Timeline for Effectiveness of technical analysis techniques: Any supporting studies?
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| Apr 13, 2017 at 12:25 | history | edited | CommunityBot |
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| May 28, 2014 at 21:32 | comment | added | John Bensin | @MarkDoony Two points to make here. 1) Due to latency (e.g. from colocation or lack thereof) and the fact that not all retail brokerages have direct access to the exchange, HFTs can put their orders in faster than retail investors, even if you both submit them "at the same time". 2) Furthermore, HFT's cancel the majority of their orders, which means that an HFT can have orders in the queue before yours, even if the signal hasn't necessarily appeared yet, and then simply cancel them instantly (from your perspective) before they're triggered, thus preempting your order through speed alone. | |
| May 31, 2013 at 22:25 | comment | added | user9822 | John - how can the HFTs have already acted on the signal near the end of the previous trading day if the signal does not happen until the next day? That is the whole point of putting a stop buy market order to be triggered when the signal occurs. So if I have the same trigger as a HFT the orders will both go in at the same time! | |
| May 30, 2013 at 13:10 | comment | added | John Bensin | @MarkDoony If you follow the debate about HFT and frontrunning-like behavior, that's another factor to take into account. There's a neat study from the CFTC/Booth on this in the context of the E-mini that you might find interesting. If you want to continue the discussion, though, maybe ask a new question or email me, since I've been warned (along with others) about long discussions in comments. | |
| May 30, 2013 at 13:09 | comment | added | John Bensin | @MarkDoony It depends on a lot of factors, but if HFT's have already acted on the signal (near the end of the previous trading day, since if the signal is there at market close, it's likely there a few milliseconds before the market close too) that you picked up on, the opportunity may have been diminished before you could put in your orders. Over time, as this occurs, the magnitude of the signal-based opportunities on a human timeframe may diminish. | |
| May 30, 2013 at 12:38 | comment | added | user9822 | So if I see a potential set-up and work out what my entry (above a certain price) and exit points will be before the market opens, then also put my stop buy market order and stop loss market order before market opens, will my opportunity be diminished by these high speed traders? Noting that as soon as my price target is triggered my order will be placed immediately onto the market and executed. And the same goes with my stop loss order. This can also be applied to day traders placing there orders prior to their trigger being hit. | |
| May 30, 2013 at 11:25 | comment | added | John Bensin | @MarkDoony Also, see the paragraph in this answer under summary; I addressed the point you're making. | |
| May 30, 2013 at 11:24 | history | edited | John Bensin | CC BY-SA 3.0 |
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| May 30, 2013 at 11:05 | comment | added | John Bensin | @MarkDoony You're right, that wasn't exactly clear in my post. I meant that the increasing use of computerized trading can remove opportunities for the average day trader to take advantage of a signal. For example, if a signal indicates that traders should buy into a market and enough high-speed traders buy first (thus driving the price up), this reduces or eliminates the individual day trader's potential for gain. | |
| May 30, 2013 at 11:00 | history | edited | John Bensin | CC BY-SA 3.0 |
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| May 30, 2013 at 6:08 | comment | added | user9822 | "...a warning against its use in markets where computerized traders are highly active." John do you know that the more people or computers that trade a particular signal the more successful that signal will become. So computerized traders actually help TA signals and triggers eventuate into better trades. | |
| May 29, 2013 at 19:17 | history | answered | John Bensin | CC BY-SA 3.0 |