Recently, a fresh leaf book Vik Niderhoffera Practical Speculation, written after the collapse of his hedge fund Global Systems. Vic compares technical analysis with Hydro - devyatiglavym monster, poisonous breath that destroy the entire district. Refrain in the chapter entitled "Head Hydro technical analysis," reads a quotation from the Greek Myths "by Robert Graves:" Hydra dwelt in a boundless Lerneyskom bog, which has become a tomb for many unwary travelers. Will you, but it seemed to me that his first book was written by other colors. Who we are and who Vic - pathetic amateur and one of the sharks of Wall Street. But his peremptory tone makes excusably my idea - "And we do not zamahnutsya William, of Shakespeare?" - All the same to understand what distinguished so much about the technical analysis. We will be very useful peretryahnut bags with postulates tehanaliza that they are not packed in rigid dogma, and try to look at the whole situation from above.
For those who first heard about Vike, citing his self-portrait at the very beginning of book:
Let's start a conversation with the answer to a question that you may have asked themselves: "How did the new book is Victor Niderhoffera on speculation and investment? Is his own hedge fund investment is not bust in 1997?"
Until 1997, I stood firm on his legs in the financial world. Barclay Agency, which determines the top hedge funds, called me a better manager in 1996. I received the award "better-managed hedge funds and traveled around the world, reading lectures on markets and music in luxurious rooms with concerts pianist Robert Shrabe. I worked as a staff of brokers and analysts, the best graduates from universities, many of whom I knew for over 10 years. I was a partner of George Soros in many investment projects, we were inseparable from them, and on weekdays and weekends. Recently published a bestseller and instantly became my book The Education of a Speculator (1997). Funds, which I have managed finances, and my condition grew rapidly.
And suddenly everything collapsed. At the jargon of Wall Street I "burst."
Honestly, I was still in his first book alerted categorically dislike Vik Japanese candle. So much that I even had an idea - but he generally does the subject knows that his ridicule like this, in passing. The market teaches people cautious, a very balanced approach to all methods of analysis, whether the Japanese candle or macroeconomic data - what's the difference? In all, it is important to be a balance and remember that the market will not do 100% case. Once again I emphasize that we are doing is not criticizing the position of Vik and tried to clarify for themselves how to apply to the methods of market analysis. We have a deal, which really is up to criticism. And this self-portrait, we will return later.
So, Hercules, fighting monster otshibal Hydro head club, but in its place grew two new ones:
Heracles still lucky. When we casually looked at the menu of technical indicators to monitor the agency Bloomberg, they saw not nine, but a dozen of colorful charts, each of which, in our view, represented a mortal threat to the investor. These were the graphics adaptive moving averages, the regression line, cash flow, parabolic foot strip Bollindzhera different oscillators, relative strength indicators, envelopes lines, stochastic indicators-tori (bars and candles), graphics tic-tac-toe, exponentially smoothed graphics, lines of growth / fall, TICK, TRIN, Fibonacci levels and options to build a direct line between any maximums and minimums, which will interest you on the schedule.
Stop, I say myself. If svalennye in a heap of technical methods and computer analysis, which we find in all our trading terminal, and there is a subject for discussion - so we will not leave. Because I do not see this subject, see only the label - all of this heap is the head of Hydra. Okay, let's say - the head, then what? Then Heracles comes to understanding that it was time to head-end and eliminate the source of the problem - cauterize fire one neck, so as not to
And this is exactly what we are going to do here. We intend to appeal to the common key to all methods of technical analysis of the topic and put it the test of fire. " This theme, the main question is: "Is the trend - is your friend?" In order to obtain a representative sample of variations of the famous sayings "trend - your friend," we appealed to the "Book of the rules of investment for global investors: invaluable advice from 150 masters recognized investment" by Philip Jenks and Stephen Eketta. We found that more than two dozen treyderov repeated with different variations of "trend - is your friend." Here are some examples:
- "The trend your friend in the last hour" (Alan Farley)
- "Do not sell stocks when prices go up" (Simon Koukvell)
- "To draw trend lines' (John Murphy)
- "Often, that quoted a low, will fall even lower, but the fact that the quoted high - will continue to rise" (Marc Faber).
And our favorite:
- "Of course, the trend - is your friend, until replaced by another trend (Thomas Demark).
None of the authors of these regulations has not tried to verify them through even the simplest test. In fact, check the "Trend - your friend is" impossible, because it has never formulated a hypothesis that can be tested. There is something evasive, subjective, even mystical in the way the rule is interpreted and used.
Oh, Vic, this is - not the neck Hydro! Rather, your corn, and I will have it happen. That is what concerns me, I belong to the trend of calm and even cautious: it is not my friend, not matchmaker, and no brother. And I belong to it easier, as the objective reality of the current time. If I see a sufficient depth for the purchase of the trend and the opposite - do not see any signs of slowing down or turn - and if I see a divergence in the trend on a computer display, then I buy. Because I know from experience that in 7-8 cases out of 10, this position will give me a good profit. Because I, unlike you, as a good 80% of speculators, there is no corporate data sources or friends, officials, because I was not informed sharks in the market, and fry.
I have no other means of analysis of the market than those that exist in my head. As well as the remaining 80% treyderov, technicians, and if we are all more or less seeing the same market situation, the price will go - where it denetsya something? Is that - any shark intervene and all eat together. So it is 2-3 cases of 10, nothing - utremsya, not the first nor the last time. Or - ostopyat us, or we - when they saw the negative signs - themselves will scoot to the market.
We, the young, are not so stupid as to persist in their positions and stand for a long time trend. As for me, I prefer the other saying, a la "all the motions - not zaberesh" or "snatch their money - and flee!"
Thus, trend is my friend, this is - not the neck. Rent me - if you do not hesitate a long time - it must be sought elsewhere, such as small axioms of Charles Dow. Rent me, our favorite Tom Demark answer to this question briefly and clearly, and I had spread to three paragraphs - I hope that my efforts were not in vain.
One can assume that some enthusiasts of the trends have been successful, but it is doubtful that their higher intelligence and that they are visionary than we are.
Oops! If you knew how much blood I drank from these same enthusiasts - stupid followers of trends, which continue to the most boring, creeping manner, drives the price of time Moving. At that time, as all normal people have taken a counter-trend position on the obvious signs of a turn. What is there to hell, the intellect, they have not yet sharahnesh a club and not ostopish they did not see in the market, except for their favorite Moving.
And one more - all kinds of enthusiasts and fanatics are always a sense of fear, but - and here tehanaliz? This is very different in the game: "Make the fool to pray to God, he rasshibet forehead."
It should go back and address some fundamental problems:
1) Is the central rule of technical analysis "trend - is your friend" right?
2) Can be a purely random good and bad results, which have made followers of technical analysis?
Too me, the fundamental.
1) This is not a central rule, and it is true, then false, as the market itself.
2) They have nothing else is left, do not worry as Elliot draw.
To begin with we note that following the trend runs counter to common sense. Take the 2 points on the graph the movement of prices, and connect them directly to pursue this line. If a later time point than the earlier, the line rises. If on the contrary, it falls straight down. What does this mean, in addition, that raise or lower the price?
Practical experience says a lot, if the trend line is built correctly. If the price of its test, but not worn through it back ahead, not noticing, the line is correct. Are encouraged to check with the method of construction of lines and selection of points for the same Tom Demark - better than anything on this topic has not yet been seen. At the same time look at the price projectors, if the "correct" line of holes - they are helping to define the objectives of Perforation. And now for the items:
1) deal properly constructed of such lines, or even better - levels, and you realize that this is simply and profitably. Just - sapporte to buy and sell on rezistanse and - never do the opposite. And you will always be in cash.
2) The first or second line test (level) means that the price of cannon and make money. On the third or fourth time can break, be careful. After a wait of Perforation return to the line (level), and "flip" - of Perforation on the deal until the next nearest sapporta or rezistansa and - did not dream that his probyut again, and collect his own.
3) Each currency test lines (levels) in different ways, examine the nature of the currency. For example, the sterling, as a rule, can not live without "spikes" - has yet to gather the foot of the line will not rest. Write to the amendment and did not rush the position until he made a "thorn" (incidentally, poostorozhnee with sterling spike is not always necessary, and of Perforation may be true - that even fellow). Euro test line more or less accurately, it all depends on the current mood of the market: sometimes can "nedotyanut (not greedy), sometimes runs tight and" punctured ", but the cost of closing an hour later returned. In general, the yen has its own, Oriental life, and for a long time to describe its nature is not a current issue.
4) Do not forget about the sharks, they are really for sure these lines are not considered (the same 2-3 cases out of 10). Or - even so, they can watch us here in the ambush.
And so on.
With regard to follow the trend, my class is too long not enough. I'm at the first signs of a turn can run more smoothly and the market itself and open to the trend early, which leads to "evaporate" position. And as far as we know Vic is aggressive in his famous story "The Old treyder and yen," remember in the previous issue of "stock the classics." Yes, and his fund, Global Systems, has failed in this same case, the counter-trend:
In order to increase revenue and be the first, I had invested in the stock market in Thailand - a country about which I knew very little. In the States, if the value of bank shares fell by 90%, you can confidently predict that soon it will rise. Obviously, this law does not work in Southeast Asia. The largest Thai bank, in which I put the fixed assets, incurred huge losses - the value of its shares fell by 99%. The losses depleted my reserves. About what happened later, I still hurt to talk - too little time has passed. Suffice it to say that the drop in Asian markets and the impact on the U.S. - the Dow Jones fell in one day on an unprecedented 550 points. It was enough that, according to a special rule, the Exchange on that day had closed at 2 o'clock afternoon. The next day I was forced to close my fund, as well as from brokers received numerous marzhin-Collet (dovnesti requirements for the margin account), I could no longer perform.
The history of life, I once again apologize for corn, and I have nothing against the methods of analysis of Vik and his trading strategy. Much more important is we all clearly understand that the market still there is nothing 100% case, and will be fun to live.
Evgeny Romanov
"Alien Money
"Alien Money
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