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deucy28
Registered: Feb 2011
Posts: 417 |
09-24-12 07:02 PM
Quote from oldtime:
well deucy28, I just answer what works for me. That way when the whole thread is complete you get a variety of opinions.
You said: "I just answer what works for me," in response to me stating what works for you is exactly opposite what works for me. Importantly, we were targeting how fundamentals don't impact you short term, but rather longer term. For me, short term dramatically affects my positions while over time, the earlier fundamentals issues when they were impactful then, tend to dampen out. Why this big cross in different directions from each other ? Answer: we trade different securities and we trade different styles (as I trade very differently from most others even within the pair trading world I am in).
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oldtime
Registered: Jun 2011
Posts: 7357 |
09-24-12 07:11 PM
Quote from deucy28:
You said: "I just answer what works for me," in response to me stating what works for you is exactly opposite what works for me. Importantly, we were targeting how fundamentals don't impact you short term, but rather longer term. For me, short term dramatically affects my positions while over time, the earlier fundamentals issues when they were impactful then, tend to dampen out. Why this big cross in different directions from each other ? Answer: we trade different securities and we trade different styles (as I trade very differently from most others even within the pair trading world I am in).
right, I got ya. Yes that is exactly right as it appllies to me. Fundamentals affect me longterm and I usually have many days or weeks to adjust. Usually the way it works is, I have something on and the new fundamentals don't justify it. So I just keep that in mind and look for a good place to get out. Although my spreads supposedly start out neutral, over time they reveal a bias, and it is not uncommon to make money on the side I originally considered fundamentally wrong.
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deucy28
Registered: Feb 2011
Posts: 417 |
09-24-12 07:17 PM
Quote from oldtime:
But if you watch cnbc, you would think the fundamentals are violently changing everyday. One day the market is up because Europe is good. Next day the market is down because China is slowing. It can't all happen that fast can it?
LOL LOL
Exactly !
That is why the fundamentals impact my position early in the trade. Over time, time mitigates the bad, and the good gets dimmed in memory. There is a tendency over time for these things to dampen out (to varying degrees, certainly) which is all the more important when a TRADE for me includes pairing up two legs....one long, one short. I have double the fun when fundamentals affect their stock plots early on in a position.
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deucy28
Registered: Feb 2011
Posts: 417 |
09-24-12 07:22 PM
Quote from oldtime:
Although my spreads supposedly start out neutral, over time they reveal a bias, and it is not uncommon to make money on the side I originally considered fundamentally wrong.
Got it !
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deucy28
Registered: Feb 2011
Posts: 417 |
09-25-12 10:22 PM
Quote from deucy28:
"Is fundamental analysis SOMEWHAT useless ?"
Just about everything is SOMEWHAT.
Asking a question like this needs some more definition. I search the internet for answers to questions and find what turns out to be very different answers that eventually I learn all of them turn out to be right. How can that be ? My huge peeve about articles on the internet is they mostly are not dated. What is true today can be different from 3 months ago which can be different from a year earlier, which can be different.......
And this ONLY refers to time frames. Just a few posts ago, TheMickey just posted, "Trading / investing successfully is fraught with twists and turns..." OldTime just posted, "I make money by betting how fundamentals will affect the market long term. Doesn't help me much on a daily or even weekly basis," which is exactly opposite of what make my gains.
This is why as a pairs trader who is apt to hold positions longer than I suspect most pairs traders (I learned this about myself from a great ET thread on this style trading), I have found that fundamentals and their associated events dampen out over time as manifested in their stock plots, and do so with the Short leg in my pair and the Long leg in my pair. (Mind you, these are selected stock pairs with good correlation.) I am so much a pariah to other pairs traders, I even ignore imminent earnings reports from chasing me out of positions or putting on a hedge, e.g. options. Time heals wounds and time dims memory of good events. I don't worry about a trade becoming "an investment" because of it getting a way from me, because "reversion to the mean" is another manifestation that fundamentals all come out in the wash between the two stocks. Studying varying chart TIME frames proved this to me before getting into the trade.
So the thread originator's question is open ended to correct answers coming from all directions. This is especially true when it comes to TIME and DEGREE.
This picture (link below) is worth a thousand words, pretty much illustrating my first post on this subject (the quote above). Particularly when knowing it was just a few ticks away from adding a 3rd layer at an obvious place on the chart (about the middle of the chart on the 14th).
I captured this chart with a screen shot yesterday. I got out a few days before with a modest gain on the first (original) position and a very nice gain on the 2nd layer, but two more days (ending yesterday) would have been all that much more significant. Today, it would have been the pot of gold at the end of the rainbow, intra-day.
Hopefully this post IS end of subject: layering (not averaging down) via pairs trading. Just wanted to put the picture with the original post on the subject.
SEE LAST CHART AT THE LINK SHOWING CI / AET
http://www.elitetrader.com/vb/showt...&pagenumber=277
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RedTankEra
Registered: Feb 2012
Posts: 252 |
09-25-12 10:52 PM
I pay attention to the timing of fundamental releases, but not the content. Purely a technical trader, you know the kind that many think it's worthless, that kind 
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