T/A lost the plot

[lesm]

Similarly the level of skill in fundamental analysis on this board is also generally very poor [something which i am somewhat knowledgable about].

No argument that that some the FA skills on the board are poor, so it will be interesting to see some FA from a knowledgeable person.

I do have one question for you. You disparage me for criticising technical analysis done by posters on this board without mastering it myself, yet lash out at fundamental analysis yourself. Can I take it that you are quite experienced with fundamental analysis and would be comfortable going over the finer details of a dcf/comp valuation model for an ASX listed company with me?

There is an ongoing banter between the FAs and TAs on this and other boards where they intermix, so you shouldn't take a lot of the comments to heart.

Your observation of the quality of FA on the board may assist you in understanding the negativity of the TAs, especially when some of the FAs try playing at being TAs, or some hybrid concoction.

If you are so knowledgeable about FA then why do you need anyone to take you through the finer details of a dfc/comp valuation model, what are you trying to prove?

Cheers.

 

[lesm]

Constable,

I use TA not FA, but my education gave me a background in FA.

This just a discussion point with Duc.

Feel free to ignore.

Cheers.

 

[coyotte]

I disagree that this technique could improve the exit due to the constant slippage of getting out and then back in again at a higher price when you call the tops incorrectly. The real profit killer for a trend following system is cutting profits short, not letting the last little bit of profit go before the exit triggers.

However - please be more specific - if it's codable, I'd certainly be interested in backtesting the concept.

There is one possible exception that I'd possibly concede - exiting a trade early that's gone parabolic and buying back in. Maybe (I haven't backtested it).

Suppose it's something to do with psychology between Analysts and Traders.

The twain will never meet --- like trying to compare a Investor/Trader or Fast Food Operator/ Antique Dealer --- to each his own poison I suppose.

As stated elsewhere, I CLOSED all positions (long/short term) once the XJO exceeded 6000 -- WRONG or RIGHT -- but my nature would not permit me to miss the possible opportunities that could arise --- thats where I keep coming back to -- this whole thing is about YOU!


Cheers

 

[constable]

Constable,

I use TA not FA, but my education gave me a background in FA.

This just a discussion point with Duc.

Feel free to ignore.

Cheers.

No worries probably out of my league anyway! But lately with my own pf i have come to above stated conclusions and looking for something more relevant and applicable to my own situation.

 

[>Apocalypto<]

As stated elsewhere, I CLOSED all positions (long/short term) once the XJO exceeded 6000 -- WRONG or RIGHT -- but my nature would not permit me to miss the possible opportunities that could arise --- thats where I keep coming back to -- this whole thing is about YOU!

coyotte

That is great to read what this topic is about doing what u think is right.

That is the same reason I went long few days ago.

 

[tech/a]

coyotte

That is great to read what this topic is about doing what u think is right.

That is the same reason I went long few days ago.

Strange I thought it was about T/A losing the plot.

Anyway I'll bugger off for a while --- plain bored.
If anyone wants me use the private messages.

 

[lesm]

My view while un-palatable to some generates debate. Hey I learn a lot from these threads---am I the only one?

tech/a,

Open debate is healthy and if everyone agreed where would we be. With the different approaches to trading, including individual styles, there are little snippets here and there that are very worthwhile.

Every now and then people's noses are going to get out of joint, but as long as its not personal we should be able to move on.

Couldn't say I have learned much from most posts -- but some have kindled an interest in areas I had otherwise dismissed , with a limited number of posters pointing the guiding finger--- most of the S/T Traders posts have been very revealing though -- have quietly learned heaps from a handful of these posters.

coyotte,

There is a lot of noise on the forum, but as I mentioned above some little snippets that make it worth it. Every now and then you pick up on a different view or approach that can help you rethink or provide a differetn perspective on an approach.

To be honest when it came to short term trading and trading both sides (long/short) I learnt more from futures traders than I did from stock traders. But to be fair, shorting on the ASX is only relatively recent compared to overseas.

Cheers.

 

[coyotte]

coyotte

That is great to read what this topic is about doing what u think is right.

That is the same reason I went long few days ago.

Sorry it's NOT about doing what you THINK is right.
It's about whatever method you are using FA, TA, Tips, News etc "indicates"


Cheers

 

[>Apocalypto<]

Sorry it's NOT about doing what you THINK is right.
It's about whatever method you are using FA, TA, Tips, News etc "indicates"


Cheers

LoL not the topic Coyotte I was talking about trading! wont delete it cuz i admit to my screw ups!

yeh before you say it yeh i messed up and i did forget the topic aghhhhhh

Forgive me Coyotte

Now I use TA and it does give false signals on the daily, intra and weekly all the time but i have tight money management to keep my winners way above my losers.

 

[coyotte]

LoL not the topic Coyotte I was talking about trading!

Now any system or analysis will throw a false signal that's the way the market is

So am I.
Intuition only comes into when you have been playing the same stock over and over and over --- you get know the stock backwards --- otherwise stick to the plan.

Cheers

 

[stoxclimber]

Re: Techs post, OK, I understand.

Your fundamental analysis can be fantastic but unless the masses follow it wont mean jack.

This is an oft repeated mantra on these boards which is misleading.

Correct fundamental analysis [if one removes the influence of unpredictable random events] will lead to profit REGARDLESS of the "price action". It is in this sense that fundamental analysis is theoretically superior to technical analysis, as ta is dependant upon human behaviour etc which has no instrinsic value in and of itself.

A 10% share of a company is a right to 10% of the company's cash flows. Assuming the company is not mismanaged [management distributes cash when there are no NPV positive investment opportunities] the shareholder will release these values. If an investor buys a stream of cash flows that are worth $10000 [when adjusted for the timing and the risk of the cfs] for $5000 and the cash flow forecasts become accurate, the investor has made money regardless of the performance of the share price. This is intuitively true if one considers non or thin publically traded investments.

Of course, does this help you to buy company ABC at $2.34 on March 1st and sell ABC for $3.20? Depends on your beliefs as to market efficiency.

 

[MichaelD]

Suppose it's something to do with psychology between Analysts and Traders.

The twain will never meet --- like trying to compare a Investor/Trader or Fast Food Operator/ Antique Dealer --- to each his own poison I suppose.

As stated elsewhere, I CLOSED all positions (long/short term) once the XJO exceeded 6000 -- WRONG or RIGHT -- but my nature would not permit me to miss the possible opportunities that could arise --- thats where I keep coming back to -- this whole thing is about YOU!

Now I'm even more confused! (btw I view myself as a trader, not an analyst.)

You may have posted this elsewhere, but why did you close all positions when the market hit 6,000 and did you do it before or after the 150 point drop?

 

[constable]

Re: Techs post, OK, I understand.



This is an oft repeated mantra on these boards which is misleading.

Correct fundamental analysis [if one removes the influence of unpredictable random events] will lead to profit REGARDLESS of the "price action". It is in this sense that fundamental analysis is theoretically superior to technical analysis, as ta is dependant upon human behaviour etc which has no instrinsic value in and of itself.

A 10% share of a company is a right to 10% of the company's cash flows. Assuming the company is not mismanaged [management distributes cash when there are no NPV positive investment opportunities] the shareholder will release these values. If an investor buys a stream of cash flows that are worth $10000 [when adjusted for the timing and the risk of the cfs] for $5000 and the cash flow forecasts become accurate, the investor has made money regardless of the performance of the share price. This is intuitively true if one considers non or thin publically traded investments.

Of course, does this help you to buy company ABC at $2.34 on March 1st and sell ABC for $3.20? Depends on your beliefs as to market efficiency.

Fantastic in theory but any decent dividend is followed by an overvalued sp with a premium already reflecting expected divs.

 

[>Apocalypto<]

So am I.
Intuition only comes into when you have been playing the same stock over and over and over --- you get know the stock backwards --- otherwise stick to the plan.

Cheers

what about when that stock does nothing then what do u do??

 

[stoxclimber]

Fantastic in theory but any decent dividend is followed by an overvalued sp with a premium already reflecting expected divs.

Perhaps I am misunderstanding you, but you seem to be saying that there's no point in buying a stock which is paying a big dividend as people will already reflect the future dividends in the stock price.

If you believe that the market is always going to price things correctly, then indeed there is no point to fundamental analysis [nor technical for that matter]. However, if you don't, then your argument would not follow - a company paying a big dividend now will vary the size of that dividend according to the profitability of the company and the growth opportunities available. If one can superiorly analyse either of these factors, one can better predict the cash flows to investors than the market is pricing.

In theory, it really is irrelevant whether the stock just paid a huge dividend or no dividend at all other than the fact that a huge dividend reflects management confidence in the future of the company. In the real market there may be some effect as a result of fund buying etc

 

[constable]

Perhaps I am misunderstanding you, but you seem to be saying that there's no point in buying a stock which is paying a big dividend as people will already reflect the future dividends in the stock price.

If you believe that the market is always going to price things correctly, then indeed there is no point to fundamental analysis [nor technical for that matter]. However, if you don't, then your argument would not follow - a company paying a big dividend now will vary the size of that dividend according to the profitability of the company and the growth opportunities available. If one can superiorly analyse either of these factors, one can better predict the cash flows to investors than the market is pricing.

In theory, it really is irrelevant whether the stock just paid a huge dividend or no dividend at all other than the fact that a huge dividend reflects management confidence in the future of the company. In the real market there may be some effect as a result of fund buying etc

I agree the market does not always reflect div returns in sp, but this would be few and far between. My point is that too often the sp is chased up so far as to negate any real benefit of the div.

 

[theasxgorilla]

You'd be suprised what you'd learn if you posted your (or anyone did) trading out in the open. Let me tell you it keeps you honest. Ive had 100s of eyes dissect T/T over 4 yrs each and everyone who have given constructive input or constructive critisism have added to my and many others knowledge.
We/I question what we do and how we do it.

This works for a mechanical system. You can take an observation that someone has made, run it through the computer, and see how it affects the stats. Then you decide whether to adopt it or not. THEN you trade the system and it's all robotic...in the scheme of things, psychology is given a tiny little space (hopefully).

Discretionary systems, totally different story. You can't objectively measure their effectiveness on a sample of data. Backtesting of a discretionary system equals taking a sample of data and steping through one bar at a time and asking, do I take the trade or not? It's like training for a sporting event (to some extent). When you think you're fit and ready, you take your method to the market and start playing with real money.

In a discretionary method psychology and gut feel play a much larger part. For this reason there isn't a hope in hell that I would publicise my system, or a pending trade, or any currently open trades onto a discussion forum. (My) psychology and gut feel would be ruined. Some others don't have a problem with this but I dare say they have more experience than I, with a longer standing track record.

 

[coyotte]

Now I'm even more confused! (btw I view myself as a trader, not an analyst.)

You may have posted this elsewhere, but why did you close all positions when the market hit 6,000 and did you do it before or after the 150 point drop?

a ATR system which I've mentioned several times on this site, was showing the XJO in the lead up to 15/2 (6000) was traveling to fast -- (a sell , not a short ).--- it kept breaking the upper band for 7 consecitive days--- ADX+ was strongly diverging along with Twiggs Money Flow and Volume --- all signs to me, to be making a " classic rounding top " -- thats when I began closing down long term positions --- was wrong it continued higher for a few days -- was beginning to doubt the play -- but the press hype seemed to be the driver . --- Mag then put up a post which I took note of and that was the final straw -- closed all positions bar BSG and took a wait and see approach.

I only basically trade stocks within the XJO , thats why I keep it in the active watch list .

Long Term was closed on 21/02 --- final close was late 23/02 (just a couple of short term trades)

Have to admit that I didn't expect such a sudden and severe drop though.

Cheers

 

[coyotte]

what about when that stock does nothing then what do u do??

Dump it!

It's using up capital and worse your attention.

Cheers

 

[dhukka]

In theory, it really is irrelevant whether the stock just paid a huge dividend or no dividend at all other than the fact that a huge dividend reflects management confidence in the future of the company. In the real market there may be some effect as a result of fund buying etc

Actually the paying of a huge dividend or none at all can tell you a lot about management competence. If a company has the ability to reinvest profits at high rates of return then paying out large dividends demonstrates that management is squandering shareholder value.