As a Minister, I will only accept HARD CASH. What if my party loses electtions next time and some opposite party comes to power. They’ll start investigating amd it will be very easy to establish money trail through stocks.
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Okay. So nothing makes money. Got your point.
Can you please tell what do you do? Since how many years are you doing this? What’s your cagr? And most importantly, why this post?
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What is this discussion even about?
Trading is from where I and numerous other traders are running our homes, using pure technical analysis and systems with an edge.
Yes, it is profitable. Period.
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So nothing makes money.
Technical Analysis doesn’t makes money. Neither day trading which is by and large TA based trading.
Can you please tell what do you do?
I follow my father’s strategy which has made him good money over the years. See my father has following shares in his portfolio: HDFC , Nestle, Unilever, MRF, Maruti Suzuki etc bought over the years and never sold. Latest he has added Mankind. Now all these shares have become multi-bagger. How he picked them? He developed his strategy after reading Peter Lynch in late 90s. The strategy is simple : If you find that product(s) of a company are good and are popular then buy the stock. Forget about PE, PB or Head and Shoulders, Cup and Handle etc .
And most importantly, why this post?
To tell that Technical Analysis doesn’t work. Neither does day trading.
There is no evidence that Technical Analysis is profitable. Just because you finish a sentence with Period doesn’t mean it has now become true.
@apple
Based on your statements, it seems you’ve used technical analysis for predicting the markets. (I’m unsure what specific aspect of technical analysis you’re referring to, as it’s quite a broad subject.)
However, if you use technical analysis to identify low-risk entry points, then I can confidently say that technical analysis works.
The same applies to day trading; if done with proper understanding, it can be profitable. Many traders are consistently making money with day trading.
I would be happy to hear the views of @Jason_Castelino @VijayNair @viswaram @paekut
Day Trading has a failure rate of 99%. Even rocket science doesn’t have that level of failure rate . In fact Falcon 9 has success rate of 99%. Back to topic .
Only 1 in 10 FNO trader is profitable and even then his profits are very minute.
profit makers incurring 15-50 per cent of the profit as transaction cost.
If your Transactions cost are 50% percent of your profits then you are not making any real profit.
Now classic mistake that many made at this point : If somebody is losing money then somebody is also winning. That’s not true because winners are not fixed. You can win today and lose tomorrow. In other words , the 1 trader who was minutely profitable this year is unlikely to be profitable next year.
Where did you get the number 99%?
You can lose today and win tomorrow too.
I don’t believe in TA. In fact, I’ve mentioned on multiple occasions that I trade against TA. This approach has worked for me over the past seven years. Your stop loss is my target, and your target is my stop loss. I have my own methods.
This doesn’t mean TA doesn’t work for others. In my opinion, TA complicates simple things because people think simplicity can’t be effective. However, my view might not be correct. I know people who follow TA and are profitable, including some here who have already mentioned it. But you can’t claim they’re not profitable just because TA doesn’t make sense to you.
There will be many who would say this doesn’t work. Trust me Japan example will come in anytime from anywhere.
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Let me tell you one more thing: everything is a zero-sum game over its life cycle. For day traders, this cycle spans a single day, while for long-term investors, it could last around 300 years. Even giants like Reliance and Nestle will eventually shut down. When? I don’t know—maybe in 500 years. Ultimately, our planet will also be destroyed. We come from nothing and return to nothing. We had no value before we were born and none after we die, but while we’re alive, our value fluctuates. Similarly, wealth continuously transfers from one person to another.
In our trades, you mentioned that only brokers, depository participants (DPs), and the government make money. However, they too will eventually lose it to someone else.
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A research paper titled The cross-section of speculator skill: Evidence from day trading says this :
Less than 1% of the day trader population is able to predictably and reliably earn positive abnormal returns net of fees.
Yes but then next day you can lose what you have won. The composition of 1% who make money keep changing. One year you may be in 1% but as market changes and your strategy becomes redundant you are now in losing majority of 99%
Japan and Argentina are two economies that no one can explain. Anyways, I still agree that there is no guarantee that Long Term Investing will work. But it definitely works way better than Technical Analysis
You can make money using TA. I have done this and I still can do. What I am saying is that TA still can’t beat LT investing so why do it?
I am giving a personal example : Few years back I made 40% using TA in VBL. I sold it based on TA. It went down and I felt happy. After 1 month it started rising again and I bought at higher price and again made 30% before selling. Again it went down and I felt like genius. Again I bought at higher price but this time I got badly whipsawed, I lost around 15% in 3-4 trades as SL was triggered. Till date I have made around 180-90% net profit on VBL while VBL has moved 2000% since listing as of today.
This question puzzled me that why I failed to make big money from VBL. The conclusion that I derived was shocking: Stop Loss which every Technical Analyst and Day Trader loves was the cause of my losses (underperformance) .
I gained this wisdom on that day:
You wil never have a 5x, 10x multi-bagger if you use 5-10% stop loss and multi-baggers are what makes money for you. It is far better to reduce your position size than to have any Stop Loss
Stop Loss reduce your Risk but by reducing your Risk you are also reducing your ultimate Reward. Most TA guys don’t understand this very important thing.
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There is no evidence “with you”.
Just because you write something doesn’t make it true either.
I wrote here thinking that logic works universally but I rest my case as I don’t think it’s true with you either.
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Evidence is clear that technical Analysis doesn’t work. Science has proved it. If you don’t believe in science then that’s your privilege.
The Profitability of Technical Analysis: A Review by Andrew W. Lo, published in the Financial Analysts Journal in 2000.
little evidence of consistent profitability after accounting for transaction costs.
Forget Science as everyone thinks he is scientist in these days, here is Warren Buffet on TA
I realized technical analysis didn’t work when I turned the charts upside down and didn’t get a different answer.
Now when you say TA works are you insinuating that Buffer is an ignorant and you know more than him?
No one has perfect competency in everything and what one says may have a context that we are not familiar with.
But yes, if he said that then he is wrong - but only to the extent that what he tried did not work for him and he moved on. I do not blindly follow anything anyone says - do you ?
He also takes concentrated positions i think and that works for him, should we also do that ? Does he recommend everyone to do that ?
Copying anyone exactly probably does not work well in trading. Did not work for me.
Anyway, your mind is already made up, you failed and so it must be that ‘TA’ does not work and so you put all your effort in finding things that agree with your opinion instead of figuring out what went bad and how to fix.
Most people do not work well enough, do not test enough, do not wait for proof before deploying capital, do not control risk, give in to FOMO etc - and that is probably why they fail.
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Ah, this happened due to improper risk management. Technical analysis provides high probability setups and low-risk entry points. The key phrase here is ‘high probability’, meaning things will often work in your favor, but not always. So, it’s crucial to have proper risk management when things don’t go as expected.
If you implement proper risk management strategies, even if you experience numerous stop-loss hits, you won’t lose more than a predetermined percentage of your capital, typically around 10%. This way, you incur small losses when you’re wrong and as you mentioned, when things go in your favor, you stand to gain significantly. This creates a positively skewed bell curve so you can make money consistently.
Only those who watch Tom Hougaard videos on YouTube will believe this nonsense that you can make money by flipping coin + risk management.
You and many people here are wrong about Stop Loss. Majority of people think that Stop Loss is good and remember majority doesn’t makes money.
Why Stop Loss is Bad
According to Modern Portfolio Theory , Reward is proportional to Risk. Everyone knows that but hardly anyone understands that.
In TA you are reducing your Risk via a stop loss. By reducing risk you have reduced your Reward as well. This is why TA always underperforms Long Term Investing.
Not taking the risk is the biggest risk in market. Those using Stop Loss are refusing to take the risk.
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Stoploss is a concept invented and propogated by brokers so that transactions keep on happening in their customers accounts regularly in the name of sl trigger and taking fresh trades and they keep on making money regularly.
Markets are simple. Experts make it complicated otherwise they’ll be jobless.
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Last post here, no point if mind is closed and i am not sure what he actually wants here other than venting frustration / parroting ‘wisdom’.
i use stop loss, they work well for me - my systems would be worse without them.
I know of a trader who does not use stop loss in another country’s market. That works well for him too. Not using stop loss is probably an exception rather than norm though.
All of these things are tools to be tested and deployed where they work. In active trading, stop loss generally should work well, but as always - we need to test. Nothing works universally well, every market / timeframe can have its own behavior and that behavior can shift. We need to test over a decade or so of data before coming to conclusions. Taking a handful of trades as proof reeks of ignorance.
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