Subjective Technical Analysis

Timing the markets based on MACD and RSI does not provide an optimal entry anymore as the real edge lies in coincidental indicators rather than any lagging indicators. 50% of Success in anything is about looking at the right places and the other 50% comes from effort, discipline and knowledge. After trying to quantify market participant’s behaviour into a matrix, we have come across that in a timeseries chart, not all the trading sessions matter in order to take an informed decision. An example below is the chart of GulfNav – a stock that is traded frequently on Dubai Financial Markets.

 

gulfNav

 

We categorise markets into three states and being able to identify two of the three states often provide us with a phenomenal advantage which can also be an invaluable information to Active Traders. This has very little to do with the candlestick pattern and more to do with the physics of greed, fear, bubbles and panics. On the chart our algorithm overlay has identified behavioural categories before and after a big move – two very key information to take profits or save a trader from holding positions in losses.

Like many others, we wouldn’t consider our system to be more than 80% accurate, however given a high net worth active trader, trading more than 5 securities at any given point it time, allocating capital efficiently based on ranking of high to low conviction trade idea could increase the profitability.

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