I plan on going into detail with all the individual factors in the future, but I'd welcome any general questions.
1) CXbby, what website or software do you use for trading? How are you modeling pattern breakouts (i.e. drawing lines). 2) I noticed that a lot of the indicators you talked about below such as bollinger bands and stochastics have settings (on etrade at least). I've messed with these settings before and it changes drastically. What settings do you use? 3) Do you use all the indicators or do you only use 3 or 4 on each trade? If only 3 or 4, how do you differentiate which to use (i.e which is giving real info and which is noise)? Also, do you have a rank of which are better? Thanks!
Technical analysis is nonsense. Its like driving looking in the rear-view mirror and corellation very rarely means causation. Buy attempting to out trade sophisticated hedge fund algorithm models and all of that you're like a scrub playing pick up ball with Kobe and LeBron. As an individual investor the only long-term success can be generated by holding long-term positions or until their value comes to fruition in their stock price. Otherwise you may win once or twice but its like a Casino in that you'll eventually lose.
hey, some bizradio love! i'm actually dan's producer. come out to one of our events sometime and chill with me. :grin: edit: thanks for the thread btw. i'm always looking to understand investing more.
lol this might be the most ignorant post i've read on this bbs in years - and that's saying a lot! :grin:
You are a right that a lot of it is hindsight. However, support, resistance, momentum, volume, sentiment, etc. aren't nonsense. As for the rest of that post, don't forget that sophisticated investors and traders aren't always right and do often get sucked into the hype and sentiment after everything is already priced into the market. lol I can certainly speak from experience and stupid trades I've made! Finally, I don't even know what your 3rd paragraph is even supposed to mean. First, you say you can't beat hedge fund models, but then you seem to think you can outperform them over the long term...as if hedge funds don't do long term investing as well. What makes it easier to figure out where things are going in the long term? Anyhow, my experience allows me to pick situations where I feel there is value. I determine value mainly by finding low risk/high reward situations where I feel there is a catalyst that can make the trade move in my direction. If they aren't there then I just don't trade. That same sort process can allow regular investors/traders to make money...but ALWAYS MINIMIZE RISK.
You are giving too much credit to the hedge funds. Not all of them do <i>smart</i> things. LTCM Scholes's Platinum Grove Fund Halts Withdrawals After Losses
I didn't mean to piss on everyone's party. One has the information available to understand a companies business model and its balance sheet and earnings profitability. As to what is going to happen in the short-run, its like the 'greater fool theory'. Volatility can help when one determines a fair range for a security and its able to bounce to the low and then to the high, but this is based on a fundamental valuation of the company's ability to produce cash in the future discounted back to today. Not any arbitrary range of where its been and its average over a certain time period. That most traders were able to profit so handsomely had more to do with leverage, meaning its unsustainable in non-typical 'tail event' markets. Do individuals really think sitting at home they'll out trade Jim Simons or Citadel? The fact that the servers of Goldman etc. are closer to the exchange means they're able to get everything in microseconds before you can think about it. I believe there's more opportunity taking advantage of firms forced to deleverage good assets due to lack of liquidity and a 'pawn shop' type mentality rather than using arbitrary data to play chicken with someone else. Just my opinion as a fundamental value investor.
I use Sterling/Lightspeed/Rediplus for trading at work, and Tradestation for personal account. But honestly, for drawing lines, you can use any free sites like Bigcharts.com or Stockcharts.com. Bollinger bands: 20, 2. 20 SMA for mean and 2 standard deviations for the bands. Slow Stochastics: 14, 3. I talked a little about how I use them in the summary post, and will elaborate in future updates. I never use them individually, but rather look for a convergence. Waiting for many of the indicators to all line up. That is the KEY to the entire strategy. I don't really have a rank for the indicators, but the Fibonacci retracement/extension usually is most significant.
But you are so GTFO of this thread. Seriously, this is not a place to debate. Go start your own thread in D&D about it.
I think Meriwether and Merton and LTCM's losses were based on a flawed idea that originated in the 80's regarding creating equity type returns with bond type risk by the use of leverage. The failure of leverage in a portfolio is the inability to hold a position during adverse market intervals and is connected with my idea of fundamental investing in a manner that is sustainable. When one is trading using 'technical' data they're basing decisions on rapid execution which makes then vulnerble to the same short-term gyrations that killed LTCM and Sowood etc when bond spreads widened. I think LTCM and their philosophies are an example of my previous post in that you have overleveraged fools that are forced to sell good securities and great prices as they're more concerned with solvency and liquidity than gains. This is an opportunity to buy securities cheap and hold them until their intrinsic value comes to fruition. That is not trading however, its acquiring securities below their value and holding them until the market becomes a 'weighing' machine in the long-run.
A nice post, but the definition of <i>long-run</i> varies depending upon whom you ask. The same can be said for the definition of <i>value</i>. Is INTC at $19.20 with a 3% yield a Buy? It was available for under $18 not that long ago. If one can find an opportunity to take advantage of a mistake in pricing and/or participants' perception and/or liquidity flow in the Marketa, then take advantage of the opportunity. Waiting for another <i>Black Swan</i> event as in Fall 2008 to pick up MLPs (EEP, LINE, PAA etc) and other securities at discount prices works for you, but don't begrudge those who can make good decisions to <i>Roundtrip</i> (buy & sell) in shorter timeframes than 6 months to several years.
you don't have to "out trade" the top guys. you just have to make money. also, that stuff with microseconds is more related to market making and not as much trading the stock and news. the market is much more fractured in terms of liquidity so you can have greater slippage on some stuff if you have larger size due to how the market has changed in the past few years. anyhow...that has nothing to do with information being disseminated earlier to the market makers like goldman...because it isn't. not sure what you are talking about with your last point. deleveraging has already happened.
