Do day traders and announcements render T/A invalid?

[nizar]

Kennas, you and some others seem to think that "day traders" and iv also heard that "announcements" throw T/A and charting out the window.

Just a couple of questions (for everybody ) to get us thinking:

1/ Do we need to know who is buying or selling in order to trade profitably?
2/ Do you need to aware of ASX announcements to be able to trade profitably?
3/ Is it important to know the reason why the share price moved a certain way? Will this reason have any predictive value?

 

[doctorj]

Re: CUL - Cullen Resources

Nizar, these are all very good questions, but probably deserve a thread of their own. Please PM me if you would like me to split these off into a new thread or if they were just rhetorical questions, we'll just move on to CUL eh?

 

[nizar]

Re: CUL - Cullen Resources

Nizar, these are all very good questions, but probably deserve a thread of their own. Please PM me if you would like me to split these off into a new thread or if they were just rhetorical questions, we'll just move on to CUL eh?

Hi Doc.

Thanks, yeh if you could delete them and put them into a new thread...
You can think of an appropriate title.

Thanks.

 

[doctorj]

Personally I think the answer to the heart of your question is yes and no. Daytraders and big announcements can blow T/A out the window, but only on certain stocks.

My belief is that T/A works best when there is considerable liquidity. Daytraders and announcements can make a massive impact where there is a material resultant change in the liquidity of the stock. It does make T/A of the likes of RMI and CUL tough, particularly as it appears a lot of people are playing it on a t+3 basis as up until very recently there was comparably little liquidity.

That said, T/A can be useful still, as has been shown time and again on these types. Basic S/R can work, as well as things like flags and pennants but I would heavily discount the impact of pre-liquidity support/resistance lines.

I know I'm rambling a bit here, but I think you need to match the time frame of your T/A to periods that make sense based upon discrete periods of consistant liquidity.

 

[Student]

1/ Do we need to know who is buying or selling in order to trade profitably?
2/ Do you need to aware of ASX announcements to be able to trade profitably?
3/ Is it important to know the reason why the share price moved a certain way? Will this reason have any predictive value?

Hi, just registered. Have no idea about CUL. My 2c:

1. No, but it helps
2. Considering how easy it is to get hold of them, I don't see any harm in skim-reading them.
3. It might, depends. Sometimes the reasons are just what some random made up with 20/20 hindsight though. I think it be more useful to know reasons why share price would move in the future though.

 

[It's Snake Pliskin]

Kennas, you and some others seem to think that "day traders" and iv also heard that "announcements" throw T/A and charting out the window.

Just a couple of questions (for everybody ) to get us thinking:

1/ Do we need to know who is buying or selling in order to trade profitably?
2/ Do you need to aware of ASX announcements to be able to trade profitably?
3/ Is it important to know the reason why the share price moved a certain way? Will this reason have any predictive value?

NIZ...,

T/A is fuzzy. Trading announcements is fuzzy.
1. no
2. no
3. no

You are attempting to understand what is not understandable - there are too many variables.

 

[Sean K]

I don't think short term traders have a significant effect on TA. Day traders, are NOT general market psychology. It's why many longer term technical traders disregard intraday price movements and ONLY work off EOD prices which are generally considered more reliable (from what I have seen). The reason is that day traders get in an out on T+3 or less, of course, and they are therefore, by definition, no longer inside the stock. The psychology of the price action has gone. This is also the reason why most professional investors stick to ASX 100 or 50 stocks, because the psychology is more deeply embeded in the chart. It's more reliable. Considering minnow species to be confidently tradeable by charts is on the edge IMO. Although, I love to do it!

 

[ideaforlife]

I agree Snake. The answers are probably yes, but too much variables to profit from them. As Guppy puts it T/A is playing with probability.

 

[nizar]

NIZ...,

T/A is fuzzy. Trading announcements is fuzzy.
1. no
2. no
3. no

You are attempting to understand what is not understandable - there are too many variables.

Three No's is exactly correct (well in my opinion).

 

[Awesomandy]

It doesn't really matter what day it is, day traders will still come in and out, so, for most stocks, apart from a little bit volatility in day to day movements, I think they will all eventually net themselves off in the long run. For me personally, I think of them as a bit of noise in the picture - like the snowy-grain effect you get on analogue TVs when the signal is not perfect. So, my answer is no - T/A is still a valid and useful system (for those who know what they are doing anyway).