Does it really work? It may help you spot trends, but once they have started to develop. When the market is consolidating, charts can't tell you in what direction the market will go. So that leaves you with fundamental analysis?
Ridiculous. Of course it works - but obviously you have to be a believer in technical analysis. The whole point of it is that it helps you spot trends in their early stages of development. I use TA for swing and position trading and it works fine for me - but I don't clutter charts with indicators and stuff, just some simple stuff. But in my world it works perfectly well. I don't ignore the fundamentals though. If you can identify a trendless market, then again, with the right techniques, it works just as well I think. I'm a trend trader, not range trader, so that arguement of it working in trendless markets maybe open to debate, but I know people that use TA pretty successfully in these markets too.
Yes, it works but there are failures. That's when discipline & proper money management takes over. As evidenced by my blog, my primary focus is on the longer trend....via the daily, weekly and sometimes the monthly time frames. I'm a little surprised how many of these types of threads bashing TA have been popping up. T http://actionpointsta.blogspot.com/
You're in the right track. I stay in cash during ranging markets, too. I don't ignore the fundamentals though. [/QUOTE] This is the point. Let's say the market is going sideways and is consolidating. Consolidating for what? To continue plunging? To recover (going up)? TA doesn't give an answer at all, only fundamentals do.
Nonsense! Markets are priced based on PERCEPTIONS, not fundamentals. It is a totally inaccurate and potentially devastating conclusion to presume that ANY market would EVER be priced based according to fundamentals. Although there are some markets and specific vehicles that are more "prone" to be priced based on fundamentals, it is not a "rule" and certainly not applicable to all markets or vehicles. Perhaps you can explain what fundamentals created the all time highs in the S&P about 1 year ago? Or perhaps the fundamentals behind the $2 bid for Bear? Maybe you'd do better explaining Amazon at $800, Oil at $140, Refco at $30, or K-mart at 7c. Osorico
Half the game is simply identifying and following the trend, the other half is (unsurprisingly) knowing and anticipating a change in trend.
You mean, markets are priced based on perceptions of fundamentals and often technicals, as well as, anticipation of information flow and other things. To say that markets are price based on just perceptions, that will raise the question: Perception of what? You cannot price anything just based on perception. You use perceptions to gather data to plug into your pricing model. This difference is essential. It is different perceptions affecting different pricing models rather that just perception. Ron
OK. I fully understand what you are saying. However for the fun of it, I want to poke a few holes in THAT concept... "To say that markets are price based on just perceptions, that will raise the question: Perception of what?" Exactly. What is considered important or pertinent today may change overnight. I don't think I need to site anything specific, but I will... Gustav. This is what makes the market go up 200pts and down 200pts in hours or days. "You cannot price anything just based on perception. You use perceptions to gather data to plug into your pricing model." Charmin or Scott's? Shell gasoline or Arco gasoline? Windows or Mac? United or JetBlue? Ramen or Campbells? Sure each of these items has underlying costs to get to market. But it is perception, whether intentional or unintentional, that augments or constrains the profit margin. I'll go so far as to say that ANYTHING, poop in a paper bag, can be priced to sell according to perception. My dog eats Eukanuba. Neighbors dog eats Kibbles and Bits. Before you say anything, yes I have a slant... marketing+competition=perception. Not precisely on topic of the markets, I know. "This difference is essential. It is different perceptions affecting different pricing models rather that just perception. " A bit rhetorical... like saying the perception of the perception itself is what forms the essential difference. Nice to converse with you RonBlack. Osorico