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What I'm trying to point out is that all the technical analysis in the world and charts and metrics are useless when Helicopter Ben announces the next round of QE or stimulus or whatever.
As I said, if you're trying to pick a top to bank profit.....exiting based upon TA or FA without confirmation is okay.
Trying to enter a new short position in gold without some sort of price confirmation is pretty risky (IMHO).
With all the turmoil and economic news ongoing, and Helicopter Ben being pressured from his fat cat banking cronies and in an election year.....
"A dumb man never learns. A smart man learns from his own failure and success. But a wise man learns from the failure and success of others."
Can you help answer these questions from other members on NexusFi?
So, my general take on most people incorporating a view on fundamentals is that it's pretty dumb. I only like to consider pieces of information from which, through experience, I have nurtured an edge. That is, I know how to use that information better than the majority of the market, and well enough to net me a little profit. It took me about 1,000 OODA cycles (trades), and bi-weekly reviews of them all, before I started to find my feet, and probably that again before I had an edge that manifst itself in my P&L.
So, when people on forums, or in chat rooms, even on trading floors, mention anything to do with fundamental analysis, I immediately switch off. The reason I do this is because, in all liklihood, the person who is explaining his fundamental view hasn't gone through the 1,000 or so cycles of trading from fundamentals that it would need, IMO, to develop an opinion that had the experience to back it up. My general take on it is that it took me that long, so I shouldn't expect anybody else to do it any quicker. This isn't arrogance, it's just common sense; one way of trading isn't any easier than another, so why should someone with 6 months experience of fundamental analysis have found an edge? They probably haven't. My next door neighbour is a HF manager, and he trades pretty much on findamentals. He says that the typical route for someone to get his kind of job is to leave a prestigious uni with a good degree and sport honours, join a bulge bracket firm in a front office (sales/trading/analyst) role or in a real money fund, work for 10 years, and then apply for jobs.
So, when someone mentions anything to to with fundamental analysis, I tend to ignore them, because most of the time you can tell from their argument that they haven't had the experience necessary to develop some advantage in that arena. I only consider bits of information that I know from experience I have an edge in, everything else is just noise and is best avoided.
(RM99 this is not a post slagging you off, it's just my view. Of course when you are involved in the markets on a day to day basis it's impossible not to have an opionion, I have my opinions too, but they are exactly that, and not worthy of trading off. Especially Gold, where everyone is an expert, yet a typical "fundamental" analysis might be QE -> more money -> gold goes up without any mention of miners, cyclical factors, bullion banks, forward rates etc etc... they are just making *poorly* educated guesses)
*p.s. the 1,000 trade is an estimate, based on 8 - 10 trades a day, 20 days a month, for 6 months
We're arguing apples and oranges. The thread is about picking a top. Picking a top is a relative term. Picking a daily top, picking a weekly top, etc, are possible with technicals.
Picking a an absolute top over the highest market structure on a long time scale is HEAVILY dependent upon fundamentals. It's no different than trying to pick the bottom with respect to oil (or the top). Those levels aren't determined by technical analysis, they're largely determined by fundamental changes in the market with respect to supply, demand, exchange rates, economic projections and outlooks, consumer confidence and sentiment, etc, etc.
Your technical analysis might tell you there's a resistance level in oil at a certain price and you enter short (on a long term trend trade) only to be dismayed when a major hurricane enters the gulf and destroys or delays several drilling rigs.
I'm not pretending to be able to call fundamentals. I agree with you.
My point is that the higher you go in time frame, the more fundamentals get a vote. Day trading and range trading aren't as succeptible.
If you're going to try to pick tops and bottoms on a long term scale, you'd better have a wide tolerance, because as I pointed out, all it takes is for any number of fundamental changes to come in and ruin your day.
How many Gold bugs were crying after their long positions got swamped when the margin rates increased out of nowhere? If you didn't have an inside track to that move, you might have gotten hurt (unless of course, as I said, you have a WIDE risk tolerance in place).
Just because fundamentals are nebulous and wide ranging and difficult to handicap, doesn't mean they don't exist.
"A dumb man never learns. A smart man learns from his own failure and success. But a wise man learns from the failure and success of others."
"Successful trading is one long journey, not a destination" Peter Borish Former Head of Research for Paul Tudor Jones speaking on conversations with John F. Carter
the relevence of the link I posted is that it could well be see as a precurser to something similar happening in Gold contracts, as the poster before me pointed out the size of money moving into it...
