Why do brokers provide technical analysis?

 

hf

Honestly, have you ever looked at a piece of technical analysis that a broker has emailed to you?

Emails starting with ‘Technical Levels for 16/03/2018’.

Why do you send these things, but then promote in education that you should follow your own strategy and do your own research?

Oh, and why do brokers expect clients to follow their analysis when they’re probably trading against them?

It’s bizarre, but probably due to a little thing called SEO, something which I’m learning about in this blog.

In my view, market analysts are little more than content marketers.

And that’s absolutely OK.

Even at banks, analysts producing reports are just one cog in the commissions machine – investors want to feel secure in the notion that the people handling their cash know what they’re doing (although, if they just bought $SPY and held for 10 years, they’d probably earn more).

I guess that if a retail client from a brokerage receives something that looks good, there’s a subconscious feeling of security, even though total autonomy with execution is with them…

The broker is just there to collect fees.

At the end of the day, most revenue is derived from fees (example is from advising on M&A but you get the picture).

That ‘2 and 20’ structure, where a hedge fund takes 2% of AUM and 20% of any profit earned has worked well for many years.

The 2% has been explained to me as a manager’s bread and butter, while the 20% is just a bonus – I mean, it’s probably why Bill Ackerman isn’t crying his eyes out after losing out on Valeant and Herbalife.

Some investors have been questioning this model for a while now…

And Mr. Buffet’s famous bet would add fuel to their argument…

Back to the brokers…

It’s not a criticism of why they do it, but I just wonder whether it’s actually worth it in the end when they’re likely to collect the fee or profit off the B Book anyway, since the stats even out to 80:20 loss:win with any types of marketing strategies anyway.

 

 

 

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In FX, simplicity is best… #fx #btc #audjpy

K I S S

Keep It Simple Stupid

Probably what you hear about everything.

In trading, it’s genuinely hard to keep things simple.

First, you pick up bad habits.

Next, you try to create a fantastically amazingly filtered strategy with loads of different variables, because you’ve been told you should be able to measure your hypothesis, and science normally says to filter until you get a valid conclusion, right?

After that, you become frustrated and feel pain.

Emotions get the better of you and you lose your head.

You lose money…

Then you repeat the process when you’ve calmed down.

It’s a vicious circle.

The issue with many comes down to the lack of understanding of price and the interpretation of it, which transfers into the understanding of risk.

Slight tangent re: risk. I saw a tweet describing spotting valid risk parameters as being an executable entry with ‘positively asymmetric’ risk:reward.

I’d never heard it be described with that phrase but I like it.

Technical analysis only works when you can interpret price.

The best FX traders are able to understand that TA and FA alone are limiting in their nature.

There’s a reason why interbank dealers make money – they can see the market… and well, they are the market.

We have to interpret price as we see it on our trading platforms to have a best guess as to what these guys are doing (well that’s what I do anyway).

One way recently that I have further simplified my trading is to just look at Heikin Ashi candles (and I mentioned this in my ‘What I have learnt after 7 years of trading‘ article the other day).

This has made my life easy.

Previously, I’d have to determine where the valid zone is that I’d expect a bounce from and then place up to 10 orders across the whole zone.

Heikin Ashi has changed that… and I can’t believe that it’s taken 7 years to find this out.

This is how simple it’s made my strategy…

I ask myself, ‘where was the last supply before it broke the low? Where is the untested demand that broke a prior high?’

Then I place my orders.

Below is AUDJPY and I mentioned I was selling it here.

That’s how simple it is, or at least how simple I personally find it.

There are other nuances as to whether I want to take it or not (I’m not going to say them all), but that’s the barebones – and Heikin Ashi has made where I want to do business so obvious it’s scary.

Arguably, it’s irrelevant as to what your filter is, but I’d say find something that makes it as obvious as possible. I have found it after seven years… seven years of thinking a chart display was a broker’s trick…

As I said, you learn something new everyday, so thanks @ForexCobain