61 votes

Paradox - When to buy & when to sell a share?

It's worth noting that Warren Buffett is a value investor, not a trader. As such, it doesn't tell you much about technical analysis or trend following. Instead, he's implying that when the market gets ...
0xFEE1DEAD's user avatar
  • 8,498
55 votes
Accepted

In what way does technical analysis involve astrology and reading tea leaves?

It doesn't literally involve astrology or tea leaf reading... While some people swear by it, technical analysis is often derided as pseudoscience, similar to astrology or tea leaf reading. As it's ...
0xFEE1DEAD's user avatar
  • 8,498
49 votes

S&P 500 Prediction

The S&P 500 goes up most of the time. So just assume it always goes up. You will be right most of the time. This is the basis of most investment advice: diversify to match the market rather ...
Brythan's user avatar
  • 21k
48 votes
Accepted

Is it true that, "just ten trading days represent 63 per cent of the returns of the past 50 years"?

Mild vs. Wild Randomness: Focusing on those Risks that Matter and A focus on the exceptions that prove the rule are copies of the original article referenced by the Wikipedia page. The authors are ...
Justin Cave's user avatar
  • 27.3k
44 votes

Is this the proof that Technical Analysis does not work?

No, your anecdotal experience is not proof that a concept is flawed. There are many many many many many flaws with TA, but proving something takes a lot more than one person's casual attempts. If I ...
quid's user avatar
  • 49k
35 votes

Is it true that, "just ten trading days represent 63 per cent of the returns of the past 50 years"?

Nassim Taleb is remarkably brilliant. It's his work that's cited in the article. In my opinion, there are 2 choices, a misquote, if the article is wrong, or a misunderstanding on the part of the ...
JTP - Apologise to Monica's user avatar
17 votes

Is it true that, "just ten trading days represent 63 per cent of the returns of the past 50 years"?

Since the book was written in 1997, the relevant period would be roughly 1947-1996. Yahoo Finance data starts from 1950, so I will look at "last 47 years" instead. Presumably, the finding by ...
Money Ann's user avatar
  • 3,789
17 votes

In what way does technical analysis involve astrology and reading tea leaves?

It's an analogy. In general, many hold the belief that the typical traders (read: not Warren Buffett levels of money where the simple act of trading can change the market) cannot beat the market in ...
eps's user avatar
  • 1,343
16 votes

Is it true that, "just ten trading days represent 63 per cent of the returns of the past 50 years"?

Let’s simplify it, our example investment is very boring except for one day when it goes crazy. Two investors with same $1,000 initial investment, the market doubles every 7 years except for one day ...
mhoran_psprep's user avatar
15 votes

S&P 500 Prediction

My high school economics teacher mentioned that when she worked on Wall Street, she and her coworker would make daily bets on market performance. Her coworker would use a bunch of market data, and she ...
Kora's user avatar
  • 437
14 votes

Is this the proof that Technical Analysis does not work?

There are firms and people doing exactly that: WSJ article Part of my masters thesis was using candle stick analysis and genetic algorithms, but my conclusion is that it is not really possible. The ...
Pete B.'s user avatar
  • 76.5k
13 votes
Accepted

Paradox - When to buy & when to sell a share?

I believe you are confused by the vague language. Trading is a process where smart money and institutions take money from the public. Consider the concept of "market cycle". Institutions ...
user1169420's user avatar
11 votes

Is this the proof that Technical Analysis does not work?

Technical analysis is, by its nature, something that evaluates the past. Making money in stocks requires evaluating the future. If there was a foolproof way to evaluate the future by measuring ...
Brythan's user avatar
  • 21k
11 votes

Is it true that, "just ten trading days represent 63 per cent of the returns of the past 50 years"?

I can't speak to the research methods used in that study but Taleb was likely trying to build on his "black swan" hypothesis by showing that the "black swan" trading days have the biggest impact on ...
daytrader's user avatar
  • 2,232
11 votes

Why do value investors ignore technical analysis?

Why do value investors ignore technical analysis? Technical analysis tries to predict future behavior from past behavior purely by looking at prices (and possibly other stats like volume traded). ...
D Stanley's user avatar
  • 135k
10 votes
Accepted

What kind of activity do the long candle-lines on candlestick charts correspond to?

The "fat" part of the candlestick represents the beginning and ending prices. If the end price is higher than the beginning price the stick will be colored green. If the end price is below the ...
D Stanley's user avatar
  • 135k
10 votes

S&P 500 Prediction

There is no way to accurately predict the movement direction or severety of the stock market or any market index over any time period.
quid's user avatar
  • 49k
10 votes
Accepted

Can fundamental analysis be applied to market indexes as if they were single stocks/bonds?

In theory it is possible, but very impractical. So much so that it approaches the impossible. Also this does not make much sense. Assuming that it takes 100 hours to do proper fundamental analysis ...
Pete B.'s user avatar
  • 76.5k
10 votes

Support for 50 & 100 Moving Averages

Who is controlling the 50-days & 100-days chart to follow this pattern? Are they Fund Managers from various investment firms? No one "controls" these patterns - they are just reflective ...
D Stanley's user avatar
  • 135k
8 votes

How to Interpret the Widely Fluctuating Gold-Silver Ratio

Gold-silver ratio is meaningless. Gold and silver are used in industry as components of a lot of electronics and industrial equipment. They're used differently, in different ways, and in different ...
littleadv's user avatar
  • 174k
7 votes
Accepted

What do SUPPORT, RESISTANCE and STOP LOSS mean?

When talking about stocks, we sometimes like to pretend that the prices are completely rational and entirely related to the intrinsic value of the stock. The fact of the matter is that this is not ...
Daniel's user avatar
  • 5,330
7 votes

Stock market: how to anticipate effect of volume on price

There is no correlation between volume and price. There can be a ton of volume on a day when the price moves a lot, or there can be a ton of volume when the price barely budges. Volume doesn't imply ...
mhoran_psprep's user avatar
7 votes

In what way does technical analysis involve astrology and reading tea leaves?

I think that your source of information is conflating different things. Tea reading is one of dozens of methods of fortune telling. If you believe that the market can be predicted from any of these, ...
Bob Baerker's user avatar
  • 76.4k
6 votes

Is this the proof that Technical Analysis does not work?

Your idea is flawed in the first place. You assume that your hypothetical bot competes against mathematical laws. It doesn't - it competes against other bots (and humans). You may be able to code a ...
Klaws's user avatar
  • 181
6 votes
Accepted

What is the OHLC of a candle when there are no trades

Exactly, it there are no trades in a time period it will be just the last traded price, so you will just get a dash as such "-" representing that the open, close, high and low are just the same as the ...
Victor's user avatar
  • 21k
6 votes

S&P 500 Prediction

The Yield curve. If it inverts, the recession is likely (or certain depending on how much you trust the model explaining inverted yield curve vs recession); and thus equity markets will (eventually) ...
user2932's user avatar
  • 640
6 votes

Price range for a stock for the next few days or weeks or months

Trendlines are arbitrary lines subjectively placed on a chart which can be interpreted in a variety of ways. Much of their success comes from hindsight resulting in accurate predictions because you ...
Bob Baerker's user avatar
  • 76.4k
5 votes
Accepted

What is the 'period' defined as for trading indicators?

The period should be the period you are using. For example, if you are looking at a daily chart where each bar or candle represents one day, then your period for indicators would be daily. Similarly ...
Victor's user avatar
  • 21k
5 votes
Accepted

Calculating weekly simple moving average

According to this article, an n week moving average just looks at the prices at the end of the week, rather than computing some kind of average over that week. This gives you n results, where n is the ...
Glorfindel's user avatar
5 votes

On what time scales are stock support and resistance levels meaningful?

Support and resistance only works as a self-fulfilling prophecy. If everyone trading that stock agrees there's a resistance at so-and-so level, and it is on such-and-such scale, then they will trade ...
Superbest's user avatar
  • 2,688

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