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>You can predict situations like crop failure - if you're an expert in agriculture and have access to data that impacts crop yields. Experts predict crop failu

by 99_00 3y ago

>You can predict situations like crop failure - if you're an expert in agriculture and have access to data that impacts crop yields. Experts predict crop failures, big money acts on those predictions and moves securities price and volume, which technical analysts examine. Therefore, the experts prediction is input for technical analysis.

mywittyname 3y ago
It can be an input, but is it a significant input? If I know for a fact that a company is about to collapse and I establish a short position, will anybody notice? It depends on a lot of factors, but I could make an assload of money on puts without nudging the market. Technical analysis is all about answering the question: are you able to filter who know something vs those that don't merely by looking at a buy signal? The answer: no, not really. Insiders acted well in advance of the SVB issues being made public, and there are lot of other examples of people making guaranteed bets that weren't obvious in the technicals. The noise is just too much. By the time the signal is clear, the market has "priced" it in, and now you're just trying to predict the random actions of the know-nothing crowd. Technicals are always after-the-fact. Since enough people with deep knowledge have to have already moved on that information in order for the market to have reacted to it. It's much like trying to predict a fire by watching a crowd running away and hit the fire alarm. You didn't predict the fire and you can't have predicted the fire. Maybe you could have noticed one person booking it for the exit and follow along, but you still didn't know what was happening and were going on blind faith.
- 99_00 3y ago
  >If I know for a fact that a company is about to collapse and I establish a short position, will anybody notice? It depends on a lot of factors, but I could make an assload of money on puts without nudging the market. Assuming you are the only person who knows for sure that this company will collapse, technical analysis is the wrong tool to use and all other strategies, experts, big money players will also fail. Assuming you aren't the only person who knows for sure that this company will collapse the price will reflect this knowledge. >It's much like trying to predict a fire by watching a crowd running away and hit the fire alarm. You didn't predict the fire and you can't have predicted the fire. Maybe you could have noticed one person booking it for the exit and follow along, but you still didn't know what was happening and were going on blind faith. It's nothing like that at all, and reasoning with analogy is pointless because the discussion becomes about the analogy not the issue at hand. But I will try. If people running away is people selling stock, it doesn't matter if there is a fire or not. Selling stock impacts price regardless of if the event is real or not. And as you know, having been in a building where the fire alarm was activated, people don't rush to the exists. Some small number leave right away. The vast majority won't enter the building. The remaining people look to others and as more leave the momentum builds until the mass moves out. And once the fire department arrives and gives the ok they will go back in. But since we are talking about stocks, not all buyers won't be waiting for that. They'll have put their money elsewhere, money may go back into the stock slowly. Obviously this won't work on the top 3 most popular stocks in a raging bull market that everyone is paying attention to. In that case, people will be waiting to jump back in.
stouset 3y ago
By the time you have this information and are reasonably act on it, it has already been priced in by participants with deeper pockets, better access, and rapid processing of relevant information sources.
- 99_00 3y ago
  The prediction of a crop failure isn't a binary event and money isn't deployed in a binary strategy. It becomes more or less likely over time. Also, the situation is very dynamic with an unknown and very large number of variables, even with something as seemingly simple as a crop failure. Such as such as a countries deciding to ban exports to secure food security, lack of access to fertilizer due to sanctions against major fertilizer producers in wheat producing countries, the politics of national and local water rights. All these factors have parties with inside information acting on them (see members of congress trading stocks) which no player with big pockets will have access to but is all reflected in the price.
  - stouset 3y ago
    Nobody is saying these things are binary events. But betting that you're going to more accurately guess the odds of these events than dedicated players with enormous sums of money behind them and who are supported by professional research teams is… maybe not a strategy with positive expected value.

by 99_00 3y ago

mywittyname 3y ago

It can be an input, but is it a significant input? If I know for a fact that a company is about to collapse and I establish a short position, will anybody notice? It depends on a lot of factors, but I could make an assload of money on puts without nudging the market. Technical analysis is all about answering the question: are you able to filter who know something vs those that don't merely by looking at a buy signal? The answer: no, not really. Insiders acted well in advance of the SVB issues being made public, and there are lot of other examples of people making guaranteed bets that weren't obvious in the technicals. The noise is just too much. By the time the signal is clear, the market has "priced" it in, and now you're just trying to predict the random actions of the know-nothing crowd. Technicals are always after-the-fact. Since enough people with deep knowledge have to have already moved on that information in order for the market to have reacted to it. It's much like trying to predict a fire by watching a crowd running away and hit the fire alarm. You didn't predict the fire and you can't have predicted the fire. Maybe you could have noticed one person booking it for the exit and follow along, but you still didn't know what was happening and were going on blind faith.

99_00 3y ago
>If I know for a fact that a company is about to collapse and I establish a short position, will anybody notice? It depends on a lot of factors, but I could make an assload of money on puts without nudging the market. Assuming you are the only person who knows for sure that this company will collapse, technical analysis is the wrong tool to use and all other strategies, experts, big money players will also fail. Assuming you aren't the only person who knows for sure that this company will collapse the price will reflect this knowledge. >It's much like trying to predict a fire by watching a crowd running away and hit the fire alarm. You didn't predict the fire and you can't have predicted the fire. Maybe you could have noticed one person booking it for the exit and follow along, but you still didn't know what was happening and were going on blind faith. It's nothing like that at all, and reasoning with analogy is pointless because the discussion becomes about the analogy not the issue at hand. But I will try. If people running away is people selling stock, it doesn't matter if there is a fire or not. Selling stock impacts price regardless of if the event is real or not. And as you know, having been in a building where the fire alarm was activated, people don't rush to the exists. Some small number leave right away. The vast majority won't enter the building. The remaining people look to others and as more leave the momentum builds until the mass moves out. And once the fire department arrives and gives the ok they will go back in. But since we are talking about stocks, not all buyers won't be waiting for that. They'll have put their money elsewhere, money may go back into the stock slowly. Obviously this won't work on the top 3 most popular stocks in a raging bull market that everyone is paying attention to. In that case, people will be waiting to jump back in.

stouset 3y ago

By the time you have this information and are reasonably act on it, it has already been priced in by participants with deeper pockets, better access, and rapid processing of relevant information sources.

99_00 3y ago
The prediction of a crop failure isn't a binary event and money isn't deployed in a binary strategy. It becomes more or less likely over time. Also, the situation is very dynamic with an unknown and very large number of variables, even with something as seemingly simple as a crop failure. Such as such as a countries deciding to ban exports to secure food security, lack of access to fertilizer due to sanctions against major fertilizer producers in wheat producing countries, the politics of national and local water rights. All these factors have parties with inside information acting on them (see members of congress trading stocks) which no player with big pockets will have access to but is all reflected in the price.
- stouset 3y ago
  Nobody is saying these things are binary events. But betting that you're going to more accurately guess the odds of these events than dedicated players with enormous sums of money behind them and who are supported by professional research teams is… maybe not a strategy with positive expected value.