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  • #101
  • Sep 27, 2009 3:59pm Sep 27, 2009 3:59pm
"because that was already discounted by the market"

That's the keypoint of all this conversation, foundamentals effects are shown on the chart.

Chart tell you the past (what price have done from x days/minutes/hours till now), and foundamentals tell you the past too (because market already discounted every foundamental situation).

Now, knowing this, the chart surely tell you much more about what may happen next, while foundamental really can't say nothing about future. That's why traders use charts and use technical analysis to make money, analysts use foundamental to do their job, but they don't trade, they are not traders.

If you want to trade, open a chart and forget about every foundamental.
(yes foundamentals are still much important, because when news are released many trades are done, it is like a fuel.., so in that situations it's better to not have big exposures for risk-control reasons).

Make sense?
  • #102
  • Sep 27, 2009 4:04pm Sep 27, 2009 4:04pm
You're in left field, pal. People that trade with charts lose money (the 95% rule).... and if it were easy to trade with charts, a lot more people would be posting threads about success in the market than failures.

Reread my first post. The analyst on CNN is a top trader invited by CNN to provide commentary. OF COURSE HE TRADES. There is no need for a commentator to provide his opinion on forex strictly for a rating. There is no AAA or AA rated commodity or spot forex pair.

Sorry, but posts like yours just burn my ass. They are unfounded.

Quoting tunera
"because that was already discounted by the market"

That's the keypoint of all this conversation, foundamentals effects are shown on the chart.

Chart tell you the past (what price have done from x days/minutes/hours till now), and foundamentals tell you the past too (because market already discounted every foundamental situation).

Now, knowing this, the chart surely tell you much more about what may happen next, while foundamental really can't say nothing about future. That's why traders use charts and use technical analysis to make money,...
  • #103
  • Sep 27, 2009 4:11pm Sep 27, 2009 4:11pm
Quoting tdion
You're in left field, pal....
Don't take it bad, i'm really sorry that my post burned your ass. I'm sure that the analyst on CNN is a good trader, but that was my point of view, i have no problem if you or anybody else stop looking charts and only trade "fundamentally", this is a free world.
  • #104
  • Sep 27, 2009 4:12pm Sep 27, 2009 4:12pm
Screw both TA and FA! Saturn and Jupiter stands at crucial points, its time to buy the US$.
Attached Image (click to enlarge)
Click to Enlarge Name: astrological-chart-2012_phixr.jpg Size: 284 KB
Measure twice, cut once
  • #105
  • Sep 27, 2009 4:23pm Sep 27, 2009 4:23pm
Quote
You're in left field, pal. People that trade with charts lose money (the 95% rule)....
and if it were easy to trade with charts, a lot more people would be posting threads about
success in the market than failures.
The 95% rule is a myth. Even if it wasn't, it would still apply to fundie traders too. In both cases over-leveraging is usually the cause of failure anyway.

Most people that have success in the markets don't post about them. There's selection bias.

Quote
Reread my first post. The analyst on CNN is a top trader invited by CNN to provide
commentary. OF COURSE HE TRADES. There is no need for a commentator to provide his opinion
on forex strictly for a rating. There is no AAA or AA rated commodity or spot forex pair.
Really? And what was his name again?

Quote
Don't take it bad, i'm really sorry that my post burned your ass. I'm sure that the analyst on CNN is a good trader, but that was my point of view, i have no problem if you or anybody else stop looking charts and only trade "fundamentally", this is a free world.
Which, of course, is really the point. If the question is "does fundie trading work?" well the answer is sure it can. Nobody doubts that. But if the question is "is fundie trading the only thing that works?" going with the old "Charts are for losers!" argument, well that's nonsense. It basically argues that all profits are a product of luck, but offers no proof of it's position, and hopes the reader doesn't question the obvious oversight.

Still, it's a fun argument to blow time on when you're bored over the weekend.

Quote
Screw both TA and FA! Saturn and Jupiter stands at crucial points, its time to buy the US$.
Hehe. But sun sets the west, so it's time to sell.
  • #106
  • Sep 27, 2009 4:24pm Sep 27, 2009 4:24pm
Yeah, and I fundamentally and freely rebuked your post. That is MY freedom.

Quoting tunera
Don't take it bad, i'm really sorry that my post burned your ass. I'm sure that the analyst on CNN is a good trader, but that was my point of view, i have no problem if you or anybody else stop looking charts and only trade "fundamentally", this is a free world.
  • #107
  • Sep 27, 2009 5:03pm Sep 27, 2009 5:03pm
I understand that my post was offensive, after all what i said is that chart was the best (and only) way of trade profitably, while the truth is that i was wrong, so i'm sorry for any offense i may given to you.

Maybe the final truth is that both Fundamentals and Charts can be used to trade profitably, the key is understand them and make money from our own understanding/knowledge.

Now, i'm very good at understanding charts, and i'm not good at all in understanding fundamentals, so yes my post was absolutely oriented in technical trading, and it could offended those who use fundamentals to trade, i'm sorry for that, it was NOT my purposes, so.. excuseme really.

  • #108
  • Sep 27, 2009 5:20pm Sep 27, 2009 5:20pm
I will conclude the following:
Fundamental analysis has to do with analyzing the economic indicators and governmental policies (or central bank if you wish) and, using that data, tries to predict exchange rate developments.

These factors are embedded in two theories:

1) Purchasing Power Parity
2) Interest Rate Parity

These theories assume that one can't make excessive profits by lending at one central bank and depositing it at another central bank (IRP) and that arbitrage ensures that identical goods can only have one (relative) price in all markets (PPP).

There are several other more specific economic models that may be relevant to explain several occurances such as exchange rate overshooting. But I'll ignore them for now.

If you can borrow money at one bank at one central bank for 1%, and lend it to another bank for 5%, you will make a risk free profit of 4% ceteris paribus. This is considered excessive, and therefore market forces will drive the currency rates to a level where the change in the exchange rates offsets the difference between the interest rates.

When this is happening, I assume you will hear fundamental analists shouting currency X is going to appreciate relative to currency Y.

I don't trade this way, because there can be strong (and unexplainable?) deviations from both theories in the short run. I added a PDF file that we had to read for an international economics course.

Instead I prefer to bet on where the price is going using technical analysis. Technical Analysis has the tendency to create self-fulfilling prophecies.
Attached File(s)
File Type: pdf 51-74Neely.pdf   219 KB | 736 downloads
The nail that sticks out gets hammered back in
  • #109
  • Sep 28, 2009 1:53am Sep 28, 2009 1:53am
Tdion,

How are the Germans treating you?
  • #110
  • Sep 28, 2009 2:18am Sep 28, 2009 2:18am
Dear sir,

As long as I know....in trading...we need to use all available tools...and to balance and get precise accuracy....we have to use both, fundamental and technical analysis.

We usually use fundamental to analyze the situation in the market, and use tech to decide which level we need to enter and out of the market.

By using only fundamental sometimes we can get caught in a position where we can misinterpret where should we go in a market.

But this is just my stupid opinion as newbie.... : ) , please correct me if I do wrong
  • #111
  • Edited 5:45am Sep 28, 2009 5:23am | Edited 5:45am
I don't remember his name. I didn't pay attention. I just remember what I stated in the first post.

I think my message has become convoluted and needs to be clarified again: a good fundamental analyst will spot a REAL WORLD inefficiency, and place a trade based on price coming back to a fair market value.

Charting, on the other hand, fails as often as it succeeds. Decisions based on historical prices are like trying to predict next weeks weather with last weeks.

Rabid, you are entitled to your opinions. At least you have intelligent input, even if I don't always agree with it.

Quoting Rabid
The 95% rule is a myth. Even if it wasn't, it would still apply to fundie traders too. In both cases over-leveraging is usually the cause of failure anyway.

Most people that have success in the markets don't post about them. There's selection bias.

Really? And what was his name again?

Which, of course, is really the point. If the question is "does fundie trading work?" well the answer is sure it can. Nobody doubts that. But if the question is "is fundie trading the only thing that works?" going with the old "Charts are for losers!"...
  • #112
  • Sep 28, 2009 5:47am Sep 28, 2009 5:47am
Oktoberfest tomorrow! It's been great!

Quoting Dopey
Tdion,

How are the Germans treating you?
  • #113
  • Sep 28, 2009 8:45am Sep 28, 2009 8:45am
Quoting tdion
I don't remember his name. I didn't pay attention. I just remember what I stated in the first post.

I think my message has become convoluted and needs to be clarified again: a good fundamental analyst will spot a REAL WORLD inefficiency, and place a trade based on price coming back to a fair market value.

Charting, on the other hand, fails as often as it succeeds. Decisions based on historical prices are like trying to predict next weeks weather with last weeks.

Rabid, you are entitled to your opinions. At least you have intelligent...
Wouldn't you agree that spotting this real world ineffiency is much easier for institutional traders, allowing them to take advantage and driving the price to the "efficient" level, before we even spot it?
The nail that sticks out gets hammered back in
  • #114
  • Sep 28, 2009 10:19am Sep 28, 2009 10:19am
Quoting Noloqy
Wouldn't you agree that spotting this real world ineffiency is much easier for institutional traders, allowing them to take advantage and driving the price to the "efficient" level, before we even spot it?
My opinion is that peak trading performance is down to a marriage of adequate funds to pay for research or gain access to information and a framework/logic/system that allows the trader to put the pieces together in a profitable way.

The determining factor is not about being an institutional trader specifically, but the bargaining power{for information} and brain power you can bring to the table. It just so happens that Institutional traders have capital and a name behind them.
Living the adventure in my head.
  • #115
  • Sep 28, 2009 11:13am Sep 28, 2009 11:13am
Quoting tdion

a good fundamental analyst will spot a REAL WORLD inefficiency, and place a trade based on price coming back to a fair market value.
Can you be this person? Infrequent trading of large $ amounts on outcomes you are near sure about, I imagine will involve an amazing amount of Economic knowledge and research. How would you have come across the whole sub-prime mess as a fundamental analyst?

I suppose that one of the biggies to come is pensions,Increased life expectancy, decreased investment...
Living the adventure in my head.
  • #116
  • Oct 2, 2009 3:59am Oct 2, 2009 3:59am
I also think trading using fundamental analysis is much more easy and effective' cause news always have some pillars, nomatter wich pillars, but it works... however, a pinpoint of technical anal-s won't do any harm
  • #117
  • Edited 6:25am Oct 2, 2009 6:14am | Edited 6:25am
Quoting Leonlorenzo
How would you have come across the whole sub-prime mess as a fundamental analyst?
Uhm.. the subprime crisis was kind of obvious, really. What goes up because of huge leverage must go down at some moment.

What wasn't obvious [in fact quite the opposite what I anticipated] was that the crisis started in US and was primarily US crisis but that made USD stronger [for multiple reasons that should now be obvious to anyone interested in fundies].

This is exactly the same thing as coming USD treasuries collapse - very easy to predict but the effects are very hard to predict. I would assume once again that USD will go down hard but it might also be gold going higher or something very unexpected.

Also it's VERY easy to predict that the crude price will go up dramatically long term because the need is there but the supplies are finite and production costs are known. The problem with the crude is that because oil producers like to hide their stats the timescale is not known but this will happen during next 2-50 years.

IMHO using fundies is important but the plan should be to anticipate events and then act as planned when anticipated events happen, possibly using technicals to see if the market moves as you would anticipate - it's very hard to use plain fundies to trade.
  • #118
  • Oct 2, 2009 6:47am Oct 2, 2009 6:47am
Quote
Also it's VERY easy to predict that the crude price will go up dramatically long term because the need is there but the supplies are finite and production costs are known. The problem with the crude is that because oil producers like to hide their stats the timescale is not known but this will happen during next 2-50 years.

Uhm, no. Crude is based on supply and demand. As the price goes too high, alternates become more feasible. There's all sorts of crude that becomes viable at $100/bl, and if gasoline gets to $5/gal we're going to see all sorts of new technologies (compressed natgas, methanol/ethanol, electric hybrids, H2) replacing gasoline engines.

As for fundies, what goes up must come down. Over a long enough time line, most normal predictions turn out to be true. That doesn't help us to trade tho.

The thing that people don't seem to get about trading... you don't have to be "right" to make money. You don't need to predict anything.
  • #119
  • Oct 2, 2009 7:13am Oct 2, 2009 7:13am
Quoting Rabid
The thing that people don't seem to get about trading... you don't have to be "right" to make money. You don't need to predict anything.
The problem I have with fundamentals and predictions is I always would become too invested, or attached, to them. I suspect this is true for lots of people.

On the other hand, when I trade TA, it's so much easier for me to remain unattached to the trades. I draw a line in the sand and when price crosses it, I get out, one way or another.

Making predictions involves the ego way too much. And a lot of us know that when your ego gets involved in your trading, it's not a GOOD THING.
  • #120
  • Oct 2, 2009 7:51am Oct 2, 2009 7:51am
Quote
The problem I have with fundamentals and predictions is I always would become too invested, or attached, to them. I suspect this is true for lots of people.

Oh yeh, you aren't kidding. It's so easy to feel strongly about something, and have it come crashing down...

Quote
On the other hand, when I trade TA, it's so much easier for me to remain unattached to the trades. I draw a line in the sand and when price crosses it, I get out, one way or another.

Nod. Which is why I think even the best fundie traders use TA to time their entries to the degree they can. But hey, to each their own, right?

Quote
Making predictions involves the ego way too much. And a lot of us know that when your ego gets involved in your trading, it's not a GOOD THING.

Totally agreed. Prediction is a trap. Ego leads to a fear of failure, leading to paralysis, leading to a blown account. Trade the market, not your beliefs.
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