Rossini
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As could you when using fundys...
Gold
- Thread starter scose-no-doubt
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As could you when using fundys...
Maybe with forex but not with commodities. Commods are the most fundemental driven market cos there is no escape from supply/demand that is all there is. The only thing ta is useful for is telling what people think of the fundementals. There is an arguement for saying demand conditions are hard to define tho.
This all doesn't seem to apply with gold tho as there is no logical reason to attach value to gold over any other commodity apart from history...which won't repeat itself.
This all doesn't seem to apply with gold tho as there is no logical reason to attach value to gold over any other commodity apart from history...which won't repeat itself.
Dunecat
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Wonder how schiff's doing with his billion dollar hedge fund.
I don't know if you guys were calling me gullible for believing that consistent returns of 80% annually were possible, but I'd rather be gullible in a position that I have nothing out to lose.
Just with TA and FA, I would think you'd use them in conjunction with one another wouldn't you? In the same way I wouldn't want to buy a good share at a time that it was overvalued, vs buying a cheap share that should go up in a company that has no real income?*cough* Enron.
Speaking about Enron, I heard that it was very difficult to determine that they were actually a sham. Was it really this impossible to dig through their records? But even in this case, it would've been best to miss a company that you don't understand?
I don't know if you guys were calling me gullible for believing that consistent returns of 80% annually were possible, but I'd rather be gullible in a position that I have nothing out to lose.
Just with TA and FA, I would think you'd use them in conjunction with one another wouldn't you? In the same way I wouldn't want to buy a good share at a time that it was overvalued, vs buying a cheap share that should go up in a company that has no real income?*cough* Enron.
Speaking about Enron, I heard that it was very difficult to determine that they were actually a sham. Was it really this impossible to dig through their records? But even in this case, it would've been best to miss a company that you don't understand?
meanreversion
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Are you sure about this? Was oil driven by fundamentals when it spiked to 147 only to collapse to 35 within six months?
Are fundamentals driving the 40 pct rally followed by 15 pct fall (in the last TWO WEEKS) in oats?
I kinda see what you're saying but I'm not sure it's always true. I would argue that commodities are very speculator driven at times, and don't relate to fundamentals at all.
meanreversion
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Two points (as always !)
1. 80% returns CONSISTENTLY at a scaleable amount are not possible. If you're referring to the Turtle example, their equity swings would make you shudder. For more about this, read "Way of the Turtle", or check out "drawdown" on Wikipedia.
2. No offence, but I reckon if the year was 2000 (and you were 15) you would have been telling us what an excellent company Enron was. You may even have been telling your Dad to buy it when it went lower! The "fundamentals" for that company were awesome, which is why the stock price went up so much. Unfortunately, it was based on fraudulent accounting. This is one of the problem of fundamentals -- sometimes the numbers are wrong.
I'd be inclined to agree unless you can stomach 50%+ drawdowns, however 80% a year is more than achievable with a mechanical entry/exit system with discretionary trade size. Yes it's a paradox, mechanical and discretionary, but isn't that what trading is anyway?
meanreversion
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My trend system has been long gold for a while, but the stop is fairly close now, just above 1220.
Thank you for reminding us that this thread is about gold.
Thank you for reminding us that this thread is about gold.
Dunecat
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scose-no-doubt
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But using your examples you can see that when prices are too far detatched from the underlying/fundamental reality they implode.
N Rothschild
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technicals work the least well on commods, especially ag's
meanreversion
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My theory (and please, shoot me down) is that TA tends to work better in FX because it's impossible to "value" the two respective countries simultaneously. As such, people look at moving averages, RSI and the like, because anything else is too unknown. E.g. Europe is a basket case right now, but so is the US.. thus which way is EUR/USD going? Have a look at the charts.
With companies, the stock price is an estimate of future earnings and dividends.. it's easier to have a stab as to the true "worth" of a company, thus fundamentals might work better here (although note that 30% or so of the move is always due to the underlying market move).
Commodities? Yes you can have a stab at using fundamentals but as with FX it's much harder than stocks. Let's say a new oilfield is discovered, is that bearish for the price of oil? Maybe, but not if it takes 10 years to come online. Even when it does, what about the price of the other side of that equation, the $? I don't use TA but I can see how there might be times when it could work well in commodities.
With companies, the stock price is an estimate of future earnings and dividends.. it's easier to have a stab as to the true "worth" of a company, thus fundamentals might work better here (although note that 30% or so of the move is always due to the underlying market move).
Commodities? Yes you can have a stab at using fundamentals but as with FX it's much harder than stocks. Let's say a new oilfield is discovered, is that bearish for the price of oil? Maybe, but not if it takes 10 years to come online. Even when it does, what about the price of the other side of that equation, the $? I don't use TA but I can see how there might be times when it could work well in commodities.
Yeah i did say that there could be a problem with demand getting out of hand...but I would say that fundementals did drive those moves, but it becomes more difficult because fundemental opinions follow trends i.e peak oil. I mean if you looked into the fundementals of oil before the bubble you might find it is undervalued but you couldn't predict peak oil theory increasing demand...so...but fundementals are at the bottom of every move because it is the people who work out that something is undervalued who start the trends, it wouldn't work any other way.
If anyone is interested in the Enron thing...i would say that it would have been extremely diffucult to find out what was happening because of all the off balance sheet business. However, the revenue recognition thing is something that has to be explained on a 10-k and it would have stunk like ****. Worldcom did the same thing with their revenues. The reason why it went un-noticed tho is probablly because it became a normal way to count revenues esp. in telecoms so people didnt ask questions. Another point is that even if it was the best company in the world, it probablly wasn't worth the price.
montmorencyt2w
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Your ZH types will always insist that gold is not a commodity, but a currency.
montmorencyt2w
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Well have a read of that book I referred to elsewhere about Madoff. (I got my copy in the library, so maybe it's also in your local library). It was quite hard to prove he was a scamster, because there was so little actual information coming out, and his cover was good. But there were indications - "red flags" - for those actually looking for them. The problem was that the people who should have been looking for them were looking the other way.
What is this billion dollar hedge fund you speak of?
Do you not trade a mechanical trend-following system? Which, I assume has moving averages / n day highs etc as inputs?
meanreversion
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Arghhhhh. I had a debate once with a user called new_trader about what constitues an indicator. He was adamant he didn't use any indicators.
I don't really consider myself an indicator user either, but I DO use moving averages for my trend filter. So I posed the question - is a moving average an indicator? The user new_trader then became very angry for some reason, and said of course it was and that he never used ANY indicators.
So in a similar vein, I don't consider myself a TA user as I don't use RSI, stochastics, MACD, Bollinger bands, visible support and resistance and so on. But if using a moving average constitues TA, well then I do use TA; but probably so does every trader.
Even discretionary traders will use some analysis of price to make their decision, which is then technically technical analysis (did you like the word play there?).
Yes it's a very grey area... for example - if you were ask a pairs trader if he used technical indicators, I imagine he would say no, but his trades are basically taken based on the result of calculations on time series, he is just doing it a different way to those RSI bods.
Better, if you ask me, to split it up into "market generated information" and "externally generated information". And like anything in life, taking it to extremes is stupid.
So other than moving averages (which occupies the middle ground between TA and econometrics), what else are you looking at (if of course you feel obliged)?
N Rothschild
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a trend filter is an indicator..
infact if you use any sort of chart reading its TA. i use area/mountain charts just to see where price is and thats it
infact if you use any sort of chart reading its TA. i use area/mountain charts just to see where price is and thats it
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