Posted In Stock Market for Beginners , Technical Analysis 8 comments. There was plenty of evidence to suggest Fundamental Analysis worked Warren Buffett has Billions of evidence. Everywhere you go online there is another guru selling the latest TA system accompanied with confusing looking charts.
To my delight I discovered many successful traders and investors who had the track record to prove that Technical Analysis does work. Here is a list of the traders I found particularly noteworthy:. Originally a stock analyst but got sick of having to write bullish investment advice on overpriced companies. He developed and combined several technical indicators in an effort to determine lower risk entry points for his trades. Schwartz found success when he shifted to technical analysis and focused on mathematical probabilities.
Investing Championship in A big advocate of moving averages , Schwartz identifies healthy stocks by looking for positive divergences in price action over the broad market. Lost all his capital several times while learning to trade including one occasion when he lost more than his entire net worth. In he sold naked calls on Cities Service that expired deep in the money.
Not one to give up, after five years Mark had totally recovered from the losses but vowed never to sell another naked option. This works as an over brought and over sold indicator. When it reaches extremes of bullish or bearish readings the market tends to reverse direction.
To succeed as a trader, one needs complete commitment… Those seeking shortcuts are doomed to failure. He described his style as only taking risks when the odds are in his favor. Understanding this makes a big difference he says, like when a life insurance policy is written the risk profile of an 80 year old is very different from that of a 20 year old. Sperandeo believes that the most common reason for failure with technical analysts is that they apply their strategies to the market with no allowance for the life expectancy of the bullish or bearish move.
The Diversified Trends Indicator, The Commodity Trends Indicator, and The Financial Trends Indicator. The key to trading success is emotional discipline. Making money has nothing to do with intelligence. To be a successful trader, you have to be able to admit mistakes. THE pioneer when it comes to computerized trading systems.
Inspired by the work of Richard Donchian he began developing futures trading systems in the s. Seykota tested and implemented his ideas using an IBM This was well before the days of online stock trading, back then such computers were the size of a large room and were programmed using punch cards.
Originally he wrote trend following systems with some pattern recognition and money management rules. Today it is reported that his daily trading efforts consist of the few minutes it takes him to run his computer programs and generate the new signals.
Ed attributes his success to good money management, his ability to cut losses and the technical analysis based systems he created. There are old traders and there are bold traders, but there are very few old, bold traders. I was very happy to discover that the Forbes Rich List was scattered with investors and hedge fund managers who have profited handsomely despite giving fundamentals a back seat.
Simons deciphered codes for U. In addition to this it had been used to help explain parts of the string theory. Renaissance Technologies is a quantitative hedge fund that uses complex computer models to analyze and trade securities.
We are a research organization… We hire people to make mathematical models of the markets in which we invest… We look for people capable of doing good science, on the research side, or they are excellent computer scientists in architecting good programs.
The flag ship Medallion Fund trades everything from Pork Bellies to Russian Bonds. Unfortunately the Medallion fund is now only open to employees, family and friends. The key to the success of Renaissance Technologies has much to do with the people they hire; PhDs and not MBAs. About a third of their employees have PhDs.
Those on the payroll include code breakers and engineers, people who have worked in computer programming, astrophysics and language recognition. They also look for people with creativity.
The past is a pretty good predictor of the future. Placed his first trade at the age of just 12, studied finance at Long Island University and got and MBA from Harvard in Dalio traded futures early in his career and founded Bridgewater Associates in when he was just From the moment he started managing money Dalio kept notes in a trading diary with the hope that his ideas could later be back tested.
Big bets on U. Dalio focuses heavily on understanding the processes that govern the way the financial markets work. By studying and dissecting the fundamental reasons and outcomes from historical financial events he has been able to translate this insight into computer algorithms that scan the world in search of opportunities. Ray is particularly interesting because he does not believe in an approach devoid of understanding fundamental cause-effect relationships. He has however been able to use technical analysis to identify mispriced assets based on fundamental information.
So to say that Ray gives fundamentals analysis the back seat to technical analysis would not be entirely accurate. Well defined systems, processes and principles are his key when is comes to making investing decisions.
All strategies are back tested and stress tested across different time periods and different market around the world to ensure that they are timeless and universal. The strategies are all about looking at the probabilities and extreme caution is exercised; for a hedge fund Bridgewater uses relatively low leverage of 4 to 1. Bridgewater focuses mostly in the currency and fixed income markets but uses powerful computers to identify mispriced assets on dozens of markets all over the world.
To find so many different uncorrelated investments requires stepping well beyond the realm of the stock exchange.
I learned to be especially wary about data mining — to not go looking for what would have worked in the past, which will lead me to have an incorrect perspective.
Having a sound fundamental basis for making a trade, and an excellent perspective concerning what to expect from that trade, are the building blocks that have to be combined into a strategy. Steven keeps his activities very secretive but his style is understood to be high volume hair-trigger stock and options trading. Steven attributes the success of SAC to the breath of experience and skills found in the people working for the firm.
They look for traders who have the confidence to take risks, those who wait for someone to tell them what to do never succeed. If you are a day trader, day trade. If you are an investor, then be an investor.
Does Technical Trading Really Work? Technical Analysis - TheStreet
Both a discretionary and systems trader who had his early success trading cotton futures. Jones majored in economics at the University of Virginia in and got a job working for the cotton speculator Eli Tullis not long after graduating. The greatest lesson that he learnt from Eli was emotional control but was later fired for falling asleep on the job after a big night out on the town with his friends.
Jones claims that predicting the crash was possible because he understood how derivatives were being used at the time to insure positions and how selling pressure on an over priced market would set off a chain reaction. He says that you need a core competency and understanding of the asset class you are trading. He attributes his success to a deep thirst for knowledge and strong risk management. Jones is a swing trader, trend follower and contrarian investor who also uses Elliot Wave principles.
Jones believes that prices move first and fundamentals come second. A self professed conservative investor who hates losing money. In his eyes a good trader is someone who can deliver an annual return of times their largest draw down. Always question yourself and your ability. The second you do, you are dead… my guiding philosophy is playing great defense.
Always maintain your sense of confidence, but keep it in check. It is clear that Technical Analysis has worked in the past and continues to work for many successful traders and investors today. But what are the common aspects that are being were used by these successful market technicians? Unfortunately due to the extreme secrecy surrounding nearly all of these traders, the specific methods that they use are not known.
However I did uncover the following:. It is undeniable that Technical Analysis does work so ignore all those who try and tell you otherwise. The next step is to make Technical Analysis work for you and that first requires identifying or creating a system that suits your personality. What has your experience been with Technical Analysis?
Did I leave anyone off the list? Let me know in the comments section below. Also I realize that I listed 8 traders not 7: Great article, I was begining to doubt the approach that I love but was reminded after reading about all of those great traders who made it. The best part was when Mark D. Cook wrote ''you should still expect to, lose money during the first five years''. Trading requires hard work and is a zero-sum game, experience and screentime along with hard work are critical to the success of any trader.
You wont be able to beat the shapest minds out there with 2 years experience, with 2 years experience all you have is a market Diploma. You need a Masters Degree to pass this market, no exceptions, to be among the best you have to work like the best there are no shortcuts and thats why so many fail and claim that technical analysis doesnt work while in fact their fault for not being able to match the requirements of success.
Thanks for your contribution. I had to earn my stripes the hard way but hopefully will be able to help speed up the growth curve for others with the information on this site. Now, I know I will earn all of it, but only after I master my emotions.
I liked 'Common Personality Traits'- shows us that the most basic of the trading lessons are the secrets behind even the all time greats. S Here is a series that I wrote on trading psychology that you may find of interest — http: The most significant non-company-specific factor affecting stock price is the market sentiment, while the most significant company-specific factor is the earning power of the company.
Thus, many stock traders use technical analysis as a timing tool for their entry and exit points. Technical analysis is more suitable for short-term trading and works best with large caps, for stock prices of large caps are more correlated with the general market, while small caps are more affected by company-specific news and speculation…:. Perhaps small stock traders should not waste a lot of time on fundamental analysis; avoid overanalyzing the financial position, market position, and management of the focus companies.
It is difficult to make wise trading decisions based only on fundamental analysis company-specific news accounts for only about 25 percent of stock price fluctuations. There are only a few important figures and ratios to look at, such as:. Furthermore, single ratios and figures do not tell much, so it is wise to use a few ratios and figures in combination. Preferably, you want to see trend improvements in these above-mentioned figures and ratios, or at least some stability when the times are tough.
Top 7 Technical Analysts of All Time Share Their Secrets | ETF HQ
Despite all the exotic names found in technical analysis, simply put, it is the study of supply and demand for the stock, in order to predict and follow the trend. Many stock traders claim stock price just represents the current supply and demand for that stock and moves to the greater side of the forces of supply and demand.
If you focus on a few simple small caps, perhaps you should just use the basic principles of technical analysis, such as:. I have no doubt that there are different ways to make money in the stock market. It is just a matter of finding out what best fits your personality. I hope the above little information from my small unique book was a little helpful!
I think its common to lose money in market. I am a trader and have my own website technicalcall. Myself too is learning technical analysis. So , What do you think. Is there a certain timeperiod which takes before a person become a proper technical analyst. Can you throw some more light on topic the of money management. The best way to speed this process up is by finding a trading style that suits your personality and having the ability to control your emotions.
Home About Derry Brown My Story Contact Testimonials. Top 7 Technical Analysts of All Time Share Their Secrets Posted In Stock Market for Beginners , Technical Analysis 8 comments Tweet. Ahmed 7 years ago.
Derry Brown 7 years ago. All the best with your trading. Vinay 7 years ago.
Kudos to you Derry for getting in all this information together. I am glad that you enjoyed it Vinay. Best of luck in your future trading! Mika 5 years ago. Technical analysis is more suitable for short-term trading and works best with large caps, for stock prices of large caps are more correlated with the general market, while small caps are more affected by company-specific news and speculation…: Fundamental analysis Perhaps small stock traders should not waste a lot of time on fundamental analysis; avoid overanalyzing the financial position, market position, and management of the focus companies.
There are only a few important figures and ratios to look at, such as: Technical analysis Despite all the exotic names found in technical analysis, simply put, it is the study of supply and demand for the stock, in order to predict and follow the trend.How The Pro's Trade Using Moving Average (MA) Technical Analysis
If you focus on a few simple small caps, perhaps you should just use the basic principles of technical analysis, such as: DEEPAN 5 years ago. Derry Brown 5 years ago. Money management is a huge topic but as a rule of thumb: For me I invest money under the following general rules: These rules fit with my personality and trading style but may not suit other people.