TV pundits or columnists)
How about Warren Buffet, he would qualify as a successful FA guy and given his wealth he would be consider quite famous. Peter Lynch, who im doing some reading has been mentioned in the book im reading could also come under this cover.

Razor
  • #50
  • Sep 21, 2009 12:48pm Sep 21, 2009 12:48pm
Many people in this thread have said that

"fundamental analysis moves the market" or "news moves the market"

If anything news and FA are EXCUSES not REASONS to move the market.

I beg to differ, I am going to give you a stock example example.

Take stock for a fictional company X, lets say stock X is at 25.50. News comes out online, tv, newspapers, that says stock X will have record revenues or some other revenue enhancing event. Which is interpreted by the market as a positive event and reason to buy. When the market opens the stock will move up to price level of $26, then it collapses to a range of $24-25. WHY?

Simple, this happens everyday all the time, people who are retail and not market savy fall into this trap daily. That $26 level is a resistance level and all the big boys are selling at $26 and driving price down. They use all those retail and news driven traders as LIQUIDITY for themselves to go short.

By the time price is at $24-25 those traders are $hitting themselves. New news comes (just on time, bring the TP) Somethings wrong with revenues, interpret it as a sell. Retail/NewTraders sell, whose buying? Big Boys.

Like I said news is an EXCUSE, not a REASON.

Orders, Order Flow, Liquidity, and Order Size move price.


BTW I did this on GE last week when my good friend asked about GE on some news about solar panel contracts, He didn't do anything, but I brought up a chart and low and behold, sold at 17.22 which is a LT Price Flip/PPZ/resistance area, TP 16.35. I wonder how many suckers listened to the solar panel brigade on CNBC and bought?????
  • #51
  • Sep 21, 2009 12:51pm Sep 21, 2009 12:51pm
Quoting Razor_trader
How about Warren Buffet, he would qualify as a successful FA guy and given his wealth he would be consider quite famous. Peter Lynch, who im doing some reading has been mentioned in the book im reading could also come under this cover.

Razor
Try discounting Warren Buffets return by the inflation rate and he truly has not done better than any other Joe 6 Pack. Also by not selling his assets, he almost never pays any capital gains tax. This is the miracle of compounding.

http://en.wikipedia.org/wiki/Exponential_function

http://en.wikipedia.org/wiki/Exponential_growth
  • #52
  • Sep 21, 2009 2:46pm Sep 21, 2009 2:46pm
Jim Rogers has been very successful with FA but his timing has always been off. The best in the business are Nuriel Rubinin and Marc Faber. Marc Faber's gloom boom doom report has been around for decades and he's predicted many of the major turning points in various markets around the world over the years even people like Jim Rogers hold Marc Faber in high esteem.

Nuriel Rubini is I think a NYU prof he has some sort of news letter he and his expert team of analysts write but I'm told its very expensive. Boris Shlossberg and Kathy Lien named him as the best FA on the planet and were full of praises for him.
  • #53
  • Sep 21, 2009 11:38pm Sep 21, 2009 11:38pm
Quoting thesnacker
I beg to differ, I am going to give you a stock example example.

...
No offense but you simply can't compare the stock market with the forex market. Or would you buy just one million shares of company XY without looking at the chart or the underlying company structure? Because that happens all the day in the Forex market.

Liquiditiy doesn't matter and is only an issue during news. Single news itself doesn't change an underlying trend (which is up in the EUR/USD since 2002 all the time by the way even though we had a big 25 figures "dip"). Those big trends usually change every 7-15 years.

And I think no one really sees news as reasons for movements. Of course the price moves because there are more buyers than sellers and vice versa. But the reason behind this comes from the fundamentals and there we have the big guys who don't glue to a 5m chart to watch a "H&S pattern" there, that's for sure.
  • #54
  • Sep 22, 2009 12:24am Sep 22, 2009 12:24am
"trading with fundamentals is the only way to go"

And you think so because someone on CNN said price will move a certain way and it did?

lol.... Classic

Good luck, you'll need it.
  • #55
  • Sep 22, 2009 12:26am Sep 22, 2009 12:26am
Well, of course not. The fact is, fundamentals are always right, the only question is, WHEN?

It is not that clear like with technical chart stuff so you have to be more flexible, scale in and out, use low leverage, cost averaging and so on... At least that's what I do and it works for me.
  • #56
  • Sep 22, 2009 12:57am Sep 22, 2009 12:57am
Quoting thesnacker
Orders, Order Flow, Liquidity, and Order Size move price.
Who's behind those, and what are they basing their decisions on?
  • #57
  • Sep 22, 2009 1:11am Sep 22, 2009 1:11am
Quoting Xaron
The fact is, fundamentals are always right, the only question is, WHEN?
The same could be said about just about anything really.
The breaking of a wave cannot explain the whole sea.
  • #58
  • Sep 22, 2009 1:24am Sep 22, 2009 1:24am
Quoting Craig
The same could be said about just about anything really.
Isn't that nice?
  • #59
  • Sep 22, 2009 1:25am Sep 22, 2009 1:25am
I just love a debate. Really there will be 2 sides to this forever as we see it. Fundamentalists and technicalist (I dont think thats a word, but it will do). In the middle there are the people that do both. At the end of the day the only winners are those who see there capital grow, and I will place my life on it that there are players from both sides of the equation that are doing this. As a result im sure they will argue it aswell. The technical chartist will argue his charts hold more info and the fundy trader will argue the opposite side.

I dont believe there is a specific side to the equation that is better. Fundys hold there place by speculating the future through economic results and strength, and in time they may be right. Chartist, depending on there timeframe speculate on that weekly Pin bar or some other measure of estimation, and in time they may also be right. Not matter which way you look if you account is growing, what does it matter where you got your edge from.

Peace to both sides

Razor
  • #60
  • Sep 22, 2009 5:41am Sep 22, 2009 5:41am
Quoting Xaron
No offense but you simply can't compare the stock market with the forex market. Or would you buy just one million shares of company XY without looking at the chart or the underlying company structure? Because that happens all the day in the Forex market.

And I think no one really sees news as reasons for movements. Of course the price moves because there are more buyers than sellers and vice versa. But the reason behind this comes from the fundamentals and there we have the big guys who don't glue to a 5m chart to watch a "H&S pattern" there,...
True comparing Forex to the Stock Market is to a degree pushing it. But, you can definitely trade the forex and stock market with the same techniques, at least I do. I almost never pay attention to news to influence my trading but (if anything I never pay attention to what the news report says, I just keep in the back of my mind that it exists, I do not interpret it as a positive or negative buy/sell event), many times I do notice pinbars, fib retracements, and intraday reversals after news releases into support/resistance and price flip areas.

These big guys are also going to put their orders at significant areas, when price hits those areas where its moves will depend on the amount of buy/sell orders there. They may have been different reasons why they put those orders there, they may have put them there on technical or fundamental grounds.

In essence technical analysis is looking at charts patterns and finding an inefficiency, but you don't make money unless you can actually trade that inefficiency, no wonder all the textbooks and theories say you can't make money use past price patterns. Same thing with fundamental, you can analyze to death and still not make money.

Can you be a great fundamental analyst and still lose money? Can you be a great technical analyst and still lose money?
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