What Do Hedge Funds Think of Technical Analysis?

this isn’t true.

 

Over 10 years ago.

 

When I'm shopping for a new car, of course I check the technicals (speed, braking & MPG in that order) how fast it goes and stops and secondarily how much does it burn doing it. No EV's for me just yet. Fundamentals like comfort and reliability are a given nowadays - no need to bother.

But most important to me is Price!!

Same with day-trading.

BTW assuming you don't day-trade why is this discussion pertinent to you and feel you know what day-traders should or should not use?

 

well over 10 years ago

 

What’s your basis for why you think someone using a chart alone would outperform others?

 

I hear what you’re saying but I think we just see price and markets differently. For me the price of the car reflects the it’s perceived value, which fluctuates day to day based upon things like interest rates, dealer inventory, and such. For me to know I’m getting a good deal, I’d want to reference the ranges in kelly blue book, look at how crowded the lot is, and consider what’s happening to the model and oem production.

I don’t “daytrade” in a colloquial sense, i do round trips multiple times per week, my time horizon is ~0-20 days. 0 meaning intraday.

I’m not denying that you or others use charts and may even be lucky with them. I’m responding to the topic prompt by stating that hedge funds are not using charts and what retail considers “technical analysis” as the basis for their trades. E.g. If you walked into a hedge fund, sat next to the PM, and said “buy xyz it hit resistance and will bounce up to $ level” he would respond with “why?” and politely (or not) ask for a rationale that’s based upon more than just the price on the chart.

 

Before I chime in,are we strictly talking about outperformance by trading the underlying and not the options??

Im enjoying this discussion

 

Charts of the underlying — spot and futures. I’m not against all charts btw I use them all the time and build charts of revisions and a variety of factors (good way to quickly scan what’s going on). To qualify I’m specifically refuting the notion that technical analysis is used as the basis of a trade.

 

I guess I am asking

1) can we use TA and options for our directional trades??

2) Does selling/buying vol based on TA count,or is that cheating as implied may be jacked/super cheap and the "edge" would be more of a derivatives play..

3) Does the TA argument strictly apply to pure directional bets not using derivatives..Cash only

 

I think he’s saying that using TA to determine what risk you want. Whether you use options or stocks is this issue.