technical Analysis - anyone follow it?

[cassiopeia]

The two books Coggan mentions were wrote by Taleb and Niederhoffer, but these guys are often on opposite sides of the fence and Niederhoffer hasn't got an umblemished record. Perhaps he should have learnt how to incorporate stops into his strategies!

http://www.gladwell.com/2002/2002_04_29_a_blowingup.htm


Taleb makes much of what he learned from Niederhoffer, but Niederhoffer insists that his example was wasted on Taleb. ...... Today, Niederhoffer makes a lot of his money selling options, and more often than not the person who he sells those options to is Nassim Taleb. If one of them is up a dollar one day, in other words, that dollar is likely to have come from the other. The teacher and pupil have become predator and prey........

A year after Nassim Taleb came to visit him, Victor Niederhoffer blew up. He sold a very large number of options on the S. & P. index, taking millions of dollars from other traders in exchange for promising to buy a basket of stocks from them at current prices, if the market ever fell. It was an unhedged bet, or what was called on Wall Street a "naked put," meaning that he bet everyone on one outcome: he bet in favor of the large probability of making a small amount of money, and against the small probability of losing a large amount of money-and he lost. On October 27, 1997, the market plummeted eight per cent, and all of the many, many people who had bought those options from Niederhoffer came calling all at once, demanding that he buy back their stocks at pre-crash prices. He ran through a hundred and thirty million dollars -- his cash reserves, his savings, his other stocks -- and when his broker came and asked for still more he didn't have it. In a day, one of the most successful hedge funds in America was wiped out. Niederhoffer had to shut down his firm. He had to mortgage his house. He had to borrow money from his children. He had to call Sotheby's and sell his prized silver collection

 

[Mr. Charts]

Wayne,
I always listen to what you have to say - as I usually do to the people I respect, even if I don't agree with them ;-)
Now you've got three votes.......
Richard

 

[DaveJB]

I'm rather with Uncle here, I am not frothing like that Frank character in the Harry Enfield series etc but given this is a site where the emphasis is on TA it seems a bit confrontational to come on and post this. That somebody at the FT believes TA doesn't work doesn't invalidate it as a method... in fact it rather flies in the face of the evidence, a heck of a lot of people use it daily to trade.
That an FT writer said this isn't surprising, that's the same company who publish the Funnymentals heavy Inventors Chronicly isn't it? You know, that mag that has so much trouble finding decent share tips? They probably believe the Earth's flat as well <g> Listen to THAT lot and you'll be playing a guitar outside the tube station of your choice inside a year!
FT says it doesn't work... great, I MUST be on the right track then!
Dave

 

[ZigZag]

wayno please continue you have my vote. The value of philosophy is that all statements and views are challenged rather than allow perceptions to be taken as truth. We would still be in the dark ages if this was not the case. Although I tend to agree with uncle. T/A has allowed me to control my own investments rather than pay commision to ineffective fund managers for the privelage of losing me money. T/A is not science. My belief is a fundamental + T/A is the best approach of increasing your wealth. However as I do not trust the fundamental information available to the man on top of the clapham omnibus (Unlike Soros who pays huge sums to the best advisors in their particular fields for original research. But even he believes you have go with the majority even if the majority is wrong . His edge is he gets out before the rest.) I therefore have to rely on second best which is T.A. AS long as my returns are better than other investment vehicles using T/A it would be illogical not will stick with it. I will change my mind when Im proven wrong. Which will of course be when I can increase my returns by using a building society savings account. The value of your contrarian view is that it makes people think, preferably without emotion. Or it should do. Good Luck

 

[rossored]

Right, well sorry if the width of my charts upsets people.

However, as no-one has actually said how to reduce the chart size (although Paul/Trader333) gave an excellent example, I still don't know how to do it!!

 

[bonsai]

rosso
your isp will have offered you about 10mb of webspace for free.
get them to set it up
and load your charts in there.
then when you post here you can use that url and
use the width and height qualifiers to control your chart.

 

[RogerM]

Rosso - FWIW I find that your chart causes no problem on my 17"TFT screens which have resolution of 1280 x 1024 and can be viewed in its entirety without having to scroll across. It does cause a problem with my 3rd screen which is a 17" CRT screen with resolution of 1024 x 768 where I have to scroll across to see both the chart and the text in posts. Could it be that you are preparing your charts on a screen with a high resolution and that those using screens with a lower resolution are experiencing problems?

 

[rossored]

Sadly, no. I use a 1024x768 res and I know the chart takes up a lot of space. I just assumed it wasnt a problem as I havent seen these kind of comments on other threads where charts of the same size as mine have been posted.

Must be my aftershave

 

[DaveJB]

Rosso,
no - and I'm 17" LCD and have no problems either, but anyone crawling the net will lose some res due to "Favourites" etc and be looking at a 700 or so pixel wide screen. (Some users will find the problem goes away if you deselect favs/bookmarks and let the browser window go full screen for the web page itself).
It IS a problem for lower res, as ALL posts then go widescreen even when they don't need it. Try saving your piccy to 640 wide perhaps, then upload...
Annoying, yes... not your fault though and I'm sure most here accept that you were only trying to post something worth looking at, it;s just that the typical trader is a 795 old Witch with corns and has recently developed indigestion. (An unexpectedly true result from the same source as Tony B's WMD).
Dave

 

[JungleJim]

I'm only a beginner to investing and only invest by buying and selling shares but here is my observations so far.

I'm the chairman of a small local Investment Club. For the first two years we invested in tip or gut feeling and lost loads of money (we did not have a stop loss and some of our shares dropped by 90%!!).

We then started to form a strategy and only invest in companies that met the strategy. All the shares in our strategy are trading profitably and a large part of our strategy involves TA. I also trade personally and use FA to create a shortlist of shares and then use TA to pick the one share to invest in. Since doing this only one of my trades has not made me money. So I believe TA does work. I don't read into TA what I want to see because otherwise I would read every TA chart as telling me it will make money for me and that does not happen. I look at the charts and they tell me if it is a good time to buy or sell. I find chart reading much easier than struggling to read Fundamentals. Fundamentals only tell us what has already happened in the past. TA tells us what is happening at the present and what will happen in the future.

 

[JungleJim]

I also forget to say in my last post that I also think that a lot of people use TA without even realising it (which is exactly what Bonsai said earlier).

 

[bonsai]

Jim
sorry to hear that your club had some bad times.

but I would suggest it taught you a hell of a lot more than beginners luck ever will.

luck reinforces bad habits.
pain makes sure you dont do it again ?

best of luck.

edit
oops. I should have said 'break a leg' !

 

[martinwalker]

Coggan looked at ta like an amateur and it shows in his writing.
The article shows his ignorance. Easy to sneer when you know nothing.
m

 

[PurplePerson]

Wayno - Surely it isn't that TA doesn't work - it's that TA (you think) doesn't work for you. Someone who can't drive might conclude that the car which won't go when they use it is broken.

You have a personality that suits some particular approach. Fine. that's the one to stick to then. Some of us have a personality that suits a TA approach, or a combination of TA plus whatever.

I hope I would never crow too loudly when winning with whatever system I do use, and declare it to be superior.

Incidentally, I agree with those above who point out that - by your own description of your methods - you are (shock, horror) using TA without wishing to recognise it.


PS: TA guides are ten-a-penny on the net. But the A-Z and Easy Guide at http://www.incrediblecharts.com/index.htm are about the best I've seen so far for anyone seeking TA enlightenment

 

[CityTrader]

Purple,
I don't disagree with what you say, and it ( presumably) works for a lot of people. It slightly concerns me when other users like TBS & Uncle become slightly more vociferous about their beliefs.
Obviously different methods work for different personalities, and I certainly don't have the intellect or patience for FA. And unless I'm mistaken, I have never crowed on here about my profits ( or losses!)
I still believe that if TA worked, then every pension fund in the world would use nothing but software to trade, pension fund managers/ hedge fund managers would be defunct, and the market wouldn't exist as we know it now, as 3 or 4 mega investment banks would do 90% of the trades through their "perfect TA models"

Wayno

ps just as a matter of information, I went on a TA course for 2 hours a day for 10 days a few years ago - paid and provided for by my employers - I went in, wanting to believe.. so maybe it is just me!
B

 

[Trader333]

There are a couple of things that are maybe appropriate here:

My understanding is that pension fund managers are not allowed to "Short" stocks and as TA involves determining when to go short they cannot use it.

They only ever perform well in Bull markets when no real TA is needed to make an ongoing profit. This is evidenced by the fact that since the markets have gone from Bull to Bear, pension funds have lost an absoulte fortune in value as has every fund that relies on the "Supposed Skill" of the fund manager to select profitable trades.

I have devised a simple TA system that if used between 1984 and 2001 would have turned a £10,000 starting bank into £2.8M and would still be making profits upto today. It is based entirely on TA and I also posted the entire results of all trades on another thread.

So in my view TA "Can" work and I emphasise "Can" because everyone uses it differently and manages trades differently as well.


Paul

 

[Bigbusiness]

Hi Paul,

Do you have a link to the thread you mention above with the results of your system? I can't find it and would like to have a look.

 

[Trader333]

Hi BB,

The file is an Excel spreadsheet with several worksheets so check them all. This is the format that Tradestation provides strategy testing in. The currency says $ but that is because the symbol cannot be changed to £.

Cheers


Paul

 

[mombasa]

Hi Paul,

Do you have a link to your TA system?

Thx

 

[JonnyT]

The argument whether TA works or not is purely acedemic.

First of all you need to define TA. The writer of the article has not done that. There are that many variables that it would take a super computer years to formulate any conclusion.

Lets spin this round abit. Assuming then that fund managers use FA we could say FA doesn't work as 90% of funds underperform the indices.

I know TA can work, I also know FA can but most people will fail with both.

JonnyT