I have always wondered about something.... What methods do institutional traders (from Investment Banks or Hedge Funds) to trade stocks?
I always thought they would have to justify their choices of trades by tying each trade back to some solid science. I can't imagine they would say that they saw the 'head and shoulders' pattern and bought on that basis.
Do they use Charting. If so, do they do this by looking at charting patterns or other acceptable techniques?
Also.. Do they only follow the day to day news and react like everyone else?
I'm curious as to what is considered an acceptable method used in trading in reputable institutions?
Is there any book recommendations which walk you through how institutions go about this kind of thing?