Technicals - Masters in finance
Techincal Analysis...
So I just did a masters in finance at a good school, been blasted with maths, stats, EMH (acknowledging some of its minor shortcomings) the law of one price, asset pricing etc.
Now I work on a trading desk at a BB all I hear is support, resistance, the trend line, we're hitting the 50 day moving average, RSI is oversold, the MACD is blah di blah di blah... you get it...
Have others gone through a similar transition? Did you try and forget what you learnt? Do other traders out here use technicals a lot? Is it a BB thing or do HFs, asset managers with their longer horizons use them too? Across all asset classes?
Just really curious because after a year of hearing techincal analysis literally be laughed out of the room at school, it surprises me to see almost everyone around me using it....
My internship in wealth management was 100% technical analysis. I find it funny how profs shit all over TA but I've seen it first hand consistently beat the market. I thought my technical background (several years day trading) would be frowned upon so this is good to hear
It depends on what type of firm you're at. In an intrinsically value based AM firm, no, technical analysis is not used at all since you're really concerned with long term valuation and not what something is going to do tomorrow or next week. Its usually some type of DCF analysis or EVA analysis and traders just focus on getting in at price levels that the strategists/PM's want. There are plenty of firms that use it though that have a different focus.
Although they teach you that it's shit a b school, it's really just another way of looking at things and is fairly prevalent. I also think highly enough of it that I trade personally a lot around it even though my firm doesn't. I look at fundamental, technical, and psychological analysis when I trade because I am more of a short term trader myself instead of a value trader.
The thing with technical analysis is that it's kind of a self fulfilling prophecy. So many people use it that markets tend to respond to it and it becomes real. Yes, it is also used across the product range that it's meant for (FX, equity, futures, etc).
We don't use TA as much as it sounds like you do but there is a guy around here that trades solely on TA and market information (could be more, but that's what I hear). He's been here for a while so I'd guess it works for him.
^I'm curious, are you at a BB or a prop firm?
Prop
In my prop desk, people use everything, from technical analysis, fundamental valuation, market sentiment... nobody cares what you do if you can profit from it. Some laugh on technical analysis, but is useful to look at it because of the above-mentioned self-fullfiling prophecy.
If someone said they could only make money by going to work naked, it would be fine.
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