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Strategies & Market Trends : Technical Analysis - Beginners
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To: Chris G. who wrote (8187)3/29/1998 2:53:00 PM
From: gonzongo  Read Replies (2) of 12039
 
Chris- you question Dave's comments about funnymentals. Dave actually said:
"Question: Why would you be concerned with Funnymentals if you are trading short term???

Answer: Because you THINK you are suppose to be.

If you are trading for the first bounce you should be looking at Volume & Price ONLY!!! PE Ratio and Price to Book has no barring whatsoever in this scenario. You are ONLY concerned with the next jump in price. "

Now TALK went against your indicators. it was caused by news. Fair enough. Not by PE and Price to Book. Our interpretation of news can also be wrong- A company comes out with an earnings warning and then rises. A company comes out with great numbers and then falls. A company comes out with a new product and the company and the competition both go up. Go figure. But TA can often hint the direction of the stock.
I personally would not have picked TALK on 3/24 but have no strong case against buying it- especially after the fact.

very few systems can be better than 75% winners- that is 3 out of 4 picks are winners. The percentage of wins is often influenced by the market:
Example: I am checking out a system which looks at short term signals to see if entry is higher 10 days later at the close. Simple enough.
Picks from 3/13 had an 87% success rate
picks from 2/27 had a 74% success rate
picks from 2/12 had an 80% success rate
picks from 12/30 had a 32% success rate
picks from 10/31 had a 64% success rate
picks from 10/17 had a 46% success rate

overall rate was about 65%- but it depended on the MARKET. If the market is a bull then indicators for long transactions work better.
Why were the numbers for 12/30 so bad- because the market tanked in the first part of January 98. Similarly in late October.

Answer- not reading the news or studying tons of funnymentals
but
1. Protective mental or physical stops ( Dave uses Parabolic SAR)
2. Acceptance that trading is a percentage game. You can lose on 50% and still win big.

g
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