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 ...
- 8,468
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 ...
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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 ...
- 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 ...
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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 ...
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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 ...
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 ...
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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 ...
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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 ...
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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 ...
- 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 ...
- 76.1k
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 ...
- 566
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 ...
- 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 ...
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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). ...
- 131k
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 ...
- 131k
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.
- 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 ...
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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 ...
- 131k
8
votes
Accepted
Is technical analysis based on some underlying factors in the market or do they work simply because other people use them?
Technical analysis is based more on psychology than anything else.
As an example, if an analyst estimates or believes that a stock is undervalued, or simply wants to re-balance their portfolio, then ...
- 8,801
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 ...
- 166k
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 ...
- 5,310
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 ...
- 136k
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, ...
- 75.8k
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 ...
- 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 ...
- 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) ...
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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 ...
- 75.8k
5
votes
Most important skills needed to select profitable stocks
You need to have 3 things if you are considering short-term trading (which I absolutely do not recommend):
The ability to completely disconnect your emotions from your gains and losses (yes, even ...
- 121
5
votes
How to trade fundamentally good stocks over the short to medium term?
Your question is a bit odd in that you are mixing long-term fundamental analysis signals which are generally meant to work on longer time frames with medium term trading where these fundamental ...
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