A question to people that don't "believe" in TA

[El OchoCinco]

Red:

So what you are saying is that unless you are a market maker, arbitrageur or fundamental analyst, the rest of the traders are just fools for using any form of TA? Are all the market wizards just flukes?

TA is not a tool to predict anything and that is why most who use it fail. It is a tool to perform analysis and help YOU YOURSELF make a prediction. This is an important distinction most people who use TA fail to consider.

 

[Thunderdog]

Quote from MAESTRO:

They don't like Apples in France, they like Grapes!

Well, if that's not a call to arms, then I don't know what is. No doubt, Apple will send its Marine Corps (that's pronounced "core") to stem the dissent. Nip it in the bud, so to speak.

As an aside, isn't it ironic that Windows-based computers are more susceptible to worms than Apple computers? Go figure.

 

[Thunderdog]

Quote from RedManPlus:

Here's another context for TA:

Far, far, far more people believe in astrology than TA...
Maybe globally 100 times as many people...
But most rational people understand that astrology is complete b*llshit.

People are not really addicted to TA...
But rather they cannot let go of the idea...
That there is "easy money" to be made in the financial markets...
** By people with very marginal understanding of markets and very limited talent/experience **.

There is no arguement one can use...
Against astrology, TA, or "free lunch" beliefs.

Some people just to not think logically...
And elevate denial to High Art.

rm+

Hey, if you're on the other side of those people's trades, then what's your problem?

 

[segv]

Quote from Thunderdog:


"Technical analysis is the study of the internal stock exchange information as such. The word 'technical' implies a study of the market itself and not of those external factors which are reflected in the market...[A]ll the relevant factors, whatever they may be, can be reduced to the volume of the stock exchange transactions and the level of share prices; or more generally, to the sum of the statistical information produced by the market." [/B]

This is way off the topic of the original post, but Sharpe's definition and your definition are not equivalent. I think Sharpe's definition is quite succinct, although it is still very broad.

You said:

I agree. Using past price action (and/or volume and/or breadth, etc.) in any way to arrive at trading decisions in the present is TA.

The key point of contention for me is your assertion that using price in any way to arrive at a trading decision constitutes "technical analysis". I mean, you are free to define things in any way you see fit if it helps you, I suppose. However, I will respectfully disagree if you think that a trader who is examining an arbitrage opportunity, and finds the market has moved away is a technical analyst in any conventional sense.

-segv

 

[Thunderdog]

Quote from segv:

The key point of contention for me is your assertion that using price in any way to arrive at a trading decision constitutes "technical analysis".

Using historical prices in any way, to the exclusion of an assessment of intrinsic value, is TA. Remember that the definition exists to distinguish it from fundamental analysis. If it ain't fundamental, then it's technical. I think that most people have an aversion to the term TA because they associate it with Bullshit. And I have to agree that TA attracts a lot of Fruit Loops armed with their Lucky Charms. But it is not all like that.

I appreciate that your disagreement is respectful, because so is mine.

 

[bitrend]

As in the generic theme, there's only two types, Fundamental Analysis versus Technical Analysis and any of other forms are just a variety of one kind or another.

For me, Fundamental is for long term investment while Technical is for short term investment for a given security. Since changes in the company fundamental will take longer time to effect on its stock price, fundamental. While the behavior of its price and volume will effect its future price & volume in short term, technical.

 

[segv]

Quote from optioncoach:

Thanks! My comments were mainly to stick to the world that I believe the OP was focusing on. I know many arbitrageurs and market makers trade second by second on the price spread or discrepencies and also take some positional bias but you guys are way above the average retail and prop trader lol.

Actually, market-making is not as complicated as a lot of people think. It can also have a much longer time horizon than is often assumed, especially in the electronic markets. I used to joke that people's perception (bias) of time advantage would eventually approach the sampling error for price as the electronic markets evolved. I think that viewing the intraday world with such a narrow lens might be more detrimental than beneficial in the long run, but I understand the motive.

For example, you or your brethern are the ones screwing me on the SPX spreads

Hey! My quotes are often only slightly askew of fair value.

I am also fascnitated by the discussions that spring from the use of the word TA and therefore wonder what stigma attaches and the basis for those feelings.

As a student of cognitive science and empirical psychology, I am equally intrigued by such discussions. I am amazed, entertained, and bewildered by the preconceptions and attributions of those who participate in the market.

My honest feelings are that whatever makes you money is the tool you stick with no matter what it is called.

I tend to disagree with you here. The reason being is that trading is an environment that caters to our natural psychological need to get feedback from our activity. Feedback from the environment is one of our primary mechanisms for learning, so people have a tendency to trade in a way that generates a great deal of feedback. As you said, "making money" is our reward mechanism for learning in this environment, and it is a dangerous one. We can make money consistently and feel perfectly confident, while at the same time we are playing a game with a negative expectation. To further complicate the quality of our feedback, the longevity of the players in our game is associated with their wealth. The fact that they have survived to keep playing the game makes tempts us to attribute their success to their methodology.

P.S.s tone is hard to read from someone's written conversation so let me state mine. I am not taking a side or trying to argue but simply engage in a discussion from the intelligent varied traders here. So I am not trying to prove anything right or wrong but hear your honest opinions and sorry if that is not the tone that comes across.

I did not think you had a defensive tone, Coach. Please do not think that I have one, even though I can be strongly opinionated.

-segv

 

[Don Bright]

Comment, not a debate.

T/A is part of successful trading....I get the question often "what kind of trader are you?" "technical, fundamental, scalper, momentum, pairs trading, tape reading, M&A, automated program trading, which one are you?"

90% of my traders will answer the same way:

"yes, yes, yes, yes, yes, yes, yes, and yes, and a few more advanced strategies as well"....

A. No one would enter into a good TA setup with bad momentum, bad earnings, bad news, wide spreads, poor trending, etc....you get the idea.

B. Good entries and exits require "all encompassing" market snapshots....Prem/Disc, spread, peers, momentum, news, sector, etc. (again, you get the idea).

I have never seen a trader use only one aspect of trading make any money....if it were that simple, then there would cease to be a marketplace at all....

My 2 cents....FWIW...

Don

 

[cnms2]

Others just deny the existence of what they don't, can't, won't understand. Keep an open mind, and learn everyday something new!

This kind of thread and endless and pointless discussion keeps surfacing on ET every few weeks, and it's like an AAPL worm that eats off ET forumities' time and consequently money.

It might be good for ET's clicks though ...

Bye ...

Quote from RedManPlus:

...

There is no arguement one can use...
Against astrology, TA, or "free lunch" beliefs.

Some people just to not think logically...
And elevate denial to High Art.

rm+

 

[El OchoCinco]

Well today was a rare day where I was not trading so I needed something to keep the mouse on the wheel in my head running

Quote from cnms2:

Others just deny the existence of what they don't, can't, won't understand. Keep an open mind, and learn everyday something new!

This kind of thread and endless and pointless discussion keeps surfacing on ET every few weeks, and it's like an AAPL worm that eats off ET forumities' time and consequently money.

It might be good for ET's clicks though ...

Bye ...