EPTAlthough you're clearly not EV=0 if the stock has a positive alpha, I'm just saying ... ceteris paribus.
P.S. in response to OP request, I have 0 trading experience. I just have many interests.
Trading thread - Page 4
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arbitrageur
Australia1202 Posts
Although you're clearly not EV=0 if the stock has a positive alpha, I'm just saying ... ceteris paribus. P.S. in response to OP request, I have 0 trading experience. I just have many interests. | ||
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BrTarolg
United Kingdom3578 Posts
a> market sentiment - people think it works. On a short term at least, people look at technicals and it forms levels and entries b> more importantly, it is a model of human psychology. it models how humans "do things" - for example, triangles are an expression of 2 groups of people squeezing their valuations together, and then when one group has their valuation no longer hold, they are forced to reconsider their position c> we don't live in a random variable efficient market - if we did then TA would not work at all. However this is not the case - stocks, currencies etc. are MODELED on random variables, but are most certainly not random! - fundamental changes in an asset are often reflected by technical indicators sparking off. Let me give you an easy, empirical show of when technical analysis is obviously useful ![[image loading]](http://img31.imageshack.us/img31/6184/moveavg.png) Like i said, fundamental changes in the market are reflected by technical indicators (sometimes). So as an investor, if you buy when the 50MA is above the 200MA, and sell otherwise, you would have made a mindblowing amount of money on the SNP500 And well, what are we seeing right now? Exactly that, the 50MA has crossed the 200MA and so it's time to sell and be short stocks Now, there are a whole bunch of fundamental reasons to be short stocks, and you could go really in depth into what makes up each index and do price earnings analysis on each one, but you are still going to be short stocks | ||
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arbitrageur
Australia1202 Posts
On September 19 2011 18:45 BrTarolg wrote: TA works because of: a> market sentiment - people think it works. On a short term at least, people look at technicals and it forms levels and entries b> more importantly, it is a model of human psychology. it models how humans "do things" - for example, triangles are an expression of 2 groups of people squeezing their valuations together, and then when one group has their valuation no longer hold, they are forced to reconsider their position c> we don't live in a random variable efficient market - if we did then TA would not work at all. However this is not the case - stocks, currencies etc. are MODELED on random variables, but are most certainly not random! - fundamental changes in an asset are often reflected by technical indicators sparking off. Let me give you an easy, empirical show of when technical analysis is obviously useful Like i said, fundamental changes in the market are reflected by technical indicators (sometimes). So as an investor, if you buy when the 50MA is above the 200MA, and sell otherwise, you would have made a mindblowing amount of money on the SNP500 And well, what are we seeing right now? Exactly that, the 50MA has crossed the 200MA and so it's time to sell and be short stocks Now, there are a whole bunch of fundamental reasons to be short stocks, and you could go really in depth into what makes up each index and do price earnings analysis on each one, but you are still going to be short stocks Well, I'm not doubting that it works. There are empirical studies that validate it as holding predictive ability for certain equity indices. [Bessembinder 1995, Neely, Weller and Dittmar 1997]. but that graph isn't an empirical demonstration of the effectiveness of TA. Remember there are huge transaction costs for any TA strategy that need to be factored in, and you'd need a huge i.d.d. drawn sample size.. but im not claiming that you're trying to claim that that's good empirical evidence, i'm just saying. What's interesting is that actively managed funds can deliver returns in excess of passively managed funds, but passively managed funds are BETTER because ,after netting for costs, their returns are higher! , | ||
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BrTarolg
United Kingdom3578 Posts
First i have a large sum which i invest. These are my life savings, and i put them in whatever i can to insure wealth preservation. Indices are fine in bullish markets, in a bearish market like this, i've actually pulled out and its sitting in cash right now. Maybe i would invest in something purely to retain value with inflation but thats it. This is what funds are for Having said that, most funds can be terrible at managing your money. There are however, good funds to invest in. Just do your research basically. Personally i hope that when i have a much larger sum to invest, i would invest wisely myself without a fund Then i have my trading funds - this is exceess capital that i play around with and try and make high return, risky investments Most of it is tied up in poker investments (lol) but the idea is these are funds that i am willing to risk and trade with Also, most of the technical indicators i look at are fairly long term indicators (a lot of this thread is months if not years of a technical indication) - dollar long is both a fundamental trade, but you could have easily done it on purely technical reasons - it only crosses the 200MA rarely and you see big moves when it happens for long periods of time | ||
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arbitrageur
Australia1202 Posts
On September 19 2011 19:44 BrTarolg wrote: Of my money, there are two things i do First i have a large sum which i invest. These are my life savings, and i put them in whatever i can to insure wealth preservation. Indices are fine in bullish markets, in a bearish market like this, i've actually pulled out and its sitting in cash right now. Maybe i would invest in something purely to retain value with inflation but thats it. This is what funds are for Having said that, most funds can be terrible at managing your money. There are however, good funds to invest in. Just do your research basically. Personally i hope that when i have a much larger sum to invest, i would invest wisely myself without a fund Then i have my trading funds - this is exceess capital that i play around with and try and make high return, risky investments Most of it is tied up in poker investments (lol) but the idea is these are funds that i am willing to risk and trade with Also, most of the technical indicators i look at are fairly long term indicators (a lot of this thread is months if not years of a technical indication) - dollar long is both a fundamental trade, but you could have easily done it on purely technical reasons - it only crosses the 200MA rarely and you see big moves when it happens for long periods of time interesting that you're using your life savings. How long have you been doing this for and what do you estimate your p.a. returns to be? Has it been much more lucrative than what you'd get in a savings account? What is the volatility like for you [w.r.t. capital gains]? | ||
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iansanew
New Zealand86 Posts
![[image loading]](http://i.imgur.com/hUyqI.png) i collaborate with a private speculation firm i developed this myself, 100% technical analysis. i majored in stats | ||
bkrow
Australia8532 Posts
I work for a financial planning company and investing in an index fund is pretty much a waste of time; active management may be more costly but it's worth it. Research is generally the key; there is a ton of information out there, it's just being prudent enough to read and understand it. I hope this thread remains what these 4 pages have been  | ||
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iansanew
New Zealand86 Posts
![[image loading]](http://i.imgur.com/JlI3L.png) forward tested strategy performance, same results on live (i have multiple accounts for different strategies) ![[image loading]](http://i.imgur.com/Lj86U.png) i suppose this is some evidence that technical analysis is viable. my opinion is that it is viable (behavioural finance basis) and you can quote all the theories you want but the assumptions used in those theories are not "real" . you cant prove that technical analysis does not work without performing detailed analysis of specific conditions and even then you only found evidence against those conditions. EDIT: similar to analysing the whole market using all the information available (no filters), can you find pockets of time where you have an edge?. | ||
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Alethios
New Zealand2765 Posts
Particularly with respect to this quote here: On September 18 2011 06:07 lightman wrote: -Trading IS NOT a form of gambling. It is a form of investing. Gambling is putting money on the Miami Dolphins, or Real Madrid or a certain Horse in the track. Investing is either making educated decisions or allowing someone to make educated decisions about your money. If it isn't gambling (like a game of poker say), what exactly are you investing in? What good is any of this doing the world? Aside from being a small cog in the machine that sets the 'fair' market price for a given commodity that is. An investor buying stocks is providing the capital for that company to grow, and for them to produce new goods or whatever. Its obviously horrendously more complicated than that, but at the heart of all.. thats what it 'does', right? What do any of the practices discussed in this thread contribute to society? If it all stopped tomorrow, what would we lose? I'm not trying to be insulting here. I just want to understand. | ||
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iansanew
New Zealand86 Posts
On September 19 2011 20:46 Alethios wrote: Forgive me if I seem stupid here. I realised that while I have no interest in trading myself, it was important to me to gain a greater understanding of the way the markets work in order to consider myself an informed citizen. I'm learning at a pretty fast rate, and while there is a vast number of concepts i'm still unfamiliar with.. I'm unable to really appreciate the point of forex and commodity trading in particular, making personal wealth at the expense of others aside. Particularly with respect to this quote here: If it isn't gambling (like a game of poker say), what exactly are you investing in? What good is any of this doing the world? Aside from being a small cog in the machine that sets the 'fair' market price for a given commodity that is. An investor buying stocks is providing the capital for that company to grow, and for them to produce new goods or whatever. Its obviously horrendously more complicated than that, but at the heart of all.. thats what it 'does', right? What do any of the practices discussed in this thread contribute to society? If it all stopped tomorrow, what would we lose? I'm not trying to be insulting here. I just want to understand. the service you provide is providing liquidity to the market so that people who need to hedge their positions can hedge at a price closer to the current listed price. also for those who are entering and exiting positions, reduces slippage and gapping. liquidity is actually important and the markets would look pretty crazy without speculators/market makers and..... most 'speculators' lose money | ||
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Alethios
New Zealand2765 Posts
On September 19 2011 20:49 iansanew wrote: the service you provide is providing liquidity to the market so that people who need to hedge their positions can hedge at a price closer to the current listed price. also for those who are entering and exiting positions, reduces slippage and gapping. liquidity is actually important and the markets would look pretty crazy without speculators/market makers and..... most 'speculators' lose money Ah ok, thanks. That gives me a framework to look further into it. | ||
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Setev
Malaysia390 Posts
If you want to make money off the stock market, do conservative long term leveraged investing instead. Its Warren Buffet's technique. Oh, and to lightman, trading is NOT investing. If you disagree, go argue away with the entire finance faculty of my university. EDIT: removed a bad word | ||
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iansanew
New Zealand86 Posts
On September 19 2011 20:55 Setev wrote: My advice to everyone here is to stay the fuck away from trading. Its not a cost effective activity. Day trading is an almost full time job, meaning your day job WILL be affected, and if you do day trading without proper coaching, prepare to be bankrupted. If you want to make money off the stock market, do conservative long term leveraged investing instead. Its Warren Buffet's technique. Oh, and to lightman, trading is NOT investing. If you disagree, go argue away with the entire finance faculty of my university. lol such an angry person. i believe its up to the individual to make an informed decision. its hard to start and it takes a special mindset to be successful. | ||
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arbitrageur
Australia1202 Posts
On September 19 2011 20:46 Alethios wrote: Forgive me if I seem stupid here. I realised that while I have no interest in trading myself, it was important to me to gain a greater understanding of the way the markets work in order to consider myself an informed citizen. I'm learning at a pretty fast rate, and while there is a vast number of concepts i'm still unfamiliar with.. I'm unable to really appreciate the point of forex and commodity trading in particular, making personal wealth at the expense of others aside. Particularly with respect to this quote here: If it isn't gambling (like a game of poker say), what exactly are you investing in? What good is any of this doing the world? Aside from being a small cog in the machine that sets the 'fair' market price for a given commodity that is. An investor buying stocks is providing the capital for that company to grow, and for them to produce new goods or whatever. Its obviously horrendously more complicated than that, but at the heart of all.. thats what it 'does', right? What do any of the practices discussed in this thread contribute to society? If it all stopped tomorrow, what would we lose? I'm not trying to be insulting here. I just want to understand. It's not just equity funds making money but contributing nothing.... The actively trading strategies you're referring to achieve excess alpha [market beating returns as measured by CAPM] but don't achieve risk adjusted profits net of all costs, in fact they perform worse than passive funds on average. Transaction costs and search costs cancel out the excess alphas delivered by these funds. So there's not much to worry about here. The market is efficient in the Jensen sense: efficient with respect to privately generated information so long as economic profits, net of all costs, cannot be made on this information. | ||
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BrTarolg
United Kingdom3578 Posts
On September 19 2011 19:48 arbitrageur wrote: interesting that you're using your life savings. How long have you been doing this for and what do you estimate your p.a. returns to be? Has it been much more lucrative than what you'd get in a savings account? What is the volatility like for you [w.r.t. capital gains]? zzz people are constantly misreading what i type I said my life savings are SAVINGS which i am currently keeping in CASH My TRADING is excess funds which i trade and try and make a return on | ||
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iansanew
New Zealand86 Posts
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BrTarolg
United Kingdom3578 Posts
http://www.zerohedge.com/contributed/fed-announces-operation-twist Operation twist is in Now is a good time to short snp if you havnt already (personally i'm already short stoxx so no need) Lets hope they invert the yield curve so that every single recession really is preceded by a yield curve inversion :D edit: lol forgive me when i wrote this snp was at 1190 still but i'd still do a long term short regardless | ||
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BrTarolg
United Kingdom3578 Posts
![[image loading]](http://static.safehaven.com/authors/kasriel/22107_a.png) Operation twist basically sells short term treasuries (increasing their yield) and lowers long term treasuries (decreasing their yield). This will flatten, or invert the yield curve, making short term yields higher than long term yields An inverted yield curve usually indicates that people are willing to settle for lower long term yields NOW because they expect future recession On that chart, the shaded area is where recessions have happened in the US. Note that EVERY SINGLE recession in the past 50 years has been preceded by an inverted yield curve. So what are we seeing: 50 200 MA cross check head and shoulders S&P500 check dollar rallying from 3 year low like in 2008 check ISM, CSI and other economic indicators at lows check Put call parity ratio trending upwards check advance decline breaking its 50 200 MA check bond yields going crazy low check inverted yield curve ???? so, where do you think the economy (and as a result, stocks, commodities, currencies and everything else) is heading? | ||
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BrTarolg
United Kingdom3578 Posts
For those of you who followed my dollar trade, well done! Dollar is up by a significant amount! We are still looking for a target of at least 81, but potentially higher depending on future information, so hold onto your dollar longs In other news, gold took a MASSIVE beating, crashing all the way to lows of 1720. For cycle traders, this represents a daily low, though it could be a lot of margin calls and a lot of technical traders getting stopped out. It doesn't make sense for gold to tank so badly when stocks are crashing. Price action technicals suggest now might be a good opportunity to long gold. (I have added a very small position at this level) --- For those of you who like long term investing, i really hope you have sold off your stocks and shares. I would suggest hold it in cash. If you are a bit more daring, invest in SNP inverse tracker. I know you americans arn't usually allowed to trade more complex instruments like we are. If you are a buffet style investor, i'd say you're going to want to wait for a loong time before re-investing in stocks. Treasury bonds have had an incredible rally on the news, though you might want to buy more bonds regardless if the government is going to buy some in the future anyway. Its a safe investment and yields are going to be low for a few years | ||
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BrTarolg
United Kingdom3578 Posts
I'm now officially bearish gold for the next couple weeks as its broken right through the 50% fibb level. Likely the next opportunity you will see a gold bull is when dollar finishes a 2-3 week rally. Current short term trends show a bear after breaking that level - banks selling, possible coordinated action and double top ![[image loading]](http://img508.imageshack.us/img508/3982/goldbugs.png) --- In other news, the level to look at today is snp 1110. If we break this, all hell breaks loose! Good thing i'm still short the market! ![[image loading]](http://img59.imageshack.us/img59/1430/snpbug.png) This has been an extremely profitable week for me, I hope it has been for you too! | ||
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