Charts vs. Fundamentals

[pixel]

Hope you chartists have fun with your squiggly line voodoo. I just laugh when I see people use charts. Might as well be reading tea leaves.

I'll just stick to the fundamentals thanks

If you only know how to use a hammer, everything will look to you like a nail.
If you know the difference between a hammer, a soldering iron, and a saw, and if you can use all three with equal expertise, you will find it a lot easier to build something useful.

 

[DeepState]

Hope you chartists have fun with your squiggly line voodoo. I just laugh when I see people use charts. Might as well be reading tea leaves.

I'll just stick to the fundamentals thanks

...and what exactly is your problem with tea leaves? Huh?

 

[rb250660]

So you knew the DAX was going to drop 250 points yesterday..

I was having quite a serious discussion with a work colleague today about making dacking people in our age group acceptable. I can't believe it is still restricted to school children in the playground...

http://www.youtube.com/watch?v=eDZKJvGC__M

It takes a fair bit of skill to do the undie grab with a standard dacking. Impressive Fitzy.

 

[Muschu]

Thread being over-ridden with semantics and defensiveness?

We're all different and market prediction is not an exact science..... Or is it?

 

[rimtas]

I just laugh when I see people use charts. Might as well be reading tea leaves.

I'll just stick to the fundamentals thanks

I also had a laugh at first, when I noticed that almost everyone(about 95% ) are using fundamental analysis. I thought-if everyone uses it, it just simply doesn't work.
Then I realized, that these 95% of traders/investors, who are loosing money in markets, are the same people who use fundamental analysis. I stoped laughing since then and I feel just sorry for them all.
Years, decades and centuries are passing by, but everyone is still sticked to the strategy that generates only losses.
I know many people who changed their view and started to look at charts instead, but do not know anyone, who threw charting in the bin and started with fundamentals instead.

The view on fundamental analysis is so entrenched in people's minds over decades , that the doctrine of socionomic reasoning looks like cosmos.
I think they will never give up looking for the future in fundamentals, they just need to die off and let the new generation with different logic take their place.

The chartist community is growing everyday, and they make money, instead of gambling by looking at balance sheets .

 

[barney]

Hope you chartists have fun with your squiggly line voodoo. I just laugh when I see people use charts. Might as well be reading tea leaves.

I'll just stick to the fundamentals thanks

Pretty sure you're only stirring the pot VH which is all in good fun ....... but just to condense the situation ....

Charts are simply a visual representation of the short term perceived Fundamental value of a given Company/whatever.

The problem is that most punters are poorly equipped to gauge the true values of anything (me included) , so we follow the herd/chart to make our decisions ....

The bigger the Stock/whatever etc., the bigger the Herd, and the longer it takes for a miscalculation to mean revert, hence why Charts represent an opportunity to make profits regardless of whether they are a true representation of value or not ..... simple really

 

[DeepState]

:nunchux:

Cougar: Stinger, we have been engaged....Sidewinder 1 is hot...we're going in. Got good tones...

I also had a laugh at first, when I noticed that almost everyone(about 95% ) are using fundamental analysis. I thought-if everyone uses it, it just simply doesn't work.

Then I realized, that these 95% of traders/investors, who are loosing money in markets, are the same people who use fundamental analysis. I stoped laughing since then and I feel just sorry for them all.

So, the market consists of 95% fundamental analysts and 95% of the market participants who are losing money are fundamental analysts.
Sooooo....the other 5% are chartists and they must represent the remaining 5% who are losing money....errr

What makes you think that all fundamental analysis is the same? Is all charting the same?

Years, decades and centuries are passing by, but everyone is still sticked to the strategy that generates only losses.

I know many people who changed their view and started to look at charts instead, but do not know anyone, who threw charting in the bin and started with fundamentals instead.

When the fundamental people changed to charts they still had money. No-one moved from charts to fundamental because they were toast before they figured it out. Could be that busted chartists still with a credit line find fundamental all too hard but the reverse is not true? Could be that books on charting and courses are more plentiful and cheaper than that for fundamental, making it much more accessible? Could be that your group of people turn out to favour charting by mutual self selection. Apart from interaction here, for example, I do not actually know a single chartist...and I know a lot of very serious investors. Could be that when someone decided which method to choose they went alphabetically...

The chartist community is growing everyday, and they make money, instead of gambling by looking at balance sheets .

The chartist community is growing, and so it the fundamental community. Both make money and both lose money. Define gambling.

:couch:jerry:nunchux: :

OK, I'm buggin' out. That was a false flag operation (in that I also use price based signals, albeit of a different classification to what I have seen here, as part of my decision process. What I do in this area would not normally be called charting though). Let the festivities begin/continue!

 

[ThingyMajiggy]

My post earlier was serious, someone out there that knows fundamental analysis, let rip, I would genuinely love to know how you guys go about it. I wouldn't even know where to begin to trade fundamentally, mainly because my time frame is in minutes and I don't see how that's possible, but there are technical guys here who share a few things on how they go about it so let's have it fundamental guys, someone start a thread or something and do some trades, would be great

 

[DeepState]

My post earlier was serious, someone out there that knows fundamental analysis, let rip, I would genuinely love to know how you guys go about it. I wouldn't even know where to begin to trade fundamentally, mainly because my time frame is in minutes and I don't see how that's possible, but there are technical guys here who share a few things on how they go about it so let's have it fundamental guys, someone start a thread or something and do some trades, would be great

Although it can, why must FA have to work in time frames of seconds or minutes to be valid?

As for posted trades, in 1962 I purchased this stock called Berkshire Hathaway...and I never drew a chart. Still haven't.

 

[ThingyMajiggy]

Although it can, why must FA have to work in time frames of seconds or minutes to be valid?

As for posted trades, in 1962 I purchased this stock called Berkshire Hathaway...and I never drew a chart. Still haven't.

It doesn't have to work in short time frames to be "valid", I'm just curious and never seen anyone trade that way, I'm just curious because that's the time frames I trade in, so was wondering if it was possible. Not really after if anyone does it in seconds and minutes anyway, I don't see how that's possible, but maybe days to a week or two time frames.

Well that's good for you then

 

[burglar]

Although it can, why must FA have to work in time frames of seconds or minutes to be valid?

As for posted trades, in 1962 I purchased this stock called Berkshire Hathaway...and I never drew a chart. Still haven't.

"Chartless in Omaha"!

 

[DeepState]

It doesn't have to work in short time frames to be "valid", I'm just curious and never seen anyone trade that way, I'm just curious because that's the time frames I trade in, so was wondering if it was possible. Not really after if anyone does it in seconds and minutes anyway, I don't see how that's possible, but maybe days to a week or two time frames.

Well that's good for you then

The biggest and most liquid market in the world by far is currency. The below is an indication of the simplest strategies related to currency trading. Not a single chart is required. The rightmost chart is erroneous. Focus on the left chart. The three lines are 'factor' returns to the three most common currency considerations. These have been the same factors in place for over two decades. No charts are drawn. This is a form of fundamental currency trading. Risk management is a massive consideration on top of this, although you can see it has done fine anyway. Source is BIS (q4 2013) so it's not me printing something out. I have my own data. The world's largest currency traders are not chartists. We know each other. The retail market now makes up around 3% of trade and are largely chartists from anything I have seen from FX discussion groups to chat sites focussed on the matter. Fundamentals never come up at all unless Chris West needs to fill in time (he's a good guy...) and get a trade out of his audience. If I raise a fundamentally oriented question the usual repose is "what the heck are you talking about?" These institutions take money out of the rest of the market in aggregate, including retail.



The time frame for trading above is monthly. In reality , it would rebalance with market moves unless implemented for an ETF which has to be very strict and simple.

Shorter horizon at the second to second level (or faster) would be arbitrage related. These would be implemented by algo because it is too fast for a human reaction. There are a great number of sub-classifications for strategies employed in this area.

There are other guys here who trade on an intra day basis who know a lot of fundamentals too and are clearly very successful. They are amongst the hard-core professionals on the site. I won't speak for them.

 

[CanOz]

Speaking of charts and funnymentals...does anyone know what this is? Can anyone give us a technical viewpoint?

 

[CanOz]

This is an awesome chart....tells an amazing story that no-one ever expected...

 

[AverageJoe]

The biggest and most liquid market in the world by far is currency. The below is an indication of the simplest strategies related to currency trading. Not a single chart is required. The rightmost chart is erroneous. Focus on the left chart. The three lines are 'factor' returns to the three most common currency considerations. These have been the same factors in place for over two decades. No charts are drawn. This is a form of fundamental currency trading. Risk management is a massive consideration on top of this, although you can see it has done fine anyway. Source is BIS (q4 2013) so it's not me printing something out. I have my own data. The world's largest currency traders are not chartists. We know each other. The retail market now makes up around 3% of trade and are largely chartists from anything I have seen from FX discussion groups to chat sites focussed on the matter. Fundamentals never come up at all unless Chris West needs to fill in time (he's a good guy...) and get a trade out of his audience. If I raise a fundamentally oriented question the usual repose is "what the heck are you talking about?" These institutions take money out of the rest of the market in aggregate, including retail.

View attachment 59899

The time frame for trading above is monthly. In reality , it would rebalance with market moves unless implemented for an ETF which has to be very strict and simple.

Shorter horizon at the second to second level (or faster) would be arbitrage related. These would be implemented by algo because it is too fast for a human reaction. There are a great number of sub-classifications for strategies employed in this area.

There are other guys here who trade on an intra day basis who know a lot of fundamentals too and are clearly very successful. They are amongst the hard-core professionals on the site. I won't speak for them.

Do you know why the largest currency traders don't use chart?

It is because they are the market. They are the liquid providers ie. Major institutional banks that move funds on behalf of corporations between currencies. I have only come across a "guru" who trades based on FA, Jarratt Davis. He claims to be the second most successful trader in the world. Yet he still flip a chart to look at levels and trade unleveraged. It took me a while to understand how to do it based on FA but then I realised he is unleveraged. Currencies unlike stocks do not go into admin. If you wait long enough it can come back and you would only lose the holding interest whether positive or negative depending on interest rate differentials.

 

[DeepState]

Do you know why the largest currency traders don't use chart?

It is because they are the market. They are the liquid providers ie. Major institutional banks that move funds on behalf of corporations between currencies. I have only come across a "guru" who trades based on FA, Jarratt Davis. He claims to be the second most successful trader in the world. Yet he still flip a chart to look at levels and trade unleveraged. It took me a while to understand how to do it based on FA but then I realised he is unleveraged. Currencies unlike stocks do not go into admin. If you wait long enough it can come back and you would only lose the holding interest whether positive or negative depending on interest rate differentials.

Hi

The FX market turns over $5.3tr a day. There is no single entity which is a significant part of it. Hence, I believe, it is hard to claim that any entity is a systematic supplier or demander of liquidity for the main pairs. From time to time, entities like central banks make intercede in a particular direction. They may demand or supply liquidity from the perspective of a particular currency. Variations in this are uncommon.

The commercials, or FX implemented on their behalf in relation to traditional trade, are a small part of the market. The banks which make markets are levered. The largest part of currency trade is financially motivated, which is two-way.

I'm not exactly sure what you mean in terms of unleveraged. Maybe Davis was a spot trader only, moving funds into different currencies at spot with total gross notional equal to or less than his net portfolio value. Or he did the same effective move via overlay. If so, his portfolio value will never go negative. It is also a highly unusual way to manage money in the land of FFX, which underlies my uncertainty with what has been said.

The largest insto managers operate with leverage on allocated funds. The OTC market does not levy an initial or variation margin after initial credit checks are cleared. Enormous leverage is therefore possible. This leverage is applied. In addition, the institution, which may be a bank or hedge fund, can also be leveraged. Hence solvency risk or, at least, liquidity risk in terms of having enough funds to hand to meet settlement obligations is a real issue. Waiting for long enough is not an option in such circumstances as they are marked-to-market.

There is no reason why TA or FA can or cannot be used under conditions of leverage or not. My observation is that the insto side favours FA.

 

[skyQuake]

If you wait long enough it can come back and you would only lose the holding interest whether positive or negative depending on interest rate differentials.

Waiting for parity



P.S. you can get them for about $5 on ebay! Then wipe your ass with it

 

[pixel]

This is an awesome chart....tells an amazing story that no-one ever expected...

Thanks for those charts, CanOz;
It's true: both are awesome decade-long rising channels; the first chart is slightly unusual in that it could indicate a top reversal over the coming 4-6 years - depending on whether it moves away from the horizontal support or respects the channel bottom when it gets there in a year or two.

In both cases, however, I would love to see a similar channel study based on a semi-log price chart. Where multiple octaves and decade-long time frames are involved, the underlying moves are better seen in an exponential scale rather than a linear one.

PS: What are the instruments btw?

 

[barney]

...does anyone know what this is?

Looks suspiciously like one of those things pictured below: ... Nice looking notes they were too!

No technical viewpoint on it ... I'm not that clever

ps. Second chart = 30 year T-Bond or a derivative of it perhaps?

 

[CanOz]

Yes, well done Barney, on both counts...Yes Pixel some nice trends there...

No analysis needed, we dont need to try and predict anything as most seem to believe. But we do know that if the AUD break support we will have a bearish view for a period of time. If you know this, you can quantify your risk and take a trade if the reward is worth it.

Charts are only a means to see the opportunities, form an opinion, or a bias. With currencies, the macro fundamentals can also give some confluence to a trade idea....

Charts can either be this for you, or just an idea what the price has done. If your profitable then no0one can argue with you if they're useful or not...

CanOz