Yes everyone is a genius in hindsight. TA is great at showing you what you want to see. I’d love to see an actual evidence of performance instead of hypotheticals. Oh yeah, there isn’t any.
I haven’t read much about that study, but I’m not surprised. Most mutual fund managers (which the study was done on iirc) are closet indexers. Don’t look at traditional mutual fund managers. Look at what the top performing hedge funds are doing. Citadel, P72, MLP, Baly, etc. The game in this world is trading around earnings (2% of days yet 20% of idiosyncratic volatility) and dispersions of estimates. These funds have teams of analysts who cover specific names and are building models. It is a system 2, deliberate, practice — not system 1 reactionary. Trading ultimately is about making very good decisions (I recommend skimming Phil Tetlock’s “superforecasting”) where the most important skill is probably reading comprehension. The mosaic approach to research means using any and all useful information that can be used to assess how either the metric or multiple might change. The financial model bit just helps because you have a much better approximation of where price will go. E.g. a company announced a dilutive merger or cap raise. You know you want to short it but (1) at what price and (2) where will it go? Retail won’t be able to compete with hedge funds or semi-pros at a high frequency basis, but can compete in the near-term (5-60 days). These anomalies exist in large part due to market structure, which impairs large managers (normal mutual fund). It’s the advantage that hedge funds and smaller traders have — agility. I guess to follow up — if you believe that technical analysis is a useful skill then why don’t hedge funds recruit aggressive for people with that skill set? The proof is in the spend… are you really going to tell me that your $50/mo technical “signal” is more advantageous than having 3 highly paid equity research analysts lol? Wouldn’t be surprised if suntrader also thinks he cooks as well as Gordon Ramsey and that Michelin kitchens “use this one easy trick” to win 3 stars… Trading is hard work.
I don’t have to skim it; I read it. Really? So that’s your comparison? You long straw futures or something? I haven’t yet disparaged FA in any of its forms, but you cannot seem to get beyond the petty here. I never suggested that PMs rely on PA. But I did note that most retail traders cannot compete with professional PMs at their level because they have neither the resources nor the contacts to level the field. They probably have to play a different game or just hand someone else their money to manage. I am not suggesting that the different game they play need be PA, but it will unlikely be the process you described in your previous posts. Also, apart from essentially implying that I am lying to you, why do you disregard the fact that there several notable traders who have been written about who swear by their own form of TA/PA in their trading? They contend that they may find utility in FA, but they lean more heavily on TA/PA. Are they also lying?
[/QUOTE] Just want to clarify — I don’t think you, or most retail traders, are lying when you say that you think technicals or price action is useful. I believe you are misinformed. As for as traders who claim to make money from TA/PA consistently as their main trading strategy — yes, I believe that they’re lying. TA/PA might have been useful before computers, but not since the 80s-90s.
That it's in a nutshell. I do cook very well for myself and those who know me. Same with trading. But anyway I'm not trying to "out-cook" famous chefs. I don't need to. Why do you keep trying to make this point. I'm not Point72 or any other big name trading firm. I trade for myself and have been for 20+ years - using TA. Get over your anal self. As for a reality-tv chef pulleazeeeeee. Emeril has saved him a spot hawking air-fryers any day now.