stewy52

[Guest stewy52]

Hi

First post on IG. Done a fair bit of research and currently using demo account. Sometimes finding that questions throw up more questions than answers. Trying to appreciate the relevance of technical analysis and want to fully buy in to this concept, compared with fundamentals. I guess that both play a part, however, if my understanding is correct and that markets are moved by institutional order flows rather than retail investors actions. Secondly, with the exeption perhaps of hedge funds, most institutional investors are investing on behalf of clients for the longer term using fundamentals and longer term prospects as a trigger to enter the market. So if it is these actions which move markets then why would price increase for example, because some indictators on a chart suggest that it will?

Perhaps I don't understand and need to do more reading but any views / answers would be welcome. 

[Caseynotes]

16 hours ago, Guest stewy52 said:

Hi

First post on IG. Done a fair bit of research and currently using demo account. Sometimes finding that questions throw up more questions than answers. Trying to appreciate the relevance of technical analysis and want to fully buy in to this concept, compared with fundamentals. I guess that both play a part, however, if my understanding is correct and that markets are moved by institutional order flows rather than retail investors actions. Secondly, with the exeption perhaps of hedge funds, most institutional investors are investing on behalf of clients for the longer term using fundamentals and longer term prospects as a trigger to enter the market. So if it is these actions which move markets then why would price increase for example, because some indictators on a chart suggest that it will?

Perhaps I don't understand and need to do more reading but any views / answers would be welcome. 

Hi, yes it's the institutional players who move the markets, hedge funds, banks, pension funds. In the FX market for example all retail only makes up 3.5% of the total traded while the largest player is a bank (citi if memory serves) which does 13% and the top 10 players control over 75% of the total market.

The fundamentals drive the market, dictate direction and final targets for the big moves while the chart techinicals determine how price gets there. Indicators on the other hand attempt to foresee technical patterns on the charts by using past data and may or may not prove to be correct which is why they should never be used in isolation.

As a retail trader you won't have the resources to predict the fundamental drivers (just guessing doesn't work in the long run) so should instead look to 'go with the flow', learn to read chart behaviour, patterns and find 2 or three indicators that source data differently and that when they converge have a good (as seen by testing) predictive probability.

[Guest stewy52]

Thanks for your response Caseynotes. Much of what you say makes sense. However, take stocks and shares for example, if fundamentals and institutional investors are driving price then sureley price is going to move however it is going to move, irrespective of what any technical chart is suggesting it may do?

Thanks again!

[Caseynotes]

21 hours ago, Guest stewy52 said:

Thanks for your response Caseynotes. Much of what you say makes sense. However, take stocks and shares for example, if fundamentals and institutional investors are driving price then sureley price is going to move however it is going to move, irrespective of what any technical chart is suggesting it may do?

Thanks again!

Institutions are watching the charts too so rather than chasing price to fill a massive order they will drip feed it over time so allowing price to fall back towards their buy/sell level. It may take them weeks to completely fill their order.