The notion that there is some strange difference in the market between TA and FA, and that they are some kind of different type of discipline, or that the market can be either viewed separately using an either or approach just doesn’t stack up.
I’ve seen recently one of the market wizards being held up as having used up 9 years as a fundamental analyst and that he only became profitable when he ‘switched’ to being a TA trader, reality is he became profitable when he included TA, his own book clearly shows it.
In the past couple of weeks I suggested to a friend that the latest fall in the Euro was contrived, gave the various FA reasons, he ‘argued’ in agreement, from a TA perspective.
His point of view was solely based on the USD, he pointed to a daily chart, notice, he said, the second leg up. this is classical TA.
This is the daily chart, time and instrument - will show in a minute, but look at that second leg, that represents, in TA, buyers not being able to make a new high. Some TA guys use fibs, others just eye ball, but no new high, TA place a sign here “Buyers Beware, Sellers Lurking”.
Should price happen to reach this point any time in the future the sign will be there.
Well price did indeed reach back up to the sign, where the yellow line is. It reached up there this week, just before the ECB announcement (by coincidence).
Of course the chart is the USDX, and both of us were correct, TA told my friend to exit his USD long and wait for the reaction, FA told me to long the Euro - all before the ‘news’.
Same chart, same yellow line:
And to add to the whole TA/FA debate, here is a close up, two confirmations, first the ‘contriving’ part, stop run, false breakout, whatever, imagine the TA trader who spotted the first false breakout and saw the hammer, then figured to go short the USD, but not confident about the FA so a tight stop, or the trader who simply just bought the break.
Probably would have gone short somewhere about midway on the hammer, stopped out the next day, just before the news.
Imagine the FA guy, so confident that a whole new injection of QE was going to be announced, along with a really good cut, it’s what the EZ really needs, or so M Draghi seemed to suggest in the recent past, so he went short Euro regardless of silly TA.
Thanks Peterma, your knowledge and insights are a blessing to these forums x
Peterma, We are grateful for your subjective contributions, about how well technical analysis works or not.
[B]We all know someone who knows someone who knows someone who knows someone again who is successful in trading …
[/B]
I’ve attached a contact list of part professors and economists who have a different viewpoint than you Peterma
It’s always good to get challenge accepted truths …
Ps Peterma to argue against them is best to use Thomas Bulkowski statically work of pattern …
In the other way Peter L brandt a famous pattern trader make money every year , challenge everone to show their result this claim dissepair when he start to lose money every year last years…
Contact Information
Ryan M. Sullivan
Bates White & Ballentine ( email )
Del Mar, CA
United States
Allan G. Timmermann
University of California, San Diego (UCSD) - Department of Economics ( email )
9500 Gilman Drive
La Jolla, CA 92093-0508
United States
858-534-4860 (Phone)
858-534-7040 (Fax)
Centre for Economic Policy Research (CEPR)
77 Bastwick Street
London, EC1V 3PZ
United Kingdom
Halbert L. White (Contact Author)
University of California, San Diego (UCSD) - Department of Economics ( email )
9500 Gilman Drive
La Jolla, CA 92093-0508
United States
858-534-3502 (Phone)
858-534-7040 (Fax)
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Hi Torulf,
It’s an interesting read, a big one so I have skimmed some of it.
I suppose we all different. I often encounter guys who say they are only TA or only FA, then when you actually see them trade they really using both.
Marty Schwartz says he was FA only and always lost, the assumption often is that he then switched to TA only, yet when you read his very enjoyable account of his trading life he uses both.
The examples that I showed above showed how it was possible to include both disciplines both for exiting and indeed for positioning pre a big move.
To me FA and TA are just windows that allow us to look into the market house and by so looking we hope to get a sense of how all the house occupants may act in the future.
At times one of the windows seems to be clearer than the other, sometimes both equally clear, and indeed times neither very clear.
But I will still attempt to look through both windows before I commit money to any decision I make.
Have a good week.
Very good point of view, objective thinking, it deserves attention.