Is the analysing technology sorcery

Discussion in 'Trading' started by cf0532, May 7, 2009.

  1. cf0532


    I am in China. I have learned the investment for some time, not short. And I only study the analying technology. Yet I often heard that many people said the analysing technology is just sorcery. The real analysis is based on the company. But I don't know how to learn that for me. And I find, many time, the analyzing technology work. How do you deem the problem. Thank you.
  2. Technical analysis is where its at.

    Everything you need to know is right there in the charts
  3. cf0532


    Yet, other people think that technical analysis is not more important than the trader's psychology. I never think so. Trading is not a psychology's business.
  4. Your initial message was about investing and now you're talking about trading.

    These are two different areas.

    Psychology is extremely important in trading but less important in investing.

    It's critical that you don't get the two mixed up.

    Trader Psychology gets into all those things that causes the most impact on a traders profit/loss level...

    * Discipline

    * Revenge trading

    * Early Entries

    * Late Entries

    * Exiting early out of fear

    * Ability to follow his/her trading plan

    I could go on and on to add more to the above list but you should understand by now what I'm talking about if your a trader (not an investor).

    As for market psychology (different from trader psychology)...

    Never underestimate how key price levels are important to those institutional traders that have the most impact on price movements of your trading instruments...

    Simply, the big boys (institutional traders) do not forget where they have placed their key positions at nor do they forget where others have place key positions at.

    Last of all, your goal early in the business of trading is to not develop hard opinions like the ones you've displayed in this thread.

    Ignore that advice and your trading career will be short lived...revealing that you should stay with investing and not with trading.

    P.S. The above does not apply to automation trading via a mechanical system.

  5. Remember this; company accountants lie, charts don't lie.

    Also company analysis is ok only if you're using it for a very long term investment.

    For shorter time investments technical analysis wins. Nothing is perfect. Though you can use combination of both fundamentals and technicals if you like.
  6. cf0532


    I am very thankful to you,quotetrader, Mark and Mr.Consistent.Your opinions are very important.
  7. cf0532, what you're referring to "The real analysis is based on the company."
    is usually called 'Fundamental Analysis' as opposed to TA - Technical Analysis - charting
    for instance a company such as WalMart, it's month-to-month stores sales
    as well as Christmas and New Year sales would be fundamental, as well
    because of the recession, more people would shop at WalMart instead of
    Target and Macy's because they've lowered their budget, have less money
    to spend and WalMart is supposed to have the lowest prices, retailer WalMart
    shares rise - bucking the trend whereas other retailers' shares fall

    Fundamentals for currencies would be the rise/fall of interest rates and many
    trading instruments rise/fall based on the release of various economic reports
    particularly the US employment report which willl be released tomorrow

    but the problem with stocks - individual companies they're subject to all the vagaries
    of human behaviour where there's no advanced warning of a catastrophe
    for instance the chairman of Refco hid $430M of bad debt resulting in Refco
    ceasing to exist, likewise the collapse of Bear Stearns last year
    stocks - companies can suddenly declare bankruptcy, not obtain financing
    particularly recently resulting in the company being unable to continue in
    business, or stall or not complete a project or buyout of another company

    stock indexes and futures are not subject to the above, at most they may
    stop trading for a period of hours or couple of trading sessions but they won't
    cease to exist and aren't subject to theft, embezzlement or other wrongdoings
    by an individual, GM may declare bankruptcy and be delisted from the DJIA
    but GM will be replaced and the DJIA will continue to exist

    while fundamental analysis has mostly to do with economics and the everyday
    management of a business plus the occassional often unknown behaviour
    of individuals, the TA of price charts is the analysis of the sum of the 'everything' but
    neither can anticipate the 'Black Swan' event

    from my pov TA can be relatively simple based of a few techniques whereas
    FA can be quite complex and require gathering a lot of information, data
    and requiring a lot more knowledge of industry groups as well as the individual
    company such as how banks/banking works not just Citi, as a way of guaging
    how Citi is performing within the group
    i think a good example of an FA trader/investor is Warren Buffett and even
    good as he is, he's had his losses this past year

    generally, TA is used by right brain visually oriented people and FA is used by
    left brain not visually oriented people, however it's not absolute since most
    TAers include some fundamentals and FAers do look at charts
  8. cf0532, I am curious how Chinese people invest or trade. Can you describe some popular Chinese trading methods?
  9. cf0532


    So many words, as good as the views in them.
    I find they are so useful, and of course, I have learned much from them. Thanks, wallace. Have a good luck.

  10. cf0532


    hello, Hook N. Sinker, Welcome to my post.
    In China, I see most investers -maybe some of them should be traders, but not easy to distingish investers or traders - do their business basing on fundamentals. At least, the mainstream, especially the famous economists, deems that the fundamentals analysis is feasible for only one method. And thinks the technical analysis is not important, even just sorcery. Of course, this opinion doesn't exist only in China. Such as Warren Buffentt, he alse said that he never saw some people gained much money by drawing charts. However, I never think so. How do you think?

    #10     May 7, 2009