A message to some day traders.

[wrbtrader]

We all know the few important reasons why new traders don't succeed. As far as TA is concerned one of these is because they blindly and poorly apply TA to intra-day trading.

Which is not to say that TA doesn't work, even intra-day, its more to do with how it is applied.

Don't Fall Down the Wrong Rabbit Hole

I've seen many surveys over the recent years involving daytrading via Technical Analysis...

Most of the surveys show that more than 1/2 of the retail day trading population do not use technical analysis (e.g. technical indicators & chart patterns). Today, a different view...most of the daytrading decisions are done via professional trading firms...its mainly algorithms.

Several predictive models show that algorithm trading will double the levels from 2018 by 2026.

Have you notice an increase in the discussions involving trade decisions in one particular area of algorithm trading...social media algorithms. They are opaque and unregulated even when wrong. Financial institutions using them think its fair game, scientific and objective trading...great for their shareholders.

They're exploiting tweets that they believe will impact the markets negative or positive. Back in 2018, financial institutional trading firms being interviewed on CNBC stated that algorithm trading consumes 80% of the transactions on the stock market.

The fastest growing area of algorithm trading is social media algorithms.

Think about those stats of 80% back in 2018 and similar type of stats on other financial networks like Bloomberg...the levels are predicted to double by 2026.

Double ? That's a scary thought even if 1/2 occurs. In fact, we have new (rising) financial market hubs in the world thanks to Algorithm trading...

Chicago

I've seen reports on other financial networks that algorithm trading is much higher in Futures markets and higher in the Forex Currency markets.

My point, its starting to get a little old to keep using Technical Analysis or failure to apply Technical Analysis correctly as the scapegoat for failure in daytrading by retail traders. In fact, these types of threads represent a growing problem involving failure to explore the real problem / threat for us retail traders as our numbers slowly dwindle...

Algorithms

I'm not only talking about trying to explain those big volatile price movements like we saw on Friday Sept 20 involving trade tensions with China. I'm also talking about small movements in the price action that only algorithms can exploit in which most retail traders can not do the same regardless if you're using technical analysis, chasing the news or fundamental analysis for daytrading purposes.

Trading is becoming harder and we need to change to keep up with AI. I've been trading a long time and can honestly say that "luck" is involved but its not the only variable just as much as "unlucky" is involved.

Regardless, lately there's a growing interest in DOM trading by the misguided / misinformed that believe in the failure of daytrading is due to Technical Analysis. Retails believe they can avoid typical reasons for failure via becoming DOM traders. In fact, there's a re-birth in DOM trading although the number of DOM traders are small.

Unfortunately, they are not addressing the real issue (not technical analysis)...its a playground for algorithm trading. Thus, DOM traders are concentrating on the fact that they are not using technical analysis...not seeing the real danger ahead..high frequency trading algorithms.

Yet, high frequency trading (HFT) is an extension of algorithmic trading in the milliseconds or microseconds. Thus, retail DOM traders are exposed to the same real problems for day traders that's impacting technical analysis traders or chart reading traders.

15 Well Known High Frequency Trading Firms @


Don't forget that Quantum Computers will soon be on Wall Street...it'll all be too late because the naive will still be blaming technical analysis. Wall Street will have access to it long before it becomes available to the general population (consumers) for trading purposes.

https://www.wsj.com/articles/jpmorgan-years-away-from-seeing-quantum-computing-dividends-11560275316 @


Technical Analysis is a safe scapegoat...will continue to be as such after Quantum Computing arrives to Wall Street. Who's really to blame ?

The person to blame is Richard Feyman (real person...an American Theoretical Physicist...dead now) or Skynet (not real)...neither care about the technical analysis trader.

Skynet is now self aware

Many of these artificial intelligence algorithms...are trained with typical data and the trouble with typical data is that it doesn't perform well when you get into atypical situations.

That may be different from true AI, trained using machine learning with historical data. But that kind of AI is a mystery even to the people who build it because such systems learn by experience, not through programming, making the logical steps they follow a black box that programmers cannot see inside.

- Stated by one of Canada's artificial intelligence pioneers, Jonathan Schaeffer

wrbtrader

 

[ElectricSavant]

Wrb,

I took a snippet of your post. I have resolved until this thread came along that trading is random EXCEPT for the existence of trend. This existence itself makes random not true. But to base trades on backtesting is not what I do...never have other than to know if I should put a system or methodology on my stress test list.

but back to the snippet. If trading is a heads or tails coin flip it is nice to have a little weight on one side so when the flip takes place it will be skewed. Trend is actually my friend
ES

P.S. I got some reading to do..

Trading is becoming harder and we need to change to keep up with AI. I've been trading a long time and can honestly say that "luck" is involved but its not the only variable just as much as "unlucky" is involved.

 

[ZTrader888]

I've seen many surveys over the recent years involving daytrading via Technical Analysis...

Most of the surveys show that more than 1/2 of the retail day trading population do not use technical analysis (e.g. technical indicators & chart patterns). Today, a different view...most of the daytrading decisions are done via professional trading firms...its mainly algorithms.

Several predictive models show that algorithm trading will double the levels from 2018 by 2026.

Have you notice an increase in the discussions involving trade decisions in one particular area of algorithm trading...social media algorithms. They are opaque and unregulated even when wrong. Financial institutions using them think its fair game, scientific and objective trading...great for their shareholders.

They're exploiting tweets that they believe will impact the markets negative or positive. Back in 2018, financial institutional trading firms being interviewed on CNBC stated that algorithm trading consumes 80% of the transactions on the stock market.

The fastest growing area of algorithm trading is social media algorithms.

Think about those stats of 80% back in 2018 and similar type of stats on other financial networks like Bloomberg...the levels are predicted to double by 2026.

Double ? That's a scary thought even if 1/2 occurs. In fact, we have new (rising) financial market hubs in the world thanks to Algorithm trading...

Chicago

I've seen reports on other financial networks that algorithm trading is much higher in Futures markets and higher in the Forex Currency markets.

My point, its starting to get a little old to keep using Technical Analysis or failure to apply Technical Analysis correctly as the scapegoat for failure in daytrading by retail traders. In fact, these types of threads represent a growing problem involving failure to explore the real problem / threat for us retail traders as our numbers slowly dwindle...

Algorithms

I'm not only talking about trying to explain those big volatile price movements like we saw on Friday Sept 20 involving trade tensions with China. I'm also talking about small movements in the price action that only algorithms can exploit in which most retail traders can not do the same regardless if you're using technical analysis, chasing the news or fundamental analysis for daytrading purposes.

Trading is becoming harder and we need to change to keep up with AI. I've been trading a long time and can honestly say that "luck" is involved but its not the only variable just as much as "unlucky" is involved.

Regardless, lately there's a growing interest in DOM trading by the misguided / misinformed that believe in the failure of daytrading is due to Technical Analysis. Retails believe they can avoid typical reasons for failure via becoming DOM traders. In fact, there's a re-birth in DOM trading although the number of DOM traders are small.

Unfortunately, they are not addressing the real issue (not technical analysis)...its a playground for algorithm trading. Thus, DOM traders are concentrating on the fact that they are not using technical analysis...not seeing the real danger ahead..high frequency trading algorithms.

Yet, high frequency trading (HFT) is an extension of algorithmic trading in the milliseconds or microseconds. Thus, retail DOM traders are exposed to the same real problems for day traders that's impacting technical analysis traders or chart reading traders.

15 Well Known High Frequency Trading Firms @
Don't forget that Quantum Computers will soon be on Wall Street...it'll all be too late because the naive will still be blaming technical analysis. Wall Street will have access to it long before it becomes available to the general population (consumers) for trading purposes.

https://www.wsj.com/articles/jpmorgan-years-away-from-seeing-quantum-computing-dividends-11560275316


Technical Analysis is a safe scapegoat...will continue to be as such after Quantum Computing arrives to Wall Street. Who's really to blame ?

The person to blame is Richard Feyman (real person...an American Theoretical Physicist...dead now) or Skynet (not real)...neither care about the technical analysis trader.

Skynet is now self aware

wrbtrader

Algorithms do not necessarily eliminate technical analysis. Algorithms can be built around TA as well. If algorithms are the major factor in the market, then everyone should learn how to code and write algorithms. Algorithms can be losers as well - https://www.bloomberg.com/news/arti...ent-is-said-to-shut-after-less-than-two-years

Algorithms are part of the dynamic, but it's not the only part. We don't know how quantum computers will impact retail trading. They may shut down retail trading completely. ATM, it's irrelevant.

The question still is - how do the 10% achieve success?

 

[ZTrader888]

This paper describes an experiment which demonstrates that the random walk hypothesis is probably wrong. So what did they really prove? They proved that examining the data from different perspectives can reveal an "edge". Edges exist. But why only 10% find it?

LINK: https://teach.business.uq.edu.au/courses/FINM6905/files/module-2/readings/Lo and MacKinlay.pdf

 

[wrbtrader]

Algorithms do not necessarily eliminate technical analysis. Algorithms can be built around TA as well. If algorithms are the major factor in the market, then everyone should learn how to code and write algorithms. Algorithms can be losers as well - https://www.bloomberg.com/news/arti...ent-is-said-to-shut-after-less-than-two-years

Algorithms are part of the dynamic, but it's not the only part. We don't know how quantum computers will impact retail trading. They may shut down retail trading completely. ATM, it's irrelevant.

The question still is - how do the 10% achieve success?

Yep, they can be built around TA. The fact is that most are geared as in growing towards social media. Strongly agree its part of the dynamic but the point I'm making...that dynamic is not being seen by some that prefer to use technical analysis as the scapegoat.

We'll find out the impact of Quantum Computers only after it arrives but with the current growth in algorithm trading...safe bet to assume that Quantum Computers will have a big impact and ultimately could be the end of retail day trading...at least for those retailers not trading via algorithms.

We'll see less threads about using technical analysis as the scapegoat for the failures in daytrading after the arrival of Quantum Computing to Wall Street...similar to when there were many threads prior to this forum blaming the 50k modem poor technology on trade losses by retail traders.

Regardless, long after the arrival of Quantum Computers to Wall Street, there will still be threads blaming it all on technical analysis or the reasons why retail traders fail. The good thing is that we've out grown the finger pointing to the 50k modem.

To your question about the 10%...

Is that like asking why do the XYZ get all the hot model looking girlfriends ?

wrbtrader

 

[KCalhoun]

great discussion, in day trading since '99 I've found:

a) the MATH is a Lot more important than chart patterns/ta;

b) what works best is tight stops, re-entries, scaling, improving entry/exit timing w/t&s;
I often do 25-40 trades daily; trade often/small; I've done over 7,600 real-money trades in my fidelity acct this year alone

c) pay close attention to $TRIN & $VIX

d) best to trade "out" vs in days & charts; eg when S&P is above/below prior day's high/low

e) trading low-float sub-$10 stocks is for morons & gamblers; best price range is $15-$50

f) i use conditional OTO orders to auto-set initial/trailing stops, & buy-stop limit orders to enter

g) the most important part of chart is the range, not so much prior patterns

h) i use 2-day charts to see pd OHLC & ORB

i) some of my most profitable days are ones in which I have way more stops than wins; what matters MOST in day trading is itty bitty af stops (most of mine are sub $40; eg 200 shares on a breakout w/.20 cent stop = $40 bfd)

j) my biggest losing days ($500ish) are ones in which i overtrade 1-3pm; I try to be done by 10:30 daily

k) I never got comfortable trading 1k+ shares

l) I'm shocked & disappointed to see popularity of young bs educators who mislead the public into believing that day trading low-float pos thinly traded/frontrunning sub $10 stocks is viable. mirror accounts, sim passed off as real, lots of bs $ claims on yt/ig social etc. ETers, you guys mostly know better; the general public notsomuch sigh.

I like day trading stocks/etfs/etns like MU AMD TWTR SQQQ VXX etc.

-ken

 

[Peter10]

I can say with certainty that technical analysis and fundamental analysis are of no help for predicting the future where it matters; the tails.

If technical analysis and fundamental analysis are of no help in predicting the market movement, then how do you explain the success of people like George Soros, Jim Simons, Ken Griffin, etc...Are they very lucky?

 

[CharlesS]

...The person to blame is Richard Feyman (real person...an American Theoretical Physicist...dead now) ...

Once again a trader blames Richard Feynman for his problems, geez

I say Theoretical Analysis is a hobgoblins game ! Do you HEAR ME, world ?

 

[KCalhoun]

I use TA daily; it's how you use it that counts.

For example 2 stock charts may both gap, or have a cup or ascending triangle or whatever, but the Range & volume (to choose which chart is best) are wayyy more important than basic patterns. It's all about directional volatility & risk mgmt. it took me many years to figure that out. Big ranges & clean, low-chop charts is key.

answers the 'why'd i get stopped out?' frustration following basic TA which does Not work, in isolation

 

[ElectricSavant]

I understand...but getting stopped out for me is just to find the direction and it is treated as a necessary wash trade.

Yes direction negates randomness. But I want to read what Mr Taleb says...if I can understand it.

ES

I use TA daily; it's how you use it that counts.

For example 2 stock charts may both gap, or have a cup or ascending triangle or whatever, but the Range & volume (to choose which chart is best) are wayyy more important than basic patterns. It's all about directional volatility & risk mgmt. it took me many years to figure that out. Big ranges & clean, low-chop charts is key.

answers the 'why'd i get stopped out?' frustration following basic TA which does Not work, in isolation