All You Need... is a Chart

[Guest forsearch]

Are you being ironic?

If not, do you have anything to substantiate those claims?

 

No irony here. No claims either. Just an opinion based on observations, anecdotes, and hearsay :missy:

 

Washington Post article: Plunge Protection Team - Sunday, February 23, 1997, Page H01

 

Presidential Executive Order 12631--Working Group on Financial Markets

 

Wikipedia entry on PPT

 

By argument, if the PPT exists, and it operates as it is said to, then, ceteris paribus, it must be the smartest of the smart money of all.

 

-fs

[Sledge 13]

Thanks for the comment. It was indeed the typical 'herd getting caught on the wrong side of the move'... would you consider the close of the first bar sufficient enough reason to go long immediately? It was only because there was potential support around that level that I would feel confident enough to do so. But you're right, it clearly showed how strong demand came in.

 

Ok if the area that the first bar dropped into and retreated at close was indeed on a support line- as long as the close was above the support line, I personally would probably taken the long at that point. You see I would have had to ride out the dead cat bounce but up in the long run.

 

However if the support line was below or very close to the close of bar #1, I would have waited for confirmation.

 

I trade a bit more aggressively than some. Very many folks would NOT take a long on bar #1 even after close as they want trend confirmation. To me if that bar closed far above Support but touched into that neighborhood on its tail- yes, that is a pretty strong indication that the market is bullish.

[firewalker 10]

Ok if the area that the first bar dropped into and retreated at close was indeed on a support line- as long as the close was above the support line, I personally would probably taken the long at that point. You see I would have had to ride out the dead cat bounce but up in the long run.

 

However if the support line was below or very close to the close of bar #1, I would have waited for confirmation.

 

I trade a bit more aggressively than some. Very many folks would NOT take a long on bar #1 even after close as they want trend confirmation. To me if that bar closed far above Support but touched into that neighborhood on its tail- yes, that is a pretty strong indication that the market is bullish.

 

Thanks for explaining. However the support was from way back in March and I couldn't exactly pinpoint it to the exact tick... it's more of a zone obviously.

 

And I agree, the best entry is often the most aggressive one

[Sledge 13]

Thanks for explaining. However the support was from way back in March and I couldn't exactly pinpoint it to the exact tick... it's more of a zone obviously.

 

And I agree, the best entry is often the most aggressive one

 

Well as you know by the chart you posted, I'd be looking at a small portion of that entire picture. So blindly it would be a good call. Depending on how many times that support had been tested and how hard it was hit would show how strong it is. On your chart they gave it a pretty good beating and it held- so I would say that it is a good line of major support.

 

The caviat with it is this, if it is a major support, the market makers will need to draw out the floating supply. the Volume on that beating was VERY high- Thus that nice little rise on the chart- may quickly return back to the previous tested area-- and soon-- if their is less volume when it re-tests you are looking at a confirmation that the supply is being sapped out of the market and have an even stronger sign that the market is bullish.

 

My personal trade on this would be (without ever seeing this chart until now is)

1. I would have bought on that stopping volume bar

2. I would have been very careful to monitor the trade as it rises and lock in profits

3. If I see it starting to slide- I see that not as an "oh shit" but I expect it as a potential scenario because of the massive volume on the initial bar that tested the Support line.

4. If it DOES re-test supply line, I will wait for that test of supply to finish, if it breaks the supply line with conviction (i.e. it blows clean through the line and closes well below it with no tail when the bar closes)- I go short, if volume is less than the first test- I know it won't break that supply line and I go long.

 

Sledge

[firewalker 10]

This excellent post was made in the premium section, so I thought I'd copy it over here so everybody can read it. Thanks to cowpip.

 

...

I read a lot, trying to understand exactly what kind of shape the economies of the world are in, but with a particular slant towards where interest rates are headed. I could care less about the drivel that analysts spout (such as the mindless automotons on CNBC). They know less about where currencies are headed than most and are probably actually better contrarian indicators.

 

For me, price action is king, and I'll trade what I see long before I will trade what I think. I've thought for some time now that the U.K. and U.S. economies are in the dumps - and far worse is likely to come. But I have no idea when that state will manifest itself in the markets, which is why I can't trade what I think.

 

But the fundamental slant I obtain does give me some basis to understand price action (at least longer-term price action) and it does help me anticipate major changes in interest rate policies. Yes, sometimes there is no correlation between price action and the fundamentals (as you have noted) - particularly for shorter-term swings, which is why price action always trumps fundamentals in my mind. Anyone who trades based solely off of the fundamentals is in for a sore surprise and a losing profit-to-loss graph.

 

In the end, price action doesn't lie. It's king. It's always been that way, and will always be that way. This is why I can completely understand how you can be on the winning side of your trades so often, even disregarding fundamentals. It's also why I am on the winning sides of trades more often than not. If my fundamental analysis weighed more heavily than price action, or if I allowed my fundamental analysis to unduly bias my price-action interpretation, I would see a hole rather than a profit. It's as simple as that, to me.

[TraderJean 10]

All I need is a chart, but which chart? Can anyone tell me a good chart platform. My broker doesn't offer much in way of charts and Esignal, which i've looked at, is ridiculously expensive. Any help would be much appreciated.

 

 

Thanks,

 

Jean

[brownsfan019 17]

Depends what you need Jean. I use Open ECry and love the entire platform. There are some things that I would like to see changed, but it works very well for me.

 

You can download a free demo here: https://www.openecry.com/software/download1.cfm

[Ants88 10]

All I need is a chart, but which chart? Can anyone tell me a good chart platform. My broker doesn't offer much in way of charts and Esignal, which i've looked at, is ridiculously expensive. Any help would be much appreciated.

 

 

Thanks,

 

Jean

 

 

Hello TJ, I've been using http://www.quotetracker.com with Interactive Brokers. QT is free with a limit of 2 days history or $5 a month with 10 days history.

 

I also use them for these videos for TradersAudio.com; http://www.youtube.com/watch?v=uodKTWWmIs0

[firewalker 10]

http://traderfeed.blogspot.com/2008/12/trading-news-when-bad-news-cant-keep.html

 

Great post from Steenbarger in his blog:

 

"Markets that cannot rise on good news and that cannot drop on bad news provide useful information for active traders. It's not the news itself, but the market's response to the news that is most important to track. "

[86834 10]

Fundamentals are extremely important, and unless you fully understand the impact of fundementals on the market that your trading will never really progess and you should stay away from trading around figures. Professional traders love their figures, when i was prop trading european fixed income markets, sometimes we used to take the whole week off ahead of ECB rate cuts, or non farm payroll figures, because on these figures is where you really make the cream. We used to come in for 11am, unload our size in the market on the release of the figures over reutures, make 250k, be out the door by 2:30/3pm latest, and go for a pie and pint. It's them days that made up for the majority of money we made in a year.

 

Figures are not as simple as the EBC cuts rates, so bonds go up etc. You need to understand your market and it's relationships, and what is priced into the market (so what is expected). For example if you're trading fixed incomes, the schatz may be more likely to react more violently to a rate than say the bund because of the 2yr life compared to 10yr. Or for example comments concerning inflation that indicated more room for rate cuts can cause the market to go bid. But as i stated you need to be aware of what is expected and priced in, and how the market will react in ever sanario, so you know exactly what to do whatever the the outcome of the figure being realeased.

 

To give you an example of what i mean, on the 4th of dec 2008 we had some of my fav figures out. We had riksbank rate decision, eurozone gdp q/q and y/y, bank of england rate decision, ecb rate decision, initial jobless claims and trichets press conference....

 

Riksbank banks previous rate was 3.75% and the market was expecting a cut to 2.75%, so a 100bp cut was priced into the market as this was what the market was expecting

 

ECB previous was 3.25% and a cut to 2.75% was expected, so a 50bp cut was priced into the market....

 

Sitting there thinking a rate cut is gonna move the market isn't gonna get you anywhere because this is priced into the market, every man and his dog is expecting a rate cut, the value and opportunity comes in when the figures are out of line.

 

So think about it... for example the ECB cuts 50bps the market is gonna do jack because everyone is expecting that.... but what happens if they cut 150bp's?

 

Thats when you trade figures and make a heck of alot of money in a few seconds and leave work early because you know you've got an extra 250k-500k coming in at the end of the month.

[firewalker 10]

Fundamentals are extremely important, and unless you fully understand the impact of fundementals on the market that your trading will never really progess and you should stay away from trading around figures.

 

The problem is that a lot of the people claiming you can't trade without having knowledge of the fundamentals, fail to translate their knowledge about fundamentals into a profitable trading strategy. I know you might be an exception, but declaring that a trader will never really progress, is - at best - a joke.

 

Wasp knows next to nothing about any news, atto doesn't follow news at all, and if you read this thread you'll know where I stand. I have yet to see any of the fundamentalists around this forum put on a trade in real time, without the usual mumbo-jumbo and with some solid straightforward reasoning behind it.

 

Professional traders love their figures, when i was prop trading european fixed income markets, sometimes we used to take the whole week off ahead of ECB rate cuts, or non farm payroll figures, because on these figures is where you really make the cream.

 

I'd love to see some real-time examples of how to trade the news, but given the recent exchange of thought on this topic, this is a better place to do so.

 

Next week brings a load of interesting numbers, so I'd say give it your best shot Happy NY.

[DbPhoenix 42]

So think about it... for example the ECB cuts 50bps the market is gonna do jack because everyone is expecting that.... but what happens if they cut 150bp's?

 

Same thing that always happens in these cases: either people buy because they're elated that the cut was more than expected, or they sell because things must be much worse than they thought they were if such an unexpected cut was necessary.

 

Either way, it's all in the chart, so why bother?

[86834 10]

The problem is that a lot of the people claiming you can't trade without having knowledge of the fundamentals, fail to translate their knowledge about fundamentals into a profitable trading strategy. I know you might be an exception, but declaring that a trader will never really progress, is - at best - a joke.

 

Wasp knows next to nothing about any news, atto doesn't follow news at all, and if you read this thread you'll know where I stand. I have yet to see any of the fundamentalists around this forum put on a trade in real time, without the usual mumbo-jumbo and with some solid straightforward reasoning behind it.

 

 

 

I'd love to see some real-time examples of how to trade the news, but given the recent exchange of thought on this topic, this is a better place to do so.

 

Next week brings a load of interesting numbers, so I'd say give it your best shot Happy NY.

 

 

Without coming across like i'm putting myself on a pedestal, or knocking the fourm (because i'm not at all), when you say about people providing a valid argument or doing live trades, you have to remember where you're discussing this. The majority of people on these forums don't know what they're doing... fact... and i would say out of everyone registered to this forum, i'd put my money on less than 1% are actually professional traders, or people who make a full time living out of this. How many professional traders are gonna be posting on internet forum during market hours? Also for these types of trades that i mentioned above, it's impossible to show on a forum live, because by nature they tend to be either a massive spike that retraces just as fast, or market direction will change very rapidly leaving the trader who uses just a bar chart behind, and if you didn't know that there was a figure out, how are you gonna explain, let alone trade these moves?

 

I never said you couldn't trade without fundamentals, i said you would only go so far. If you have two traders trading a fixed size of say 50lots, one who uses just a bar chart and one who uses a bar chart but can properly apply fundementals to their trading and play the figures, the latter would wipe the floor with the first one.

 

There are facts that you have to accept, like when it rains people get wet...

 

Professional traders are at the front of the information curve ... FACT, prop firms, investment banks etc all spend a vast amout of money on having the fastest most up to date information, that is far out of reach of non professional traders, unless they already know about this stuff and they happpen to already be wealthy and can afford the means before they start their trading journey.... FACT. Waiting for the figure/data to come out on bloomberg/cnbc on sky or cable TV, or internet forums doesn't put you anywhere near the front of the information curve

 

I've attached a screen of what these typical moves look like. It's a 5min Bund chart and is highlighted in a red circle. Professional traders are in and out of trades like that while 99.9% of people are sat looking at their bar charts covered in indicators wondering what the hell just happened. FACT - this is what i do for a living

 

Don't judge the skill of trader on just how much they make. If someone has a candle stick pattern that gives them 2 ticks a day, and thats all they know, all they have to do increase their size acording to their account size and they'll make a lot a money. Doesn't mean that they understand whats going on tho. Earning a couple of million a year doesn't mean you're anyone in this game, all of my colleagues earn more than a couple million a year but in the grand scheme of things they're nobodies... i'm nobody.

 

Don't put yourself in a box and say all i need is a bar chart, because you need everything that is gonna give you an edge in this game. Heck, when i was prop trading they used to send us to a sport psychologists every now and then to try and help us find a mental edge (they always used to tell me that i shouldn't have black charts because they make you trade angry lol). When people get involved with trading they seem to get so hung up on the concept that there's a 'system' out there thats gonna give them exact entries, and all they need is one method. Not as simple as that i'm afriad. A professional trader could give the techinical methods they use to trade to anyone here and the majority will still lose money - i've seen it many times.

 

You need to accept that it is what it is. Professional trading and sitting at home spread betting or trading retail are competely different worlds. Fundementals play a huge role in the financial markets.

 

Tell me this, if you're trading the fixed income markets and want to trade a calander spread that gives you a synthetic position with lower risk and margin, how are you going to do it without fundementals? Or how are you going to do a butterfly trade? These methods are lower risk and have high profit potential compared to trading outrights. Like i say tell me how you would do this with no fundementals, i really am intreeged...

 

As i said before, i'm not knocking anyone or the forum (i like the forum or else i wouldn't post on it when i get time). People need to accept what is and remember where they stand in the grand scheme of things. There was a time when i used to think all i needed was a chart, but when i first started prop trading my mentor said to me 'the stuff you're not interested in learning is the stuff you need to learn most of all' - it was when i fully took that on board and took the apporpiate steps, that i started really going somewhere.

[atto 20]

Not to really jump into the crossfire, but I would dare to say that this forum has a higher concentration of professionals (who daytrade as their primary source of income) than any other I know of. To respond to how we'd know about trades people are making, because it happens so fast: a number of us enjoy hanging out in the TL chat room (link above in the navigation bar). Several people there, myself included, would fall into the "professional" category, and talk about what we're looking at real time. You're more than welcome to join us and chime in your thoughts (it's most active during US hours, primarily in the morning session).

 

I personally use zero fundamentals in my day trading (I trade index futures), but I certainly wouldn't knock anyone who does. And no, I don't scalp for two ticks, spread bet, or anything like that. I don't think I'm boxing myself in by limiting myself to the tools I choose, but I could be mistaken. However, it seems to be working fairly decently (to say the least).

 

Your differing opinions are interesting, though. And I'll let you guys continue... :missy:

[86834 10]

Not to really jump into the crossfire, but I would dare to say that this forum has a higher concentration of professionals (who daytrade as their primary source of income) than any other I know of. To respond to how we'd know about trades people are making, because it happens so fast: a number of us enjoy hanging out in the TL chat room (link above in the navigation bar). Several people there, myself included, would fall into the "professional" category, and talk about what we're looking at real time. You're more than welcome to join us and chime in your thoughts (it's most active during US hours, primarily in the morning session).

 

I personally use zero fundamentals in my day trading (I trade index futures), but I certainly wouldn't knock anyone who does. And no, I don't scalp for two ticks, spread bet, or anything like that. I don't think I'm boxing myself in by limiting myself to the tools I choose, but I could be mistaken. However, it seems to be working fairly decently (to say the least).

 

Your differing opinions are interesting, though. And I'll let you guys continue... :missy:

 

I agree that there are people on this forum that know what they're doing and are making money, and thats why i like having a browse in my spare time and reading what these people have to say. All you have to do is compare the premium forum to t2w to see that

 

 

I didn't mean to come across like i was knocking spread betting or retail trading etc, but i do think people at times do need to take a step back and remember what they're playing with here... the global financial markets. If you're making money then money is money at the end of the day, but to say something along the lines that fundamentals is useless or you don't need to bother with it, in my eyes just makes you look like a plank who really doesn't have a clue (not aimed at you fw, you're the only one on my friend list )

 

Here's my take on things... When i browse the forums on the internet you have a small handfull of people from these places who are making money, and more power to them, however... 99.9999% of people on these forums, including some of those who are making money don't really have a clue whats going on behind closed doors in the city eg prop firms, investments banks etc

 

I'm not implying i know everything, far from it, but as someone who is a professional trader, and has traded in the city, and now runs their own private fund, i must admit it does irritate me when i see someone saying 'bah all you need is a chart, fundementals is a load of bollox' because the only thing that's a load of bollox is that statement.

 

In the global financial markets there are all sorts and every sorts going down, from basic t/a to mind bogling algorithms and financial models that will blow yours and my mind into the next decade. Investment banks spend millions upon millions upon millions researching fundamentals and incorporating them into their trading strats, then invest billions upon billions based on them. That's fact wether you like it or not. People need to realise that we're in their backyard, and sitting there saying fundamentals have no place or whatever, is just plain ignorant.

 

Yeah you can make money using just a chart, but to me good solid trading is being able to adapt quickly and being able to adjust to anything the market throws at you and, understanding the underlying forces that are pulling the levers will help you with this goal. Fundamentals play a massive role.

 

Look at all them daytraders in the dotcom boom using candlestick patterns and thought that's all they needed to know, then the pop came and they all went flat on their face. Most of them are working crappy average jobs now in retail.... says it all.....

[OAC 10]

Frankly, you guys are not making too much sense here. Is it me or did one of you guys had too much to drink on New Year's Eve ?

[atto 20]

Ah, okay, I'll bite . Saying fundamentals are useless is far different from saying that fundamentals are not necessary. You could disprove the former adequately with consistent returns gained from fundamental analysis. However, you couldn't prove the necessity of fundamentals by using them. Rather, to prove they're necessary, you'd have to fail at every other methodology that doesn't use them. So you see the burden of proof here is far more complex than arguing how well they work, or how complicated the financial system is, or how you can play news events.

 

On the contrary, I'd argue that they aren't necessary, because myself and others (with more weight to "others", as I'm just one person) profit consistently without them. Therefore, we both arrive at the same place: ample profits derived from our methodologies; you from a primarily fundamental approach, me from a technical approach. You don't hear the Oil billionaires arguing the real estate billionaires that their methods for gaining fortune were better. Therefore, if we can get past extremes of "fundamentals don't work" (which of course they can), or "technicals can't work without fundamentals" (likewise), why does it matter?

 

Yeah you can make money using just a chart, but to me good solid trading is being able to adapt quickly and being able to adjust to anything the market throws at you...

Then quite possibly our definitions of "solid trading" differ... I attempt to maximize profits per time invested.

[86834 10]

Ah, okay, I'll bite . Saying fundamentals are useless is far different from saying that fundamentals are not necessary. You could disprove the former adequately with consistent returns gained from fundamental analysis. However, you couldn't prove the necessity of fundamentals by using them. Rather, to prove they're necessary, you'd have to fail at every other methodology that doesn't use them. So you see the burden of proof here is far more complex than arguing how well they work, or how complicated the financial system is, or how you can play news events.

 

On the contrary, I'd argue that they aren't necessary, because myself and others (with more weight to "others", as I'm just one person) profit consistently without them. Therefore, we both arrive at the same place: ample profits derived from our methodologies; you from a primarily fundamental approach, me from a technical approach. You don't hear the Oil billionaires arguing the real estate billionaires that their methods for gaining fortune were better. Therefore, if we can get past extremes of "fundamentals don't work" (which of course they can), or "technicals can't work without fundamentals" (likewise), why does it matter?

 

Then quite possibly our definitions of "solid trading" differ... I attempt to maximize profits per time invested.

 

i think you completely missed the point of my post i'm not saying i'm coming from a fundamental approach, rather than technical approach as i use both in equal amounts. In your example of oil and property if both work why not combine the two to make more money and have a more balanced portfolio, rather banging all your eggs in one basket (what i interperated fw as saying), so when the property market goes pop and you loose the property game (all them dotcom day traders who thought they were masters of the universe with their candle hooks) you still have your oil billions....

 

The way i took this thread was someone saying fundementals are basically a load of crap, prove me wrong if you think otherwise. That's the bit where i put my 2 cents in.

 

Like i say, i'm not one to limit myself, anything that i can use to give me an edge i will, and everything has a place in this game. For example if there's no market moving figures out on a certain day in the fixed income market then i'm trading from a very technical point of view. If there are market moving figures that are out of line i'm gonna hit the market on the bid/offer if i feel it is right to do so and profit from them large quick spikes. If the fundamentals are pointing the market in an overall direction then i will take this into considersion when spreading bonds

[86834 10]

Then quite possibly our definitions of "solid trading" differ... I attempt to maximize profits per time invested.

 

So do i.... for example by bringing fundementals into my trading alongside technicals i'm maximizing profits per time invested because i'm taking advantage of more opporunites available in the market by using both techs and fundamentals.... rather than saying all i needs is techs

[atto 20]

The horse is on its dying breath, so I'll make my last remark, and let it be. I don't think anyone has said that fundamentals are pointless, but rather not necessary -- to which I'd agree, as it seems you would as well (since it's possible to trade purely technically). My previous post wasn't meaning to misrepresent what you're arguing either, as I know you use both.

 

If seeking edge after edge to maximize every situation is one's goal, then he may want to thoroughly investigate fundamentals. However, that's not really my goal. My point about the billionaires had little to do with industry: at the end of the day, what works for you and others, works; likewise, what works for me and others, works.

 

Yes, if, hypothetically, you knew -- secretly -- that the Fed would cut rates 50 basis points below expectations, that would be fundamental knowledge not priced in. However, on a more macro scale (I'd argue anything past an initial shock of a number), I do think trading decisions can be performed better from the charts.

[86834 10]

The horse is on its dying breath, so I'll make my last remark, and let it be. I don't think anyone has said that fundamentals are pointless, but rather not necessary -- to which I'd agree, as it seems you would as well (since it's possible to trade purely technically). My previous post wasn't meaning to misrepresent what you're arguing either, as I know you use both.

 

If seeking edge after edge to maximize every situation is one's goal, then he may want to thoroughly investigate fundamentals. However, that's not really my goal. My point about the billionaires had little to do with industry: at the end of the day, what works for you and others, works; likewise, what works for me and others, works.

 

Yes, if, hypothetically, you knew -- secretly -- that the Fed would cut rates 50 basis points below expectations, that would be fundamental knowledge not priced in. However, on a more macro scale (I'd argue anything past an initial shock of a number), I do think trading decisions can be performed better from the charts.

 

I know the point about billionaires had nothing to do with industry, i was just using the example you gave for the 'putting you're eggs in basket'

 

I think on the macro scale fundementals are most important. I'll start another thread on it when i get up because it will stray off the original topic.

 

It's 6:50am here and i haven't been to sleep yet and i've already broken my new year resolution by smoking a 20 deck...

[firewalker 10]

The way i took this thread was someone saying fundementals are basically a load of crap, prove me wrong if you think otherwise. That's the bit where i put my 2 cents in.

 

Just for the record, I don't recall saying fundamentals are crap... all that was said is basically in the thread title: you don't need funnymentals to trade. You don't need MA's to trade, but some manage to do fine with them. Does that mean MA's help people become a better trader? Perhaps for some, but would you say it's a necessary requirement to be a profitable trader? Nope.

 

Honestly, from my point of view (which is an intraday trading one), I'd really like to see how anyone can improve their results by using a fundamental approach.

 

I am not putting my head in the sand by choosing to be blind to anything that deviates from my opinion. On the contrary, I am very open to suggestions, but only two weeks ago we had some people around here, claiming that FA are the tools of the professional and how they ignoring it is being a fool etc etc... Unfortunately when it comes down to actually pulling the trigger, none of that information helped.

 

How many professional traders are gonna be posting on internet forum during market hours? Also for these types of trades that i mentioned above, it's impossible to show on a forum live, because by nature they tend to be either a massive spike that retraces just as fast, or market direction will change very rapidly leaving the trader who uses just a bar chart behind, and if you didn't know that there was a figure out, how are you gonna explain, let alone trade these moves?

 

As for the live trading part: several people have been calling where to enter and where to look for an exit before they put on a trade. The market is not moving 100 points in 1 minute, and it only takes 3 seconds to type "short here" or "long now". The chatroom is ideal for these kind of things. Many traders have been doing it and indeed explaining their trades. As for the rest of the comments, atto has done a pretty good job of answering those so I'll leave it at that.

 

One last thing example regarding news:

 

Last Tuesday consumer confidence showed a record low of 38, well below the expectation of 45 of economists surveyed. Yet the market somehow choose to ignore that, hold steady and start moving upwards. How was that already priced in? Hypothetically speaking, if you know it was going to be that bad, wouldn't you want short the market before the number comes out? Whatever explanation people like to give for this, the fact is price was trading near or at support and there were enough buyers around that level to keep price from falling. There might be a dozen other approaches, but a wise man once said "All other things being equal, the simplest solution is the best." Which is why couple of min after the release I took a long trade (ES 872). I hadn't even looked at the CC number, I just traded what I saw instead and I mentioned a potential price target of 886. Seven hours later price eventually hit 886.25 and the high of day was 888.75.

 

Another example: on Wednesday, dbphoenix mentioned there the odds where higher that the NQ would travel all the way to 1225 after reacting off 1200 early in the day. The high of day turned out to be 1224.75. That makes me wonder, what extra benefit could FA offer above this?

 

PS: as for the chart you attached, it's too small to really see anything on it...

Edited January 2, 2009 by firewalker

[OAC 10]

Professional traders are at the front of the information curve ... FACT, prop firms, investment banks etc all spend a vast amout of money on having the fastest most up to date information, that is far out of reach of non professional traders, unless they already know about this stuff and they happpen to already be wealthy and can afford the means before they start their trading journey.... FACT. Waiting for the figure/data to come out on bloomberg/cnbc on sky or cable TV, or internet forums doesn't put you anywhere near the front of the information curve

 

So I guess nothing is faster on the information curve than putting a bug on Bernanke's phone line ? Then I guess if you are rich enough. nothing is out of reach. But wasn't that what the movie "Wall Street" was all about ?

When you label all this as Fundamental Analysis which institutions spent billions on, you have just created massive confusion.

God save the newbie traders on TL

:cheers:.

[Hlm 10]

I will start off by saying that I have nothing against fundamental strategies and those that trade them. I actually use to trade news in Forex as well as swing trade (non news related) penny stocks off of fundamentals. For me personally, I moved over to the pure technical aspect for two reasons. One...to make things as mechanical as possible. Two...to decrease my draw downs. Of course, the second reason can vary greatly depending on the experience of the trader, etc.

 

Now to the meat...

 

Fundamentals are extremely important, and unless you fully understand the impact of fundamentals on the market that your trading will never really progress and you should stay away from trading around figures.

I might agree with you a little if you mean to put an intraday position on right before or right on release of a big announcement and specifically for it (especially in the FX world). But if you are meaning staying away from going in and out before and after the an announcement I would disagree. Which leads me to my next point...

 

Investment banks spend millions upon millions upon millions researching fundamentals and incorporating them into their trading strats, then invest billions upon billions based on them. That's fact wether you like it or not. People need to realize that we're in their backyard, and sitting there saying fundamentals have no place or whatever, is just plain ignorant.

You are right, and this is ABSOLUTELY why I am purely technical. This is exactly why my methodology/edge will always be around and work in open liquid markets. Why would one want to waste their time trying to match or even beat these "big boys" at their own game. Big money spends their time putting on (before news) and taking off (after news) their positions in chunks because they can't do it all at once while getting the fills/averages they want. These swings, waves, or fractal like moves is where someone like me can consistently make money using pure technicals. I don't mind putting all my eggs in one basket (technical analysis) since without the basket (aka Big Money) there would not be a market to trade.

 

So do i.... for example by bringing fundementals into my trading alongside technicals i'm maximizing profits per time invested because i'm taking advantage of more opporunites available in the market by using both techs and fundamentals.... rather than saying all i needs is techs

This can vary so much. It depends on what your positive expectancy and draw down is for each. But to say that bringing both into trading automatically increases your profits per time invested is most likely not true in my opinion. Of course, for you, it may depending on your strategies. But different strategies have different risks and fit different personalities. Especially when you are dealing with fundamentals which by nature aren't mechanical friendly.

 

Don't judge the skill of trader on just how much they make. If someone has a candle stick pattern that gives them 2 ticks a day, and thats all they know, all they have to do increase their size acording to their account size and they'll make a lot a money. Doesn't mean that they understand whats going on tho. Earning a couple of million a year doesn't mean you're anyone in this game, all of my colleagues earn more than a couple million a year but in the grand scheme of things they're nobodies... i'm nobody.

:hmmmm: I am still trying to figure out what you are getting at here. Someone who can consistently make money (say 2 million a year) with a candle stick pattern that gives them a couple of ticks a day (again, consistently)...is not a skilled trader to you? :hmmmm: My response to you would be a simple "so?". I guess it depends on what your personal idea of success is. I'll take my 2 million a year and enjoy every second of my life without understanding what's going on and not being anyone in this game. I could be completely off (apologize if I am) but your mentality kind of sounds like those that try to buy the bottoms and sell the tops. Those that are looking to catch the entire move. You don't have to be the president to be in politics.

 

I will leave it with this...as those before me have stated, it's not that one can't trade with fundamentals or use them in their strategies, but that it is indeed not needed to be consistently profitable in this business. Just like I am sure some would argue that technicals are not needed to be consistently profitable as well.

 

P.S. It would be great if those that do trade fundamentals start some threads on the topic.

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Just for the record, I don't recall saying fundamentals are crap... all that was said is basically in the thread title: you don't need fundamentals to trade. You don't need MA's to trade, but some manage to do fine with them. Does that mean MA's help people become a better trader? Perhaps for some, but would you say it's a necessary requirement to be a profitable trader? Nope.

 

Honestly, from my point of view (which is an intraday trading one), I'd really like to see how anyone can improve their results by using a fundamental approach.

 

I am not putting my head in the sand by choosing to be blind to anything that deviates from my opinion. On the contrary, I am very open to suggestions, but only two weeks ago we had some people around here, claiming that FA are the tools of the professional and how they ignoring it is being a fool etc etc... Unfortunately when it comes down to actually pulling the trigger, none of that information helped.

 

 

 

As for the live trading part: several people have been calling where to enter and where to look for an exit before they put on a trade. The market is not moving 100 points in 1 minute, and it only takes 3 seconds to type "short here" or "long now". The chatroom is ideal for these kind of things. Many traders have been doing it and indeed explaining their trades. As for the rest of the comments, atto has done a pretty good job of answering those so I'll leave it at that.

 

One last thing example regarding news:

 

Last Tuesday consumer confidence showed a record low of 38, well below the expectation of 45 of economists surveyed. Yet the market somehow choose to ignore that, hold steady and start moving upwards. How was that already priced in? Hypothetically speaking, if you know it was going to be that bad, wouldn't you want short the market before the number comes out? Whatever explanation people like to give for this, the fact is price was trading near or at support and there were enough buyers around that level to keep price from falling. There might be a dozen other approaches, but a wise man once said "All other things being equal, the simplest solution is the best." Which is why couple of min after the release I took a long trade (ES 872). I hadn't even looked at the CC number, I just traded what I saw instead and I mentioned a potential price target of 886. Seven hours later price eventually hit 886.25 and the high of day was 888.75.

 

Another example: on Wednesday, dbphoenix mentioned there the odds where higher that the NQ would travel all the way to 1225 after reacting off 1200 early in the day. The high of day turned out to be 1224.75. That makes me wonder, what extra benefit could FA offer above this?

 

PS: as for the chart you attached, it's too small to really see anything on it...

 

 

As for time for posting live trades, in danger of sounding like a snob, but i'm gonna say it anyway, i stand by that no professional trader (maybe a couple) are posting on the forums during market hours if they're trading, and by professional i'm classing people who have made a career in the financial markets by rising through various paths in the city. I stand by my statement that sitting at home trading for yourself and trading in the city are completely different worlds (i'm not for one moment knocking people trading on their own at home, more power to you), but you have to accept that it's like comparing sunday league football to the premier league. Active city traders and fund managers in the city work together, go to meetings together, play football together, get wasted together and go to each others weddings. During market hours if i've got a debate of an observation, am i gonna mess around on the internet, or sit and talk to the other 7 traders in my office that work for me?

 

At the end of the day if people on these forums were that good 90% of them would go to a firm in the city and go 'hey look this is my trading record and pnl, i'm hot stuff' and you would get hired if you can prove you can do it, then you wouldn't be risking any of your own money, and you would have massive rapid potential to the upside in terms of earnings. When i started in the city with three other grads, it took us about a year to be a clip size that was earning us 1m a year. Plus once you're in the city you're learning for the best of the best, have the best tools on the planet at your finger tips, and have massive networking opportunities.

 

Put all these factors together and you have two different class of traders that are worlds apart, and like i say i stand by my statement that 'professional' traders in the form that i described above are not gonna be posting on forums for the reasons above. If i caught one of my traders messing around on a forum during market hours i would fire him.

 

Like i say, i repeat i'm not knocking anyone, or putting the forum down because i think it is a great place for people wishing to know more about trading to come together. However when i read posts like these they are full judgmental heuristics

 

The heuristics are all over the place because 99.9% of traders trade their beliefs about the market, and once they've made up their minds about them beliefs, they're highly unlikely to change them. So when you go and trade whatever market, you think that you're considering all the available information (all i need is a bar chart, price actions tells me everything), but instead you've just eliminated most of the useful information thats available by your selective perception.

For example when you're looking at a 5min candle stick chart thinking thats all you need, then that a heuristic called law of representation, meaning that you are assuming that something is assigned to represent something. So you look at you candle charts and think to yourself that it's the market trading, when in reality it's just a line on a chart, no more, no less. However you accept this as being meaningful because...

 

you were told it was meaningful when you first started studying the markets,

 

everybody else uses candle stick chart to represent the markets

 

when you think about the market trading you typically visualize a daily bar

 

A candle chart doesn't tell you anything about how much activity occurred, and it doesn't show you how much activity occurred at what price. There is a lot of information that is extremely useful to a trader that isn't shown in any form on a candle chart. For example did the transaction involve opening up new contracts or closing out old ones? What kind of people were doing the trading? Did a had full of floor traders trade with each other all day long, trying to outguess and outmaneuver each other? How much of the activity was in a single unit, how much activity was in large units. How much was traded by a single trader, how much was traded by large funds or institutions?

Also a candle chart doesn't show who's in the market, like how many people are long and short in the market and what their position size is. All this information IS available. I can go on and go, like how chart gives you no psychological information such as how many people are sitting outside of the market with the belief it will go up or that it will go down, and are they likely to convert them beliefs into trades. However it doesn't really matter that much because you wouldn't be able to trade using any of it because of your judgmental heuristics and biases. The information will be eliminated by your selective perception

 

There are so many biases that non professional traders (even some profession traders) have. For example the lotto bias... which is about the increased confidence people have when they, in some way manipulate data, as if manipulating that data is somehow meaningful and gives them control over the market. Because you think the candle chart is the best method for trading toy manipulate the chart in some way until you feel confident enough to trade it.

 

People think they can make money by buying/selling at the right time and they simply want to know when to buy or sell. The average person here wants to know what to buy/sell right now to make a boat load of money. Most people would rather have someone tell them what to do....

 

Non professional traders who try and make it on their own become fascinated by entry signals that they perceive to be synonymous with a complete trading system, thats because you get a sense of control. Unfortunately the market is far more complex than that. Like i say, look at what happened to the dotcom day traders. I'd like to see how many people here will still be trading in 7-10yrs, but only a couple....

 

When i look around on the internet from time to time and see what systems people are trading etc, i'm shocked that a lot of people think that they're 'systems' For example for all the tech guys, who think thats all they need, how many of you have considered probability rate information in developing your TA trading system? Probably not, i've never met a non professional that has. The majority of people haven't even tested their system properly, they think they have, but they haven't, i would say the majority couldn't post accurate data on the expectancy of their system

 

You need to overcome the biases that are affecting you or you will never be a good trader. Like i've said, making a couple of million off a candle chart doesn't make you a good trader. You need to consider biases such as

 

representation bias - people assuming that when something is supposed to represent something, that it really is what it's supposed to represent

 

reliability bias - people assuming that something is accurate when it may not be

 

lotto bias - people wanting to control the market so they get all hung up on indicators and entry signals and all that rubbish

 

Conservatism bias - once you believe you have found such a pattern and become convinced that it works, you will do anything you can to avoid evidence that it doesn't work (i think of you w in particular here....)

 

randomness bias - people like to assume that the market is random and has many tops and bottoms that they can trade. The markets are not random at all. Distribution of prices who that markets over time have infinite variance, or what statisticians call long tails at the end of the bell curve. People fail to understand that the even random markets can have long streaks, and as a result, trying to trade tops and bottoms is the most difficult type of trading there is

 

Then even once you accept these, then you need to integrate stuff such as degrees of freedom and postictive errors

 

I'll say it again, look at what happened to all the dotcom day traders, making millions a year from their bedrooms. They boxed themselves in and failed to truly understand the fundamentals of what they were doing in every aspect. They had something that worked... yeah it worked then for a few years tops and gave them a false sense of security that they actually knew what they were doing. Where are they know? I read an article about a dotcom day trader working in mc donalds....

 

Market conditions are reflected by the people trading them, now days the day traders from their bedrooms are gone and the massive majority of the financial markets are professional city traders. There's few places at the top and if you really want to make it in this game you need to pull out all of the stops and fight to stay. Yeah you might have something thats working now for you, but it won't last, and how many of you will make enough money in a 2/3 years to never have to work again?

 

Like i say, look at the dotcom traders....

 

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