Speculate on the markets using TA and you will lose 1% on average every month

[montmorencyt2w]

Oh my yet another Billionaire trend follower who was Trader Dailies top earning trader several times with also several times an ANNUAL income in the Billions !!!

Billionaire trader through 15 minutes work / day !

Oh my if only he knew that TA don't work yo, do you think someone here should be nice and go tell him !

The link you have posted is to a posting (of yours) about Boone Pickens.
It has nothing to do with technical trading.
If anything, it is about work-life balance (hence the "15 minutes a day").

I have no idea if Pickens trades technically or not, but if he does, that article does not say so. Instead, it gives a lot of evidence of his knowledge of business in general, in other words, what you might call fundamentals.


Don't overstate your case


EDIT:

OK, I see that article you posted does say that he bet on trends, but I don't think that necessarily proves he was a technical trader, or only a technical trader. You can bet on a trend for fundamental, as well as technical reasons, and given Picken's obvious business acumen, it would be a rash person who said that he shut off the "business" part of his brain when he was making trades.

You make some good points Markus, but on this sort of subject, you do tend to overstate your case, just a teeny weeny bit

 

[BSD]

OK, I see that article you posted does say that he bet on trends, but I don't think that necessarily proves he was a technical trader, or only a technical trader. You can bet on a trend for fundamental, as well as technical reasons, and given Picken's obvious business acumen, it would be a rash person who said that he shut off the "business" part of his brain when he was making trades.

You make some good points Markus, but on this sort of subject, you do tend to overstate your case, just a teeny weeny bit

I like teeny weeny bikinis to be honest !!!

Actually doing my homework I looked at his equity curve and compared it with oil prices, and his incredible equity explosions always concurred with price rises in oil, while his daunting losses concurred with ranging situations.

Also in a Trader Daily article his trading is described as basic mechanical trend following.

Hey btw whats up none of you guys going out for drinks ???

What's up here with work hard and play hard !!!

 

[montmorencyt2w]

Fellow Billionaire Paul Tudor Jones is also just using TA as an euphemism for sthg else probably.

CLICK: Market Folly: Hedge Fund Manager Interviews

Excerpt from Paul Tudor Jones:

“It’s a hell of a lot easier to get an information edge on one stock than it is on the S&P 500. When it comes to trading macro, you cannot rely solely on fundamentals; you have to be a tape reader, which is something of a lost art form. The inability to read a tape and spot trends is also why so many in the relative-value space who rely solely on fundamentals have been annihilated in the past decade. Markets have consistently experienced ‘100-year events’ every five years. While I spend a significant amount of my time on analytics and collecting fundamental information, at the end of the day, I am a slave to the tape and proud of it.

[I come] from that period of crazy volatility [in] the late ’70s and early ’80s, when the amount of fundamental information available on assets was so limited and the volatility so extreme that one had to be a technician … When I got into the business, there was so little information on fundamentals, and what little information one could get was largely imperfect. We learned just to go with the chart.”

I guess one could try and twist facts around ones opinions now by stating that hey he ain't really using TA either as first of all reading charts has nothing to do with TA, and second of all he's he's just putting out some misleading info anyway lol !

I'm not going to let you get in your usual plug for Paul Tudor Jones and TA without getting in my usual plug for Paul Tudor Jones and FA:

Q: Let's play a word association game. I'll say a word and you say whatever comes to mind.

Q: Technical analysis

Paul Tudor Jones: Made well over half the money that I've made in my lifetime.

Q: Fundamental Analysis

Paul Tudor Jones: Made the rest.

Q: Are you better at one or the other?

Paul Tudor Jones: Probably technical analysis.

http://chinese-school.netfirms.com/Paul-Tudor-Jones-interview.html

To be more than fair, I have not snipped that last bit where he gives the edge to TA.
But the important point here is surely that in order to make his fortune, he did not only use TA.

(Newbies please note, if you are launching your career as budding Paul Tudor Joneses.)

 

[montmorencyt2w]

I like teeny weeny yellow polka dot bikinis to be honest !!!

Actually doing my homework I looked at his equity curve and compared it with oil prices, and his incredible equity explosions always concurred with price rises in oil, while his daunting losses concurred with ranging situations.

Also in a Trader Daily article his trading is described as basic mechanical trend following.

Hey btw whats up none of you guys going out for drinks ???

What's up here with work hard and play hard !!!

Some of us stay in and keep the wife company

 

[tomorton]

Surely, FA is any technique that supports financial decisions based on the financial strength of the underlying business: essentially, the company's customers' reaction to their products or services, moderated by management strategy.

And TA is any technique that supports financial decisions based on financial market behaviour, as reflected in price: essentially, the financial market's reaction to financial decisions which are based on both FA and on TA itself.

It follows that charting, quant trading, tape reading, contrarian investing, bottom-fishing, dog-picking, arbitraging - in fact anything that uses price as a factor - is TA. Let's not argue.

 

[BSD]

Monty errhem but what about when the wife is away ?

Btw, I never said FA doesn't work for longer term investing, I just get cranky when contrary to all evidence proving the opposite people go into denial and with some chip on their shoulder try to make out that nobody can utilize TA to make money trading which is just obvious nonsense.

The only ways to make money from directional trading are buying high and selling higher, or buying low and selling high, that's it, coupled with the fact that markets have a tendency to develop trends.

That is what every single system no matter if it's TA or FA driven capitalises on, that prices from time to time have a tendency to move and keep on moving, all it is is just a probability game like running a casino or an insurance company.

Anway really got to get out now !!!

Have a nice evening

 

[BSD]

And TA is any technique that supports financial decisions based on financial market behaviour, as reflected in price: essentially, the financial market's reaction to financial decisions which are based on both FA and on TA itself.

It follows that charting, quant trading, tape reading, contrarian investing, bottom-fishing, dog-picking, arbitraging - in fact anything that uses price as a factor - is TA. Let's not argue.

Absolutely, that's so patently obvious that it actually hurt my brain to have to defend that perfectly clear truism lol !

 

[tomorton]

I suppose the argument as to whether TA works will go on for ever, but I never thought we'd have to discuss what it is. Still, an nteresting thread and some encouraging examples thanks.

 

[oildaytrader]

I suppose the argument as to whether TA works will go on for ever, but I never thought we'd have to discuss what it is. Still, an nteresting thread and some encouraging examples thanks.

If t/a worked , would you have 95% club of losers?Surely traders would learn it to become profitable.The books only tell you about technical analysis, the hard part is becoming a trader who knows when and how to apply t/a.One needs trading skills or method of knowing when and how to use technical analysis, and this can only be achieved by jumping in the shark tank and swimming.One will need additional qualities to become successful, not just t/a.

 

[tomorton]

ODT - I agree with that: TA is just knowledge: wisdom and judgement are also required. But that's the same with anything in life: e.g. a car works really well at getting from A to B, but to do it safely requires more than just a briliant engineering design and knowledge of how the engine works.

But if TA + judgement = profit, then it has to be said that TA works.

I'm not worried that so many traders lose. The financial barriers to entry are very low, no training is required, it is attractive to people who are lazy and those and think they can get rich quick, it genuinely offers financial independence at very low risk (I bet 95% of the 95% don't lose the roof over their heads), and in the UK is marketed by some companies as a form of gambling (i.e. a branch of the entertainment industry). Starting with such a group, it would be amazing if 95% didn't lose. Have you imagined how many people would crash if they got into a car and started driving with the same casual approach to the skills required - probably 95%.

 

[barjon]

I think the conclusion drawn from the opening statistics is spurious.

The stats say that the biggest bunch of losers employed TA. So what? It's the people who lost not TA.

If you did a survey of failed businesses and found that the biggest bunch of losers came from those who employed standard accountancy techniques, then you couldn't extrapolate to say "employ standard accountancy techniques and you will fail" could you. It's the age old falsity "most rotten apples are green, therefore all green apples are rotten" in a different guise.

jon

 

[shadowninja]

The important thing to remember is that the four minute mile cannot be done. I mean, I can barely run half a mile before I become tired/bored so I put it to you that it is impossible to run a mile let alone a mile in four minutes. I can find at least 50 other people who also cannot run more than half a mile without complaining about being tired or in pain.

QED.

 

[0007]

Agree with Barjon. The statistic is interesting but rather meaningless because it applies generally and therefore is not indicative of individual cases.

It sounds like a typical piece of academic reserach designed to exercise the brains of researchers - it would be interesting to know what financial interest the sponsors of this research have.

I know that statistically flying is the safest form of transport ....... etc etc ....

Reading the abstract of the paper possibly suggests that speculation has the potental for greater rewards in the right hands. But we already know that don't we!

 

[BSD]

Attributing the failure of most traders on TA is really akin to claiming that because on average most new businesses fail having a go at a startup is an exercise in futility because well hey startups don't work you know.

The reality why most traders fail has nothing to do with their choice of analysis, it's entirely down to the fact that by far most people prefer being right over making money, want certainty from a holy grail that simply does not exist in a probability game where losing is an intrinsic cost of doing business that is unavoidable.


Multi-Billionaire George Soros:
"I don't care when I'm wrong. I cut my losses and move on to the next opportunity. Trading is not about being right. It's about how much you make when you are right."

An observation echoed by Kenneth Grant, who in "Trading Risk: Enhanced Profitability through Risk Control", depicts his experience as risk manager for some of the best and most successful hedge funds, amongst others Paul Tudor Jones funds and Steve Cohens SAC Capital, that:

ACROSS ALL MARKET CONDITIONS, TRADING STYLES, TIME FRAMES AND TRADERS, ONE RULE HOLDS TRUE:

10% OF ALL TRADES INEVITABLY ACCOUNT FOR 90% OF PROFITS !

http://www.amazon.com/Trading-Risk-Enhanced-Profitability-through/dp/0471650919

It's the inability to psychologically handle losses that does most traders in.

The focus of this study is the habitual speculator in commodity futures markets. The speculator's activity broadens a market, creates essential liquidity, and performs an irreplaceable pricing function. Working knowledge of the profiles and motivations of habitual speculators is essential to both market theorist and policy makers. Responses to a 73 question survey were collected directly from retail commodity brokers with offices in Alabama. Each questionnaire recorded information on an individual commodity client who had traded for an extended period of time. The typical trader studied is a married, white male, age 52. He is affluent and well educated. He is a self-employed business owner who can recover from financial setbacks. He is a politically right wing conservative involved in the political process. He assumes a good deal of risk in most phases of his life. He is both an aggressive investor and an active gambler. This trader does not consider preservation of his commodity capital to be a very high trading priority. As a result, he rarely uses stop loss orders. He wins more frequently than he loses (over 51% of the time) but is an overall net loser in dollar terms. In spite of recurring trading losses, he has never made any substantial change in his basic trading style. To this trader, whether he won or lost on a particular trade is more important than the size of the win or loss. Thus he consistently cuts his profits short while letting his losses run. He also worries more about missing a move in the market by being on the sidelines than about losing by being on the wrong side of a market move; i.e., being in the action is more important than the financial consequences. Participating brokers confirmed that for the majority of the speculators studied, the primary motivation for continuous trading is the recreational utility derived largely from having a market position.

To make it as a trader you need to be able to cope with uncertainty, have discipline, accept losses without letting them get personal, and have the ability to hold on to your winners.

None of that is rocket science let alone a significant insight, but it's the actual implementation that stumps most psychologicaly.

And that's why trading is simple but not easy, and why most fail.

 

[spinola]

Hey, these BILLIONAIRE TA traders, is there any correlation between their use of them and the Time frame they use with them ?

I " suspect " they are Inter session traders on a time wise basis. i.e. they are not using Short Term TA to make their bacon, trades to them are likely to last weeks, at a min, maybe months and possibly into the year time wise.

And I suggest this has a role to play in why they can appear to be Masters Of The Market Universe !


They master their patience while the average market speculator is in too much of a rush to realise profit, so much so, that they are not able to psychologically cope with shorter term trading, and it is for this reason that TA used, for them, on shorter time frames, leaves them caught in the headlights of the herding elephants, on route to the green pastures and rich, ripe, & boon pickings !

TA = Technical Analysis
TA = Time Awareness
TA = Traders Analysis

Perhaps if one puts all them in the pot then that will lead to Technical Ability !

Bloody hell, TA don't work ? , I see TA all the time !

ta, ta , DAMN ! see ?

 

[BSD]

Hey, these BILLIONAIRE TA traders, is there any correlation between their use of them and the Time frame they use with them ?

I guess the typical trend followers are very long term indeed, but you also have the opposite end of the spectrum with the high frequency trading outfits:

In electronic financial markets, algorithmic trading or automated trading, also known as algo trading, black-box trading or robo trading, is the use of computer programs for entering trading orders with the computer algorithm deciding on aspects of the order such as the timing, price, or quantity of the order, or in many cases initiating the order without human intervention.

A third of all EU and US stock trades in 2006 were driven by automatic programs, or algorithms, according to Boston-based financial services industry research and consulting firm Aite Group.[3] As of 2009, high frequency trading firms account for 73% of all US equity trading volume.[4]

Or also check out Billionaire Steve Cohen:

SAC's Steve Cohen whose firm routinely accounts for as much as 3% of the New York Stock Exchange's average daily trading, plus up to 1% of the NASDAQ's -- a total of at least 20 million shares a day

 

[oildaytrader]

Hey, these BILLIONAIRE TA traders, is there any correlation between their use of them and the Time frame they use with them ?

I " suspect " they are Inter session traders on a time wise basis. i.e. they are not using Short Term TA to make their bacon, trades to them are likely to last weeks, at a min, maybe months and possibly into the year time wise.

And I suggest this has a role to play in why they can appear to be Masters Of The Market Universe !


They master their patience while the average market speculator is in too much of a rush to realise profit, so much so, that they are not able to psychologically cope with shorter term trading, and it is for this reason that TA used, for them, on shorter time frames, leaves them caught in the headlights of the herding elephants, on route to the green pastures and rich, ripe, & boon pickings !

TA = Technical Analysis
TA = Time Awareness
TA = Traders Analysis

Perhaps if one puts all them in the pot then that will lead to Technical Ability !

Bloody hell, TA don't work ? , I see TA all the time !

ta, ta , DAMN ! see ?

Millionaires and billionaires are often using other people's money or like Goldman using Taxpayer's money to speculate on A I G with fraud charges.Have a flutter in a t/a casino at the expense of pension funds. heads we win 20% , tails pension savers lose .Of course t/a works , but with other people's money

 

[tomorton]

No logic in that ODT - success does not come automatically to big accounts, no matter what investment strategy is used.

 

[oildaytrader]

No logic in that ODT - success does not come automatically to big accounts, no matter what investment strategy is used.

Agreed.If you had $1,000 and it is all you could afford to lose , and if someone else had $1m , would they trade the same on the same strategy?

Is the trader with $1k going to be worried about not paying his grocery bill , or less worried about placing a trade than the $1m guy?Aee they going to trade the same , without fear of loss and hesitation?

 

[wackypete2]

Agreed.If you had $1,000 and it is all you could afford to lose , and if someone else had $1m , would they trade the same on the same strategy?

Is the trader with $1k going to be worried about not paying his grocery bill , or less worried about placing a trade than the $1m guy?Aee they going to trade the same , without fear of loss and hesitation?

If the trader with $1k is worried about paying his grocery bill he should take the $1k and pay it. IF it's money he can afford to lose then there should be no worries of that sort.

Peter