TA in new markets/exchanges

Discussion in 'Trading' started by malaka56, Nov 11, 2005.

  1. malaka56


    ok, so maybe this is a dumb question, BUT, if technical analysis assumes information is priced into a security already, and we are looking for "inefficiencies" to exploit, wouldnt it make sense to trade lesser known and more obscure securities even at the disadvantage of reduced liquidity?
    i was reading some article about these arbitrage hedge fund guys who traded exotic futures and this was basically their opinion: you will find the greatest gains where the market is most inefficient.

    Of course, you may also find a lot of irrational behavior, low liquidity, and other craziness, but i have seen certain forex brokers for example suggest trading the EUR/USD, which apparently is the MOST traded thing on the planet, leaving one to believe almost all of the inefficiencies have been squeezed out of it.

    Anyway, do any of you trade in strange places like the hungarian stock exchange, or other small/new exchanges, or are these just too finicky to get consistent gains out of with technical analysis? Thanks.
  2. mokwit


    Technical analysis works in obscure markets because they are predominently retail driven, but on the other hand you have thousands of local traders who are smart, better connected, kbnow their stocks and watching and acting on every print, so don't get any ideas that it is a cakewalk.

    In my local market I am up against a hard core of 60,000 locals.

    If you want to know how to trade these markets you have to read stuff written prior to the 1934 SEC act, i.e when the pools were active and the US was an emerging market. I am operating in the markets of Livermore et al.
  3. lescor


    I trade some small, ignored, illiquid markets. It's true there are more inefficiencies there, but there are unique risks and limitations.

    The illiquidity can be used to your advantage, but will also bite you in the ass when things go against you. It also means that your trading isn't very scalable. You might be able to do well on your own, but you will reach a ceiling at some point where you can't put more money to work without affecting the market too much with your presense.
  4. I know Thai market is more geared toward Thais, and not
    being able to read thai is another disadvantage and
    taskin family and alike are first to manipulate your shares
    and others :D

    Just look at % foreign share purchase daily, it's not much
    I know paul renuad offer service to foreign members in
    his newsletters, that means you need him (he visits listed
    companies personaly and investigate from production to
    balance sheet), not TA
  5. malaka56


    hmm, interesting posts guys.

    i'm sure even in local obscure markets there are a lot of "hard core" active traders. but in the US markets there are millions of hard core active traders, throwing billions of dollars around all the time.

    So the hungarian exchange interested me a bit, since they "transitioning" and new to a market economy, I wouldn't imagine there would be a lot of people in old-communist countries that can afford/know how to trade, much less know how to use modern TA for it. Of course there will be American born hungarians and foreign education ones that may, but given the size of population, etc etc, it doesn't seem like there would be a ton of traders on there. But thats just a guess, I have no idea. The one poster said he was in the liverpool markets, while i know nothing about them, I know the UK is a pretty darn' developed, with lots of know-how. Think 2nd world economies.

    Any input on what kind of unique risks exist in these markets?