Trusting What You Think You See/Trusting Sources of Trading Information

Discussion in 'Trading' started by ByLoSellHi, Apr 20, 2008.

  1. Part of the biggest issue I have with trading, and investing, for that matter, is feeling comfortable that the sources of information I am relying upon to pull the trigger with my personal money (not 'opm') are inherently reliable.

    We've all heard the myths and stories, read about the very real scandals, and have seen the tangible results when the 'distributors' and disseminators of misinformation, be they high ranking corporate officers, employees of brokerage firms or hedge funds, and even media 'professionals' themselves, have materially misrepresented information that was relied upon by both investors and traders, much to their financial demise, while those intentionally spreading such misinformation profited handsomely.

    So, who or what do you rely upon, aside from your own perceptions and interpretation of such information or data, that you have inherently trustworthy, when trading or investing?

    Also, what sources of information do you believe should never or rarely be relied upon?

    I'll volunteer a first offering: Despite a nearly dogmatic adherence to what I believe are somewhat outdated and naive principles of macroeconomics and modern trade (the commerce type of 'trade,' not the trading kind of 'trade'), The Economist magazine is an indispensable and more often than not reliable source of information in helping me establish investing strategies.
  2. Tums


    I rely on Price and Volume.
    Don't have time for anything else.
  3. hughb


    I can pretty much ditto that. I never have cared too much for what anyone says about earnings, mergers, business prospects or whether they are corporate officers, analysts, or fund managers.
  4. I rely on charts. Charts cannot lie. The price is what the price is. If it is rising, on volume, that is always positive. If it is rising on less volume than it is falling, that is always negative. If there is no volume, then look at range.
  5. One question to those of you who seem to indicate that you (exclusively?) rely on charts:


    Where would you have gotten out based on either one of those trend lines?

    I'm speaking of, 'holy shit, I'm out of this mofo!' getting out, not just seeking out a tradeable range.

    If you didn't go all out pretty quickly, and were levered, you'd had have your ass handed to you fairly quickly as you waited for that double top, no?
  6. Tums


    Where there is crisis, there is opportunity.

    The market goes up,
    the market goes down.

    All you have to do is to get on the right side.
  7. Can't see any trendlines but if you remove the names it could be a 1 min chart on Fx. Exactly the same rules apply on any timeframe/market with exactly the same decapitation if you get it wrong.

    FWIW, a journalist working for the Economist came to see me for investment advice. For years I had been well impressed with this magazine and told him so expecting to have my views reinforced. However what he told me about how they went about their expert research shocked me and he made it clear in no uncertain terms that if I believed all I read in the Economist I was a sucker.

    Now I trade the news on a 1 min chart before it is released - I couldn't even tell you when the news releases are due. I just trust what I see.

    However if you are a position trader holding for weeks/months, good fundamentals can identify which market is likely to become the darling for investors well before the charts can call the explosive extent of the move. Then I'd use charts for a breakout out of consolidation for a long term hold.

    Sub 1 min is my best timeframe but almost every technique I use applies equally to weekly or monthly charts... no outside opinions required.
  8. Cheese


    Markets in their generality are technical and not news based although news may appear to provide distortions. Those who believe price is propelled by news don't have a means to know if price otherwise would be any different and when there isn't any news they don't have a means to explain price moving against their expectation.

    If I want to read the day ahead I have a model to tell me, based on the particular market (ie Dow), what the days parameters will be: that is the range and whether price will be in a BS (BuySell) day when the day low will precede the day high or in an SB (Sell/Buy) day when the day high will precede the day low . News believers won't know that the market is technical; they will either think that the market reflected the news or did not reflect the news. During the market session I can use the same model to insert price (at time) and read the balance of the day ahead.

    If I want to read the market from bar to bar, I use the trading methodology I have, to buy upmoves and sell downmoves as they develop and follow each other sequentially.
  9. Naah, trust no one even the Financial Times has about 50-60% rubbish, last week they ran a half page article on how good Chinese stocks are, but dig deeper and see it was written by a Macquarie employee.They have a huge amount of HK and mainland convertibles that are failing to sell last 5 months. Posterboys and girls are great as well.Best shorting opportunities are from macro type recommendations from retail publications and brokers. Barclays Stockbrokers did a huge campaign for China ETF's last 2 weeks of September. :D
  10. I think thats a great question as one of the most important things for survival is not just finding information but weighting it correctly.

    I have personally come to the conclusion that in general nobody knows what they are talking about. We are all just mice running around a maze desperately looking for the cheese.

    With that being said I do believe that from a probabilistic sence some people can still have an edge by looking at the macroscopic situation and betting in the appropriate direction.

    In an age of so much information and much of it mutually exclusive, I think the best heuristic is logical positivism (rely only on empirical evidence) which would be; homes you see for sale; interest rates; cpi (taken with a grain of salt); anything that cannot lie to you.

    Many people tend to compress information in ways that I think are inappropriate. When an analyist says "I believe that Citigroup will cut the dividend" many people compress this to mean "Citigroup will cut the dividend" where as I think it more appropriate to say "An analyist thinks Citigroup may cut the divident" where the important information is not what will happen to the company but what people's perception is of what will happen to the company.
    #10     Apr 20, 2008