TA used by itself would have had you buying on "support" all the way from $80 to .80 on Enron. Same with a few dozen other stocks of the last few years. TA is useful but one must keep the overall market and the basic fundamentals of the particular company and sector in mind at the same time. As a trader one should also be aware that you are not trading "stocks" as much as you are trading "traders", LOL. If everyone 'knows" support is at $40, then it becomes a self fulfilling prophesy. SteveD
"TA used by itself would have had you buying on "support" all the way from $80 to .80 on Enron. Same with a few dozen other stocks of the last few years." One basic principles of TA is TREND. If you know how to follow it then you would not have bought Enron due to the change in trend of lower highs and lower lows.
Then a lot of money was made when you sold Enron short as it started down. At what price did you get that short? And at what price did you cover? I do not mean to be rude, but this is exactly what everyone says about TA. In hindsight everyone is absolutely correct in pointing out that the trend was down for Enron. It is quite obvious to any technical trader isn't it? But who shorted it at 60? 50? 40? 30? Any one? Any one? That is why it is called a downtrend until it is called an uptrend. but always in the rear view mirror. I believe in moderation in both technical and fundamental at all times. Stay alert and keep tight stops, LOL. SteveD
It's hindsight only if you don't know what to look for. Simple principles applied consistently will help the trader see what's in front of him rather than what he wants to be there. If you'd like to post a chart of Enron at its top, I'll be happy to show you what I'm talking about.
Seems to me there are a few things missing here: people are talking about TA like it's one thing or one organized body of thought. Not true at all. Posts like this really demonstrate this problem. The person who wrote this is probably unlikely to have any working knowledge of TA. TA is a collection of methods and tools... some good, some bad, some worthless. I think you can say the same of FA. All these things work together to give a bigger picture. Can TA work alone? Absolutely. You could be astounded by what can be achieved with a few moving averages and discretion. Does it take experience? Yes. So it's not really the moving averages, right? Right... but they provide a framework that can work. (Understand I'm only using ma's as an example... not advocating trading based on any specific scheme.) There will be unexpected events, but TA provides an excellent roadmap and can give a good sense on when to get the heck out of a trade. The key is to remember the market can do ANYTHING at all at ANY TIME. Nothing's 100% and no one who honestly uses TA tools in their trading would pretend to always be right. My impression of this board, after lurking for a few weeks, is that there's a lot of angry people here and only a small handful who seem to have much knowledge or experience. Sad to see newbies spinning their wheels... then other people affirming them... but they really have no more experience or knowledge than the person asking for help. I have to wonder how helpful a forum like this really is to someone with no trading experience or someone looking to get a perspective?! Shaman
Ok sorry... I didn't see this post until I'd responded to your other post. I trade stocks based on weekly bars. I did not start trading equities (had only done futures) until after 2000. I had 4 trades in this stock from 2000-2002. 4/24/00 long at 70.00 11/29/00 stopped out at 74.90ish I added to this long position sometime in October and ended up taking a loss on that part of the position. 1/29/01 short 87.75 5/14/02 shorted more 59.55 took some profits at 40 some at 35 and the rest at 10 When I traded stocks (I no longer do) I used to literally look at the charts once a week. These are not after the fact trades and they were based on "pure" TA... a simple indicator that is in most software packages was my entry trigger. I never read the news, never watch CNBC. These (and all) my trades are totally basd on TA. What did I bring to the table? Stop, exit and money management strategy... and a willingness to sit tight for a long time. So yeah dude, someone shorted at 80 or so. Twice.
You make my point exactly. Everybody looks at the same chart for TA. Yet the large per centage of traders of Enron were going long and lost their money. Some with tight stops and, of course, some with no stops, LOL. You should be proud of your self for making some money shorting Enron. Very few traders shorted the stock with real money. I use TA but I also use FA and do understand both. I also listen to CNBC and read WSJ. SteveD
You keep missing the point. Everybody is NOT looking at the same chart for TA. Previously you said "TA used by itself would have had you buying on 'support' all the way from $80 to .80 on Enron.". Again, you think all TA is the same. Ignorance is bliss, I suppose.