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

[whitster]

i have seen it written many times that TAnalysts believe that all news is priced into a stock therefore Fundamental analysis offers no benefit. the chart tells ALL.

this is... wait for it... absurd.

i use TA. but i don't believe everything is priced in. that's just stupid.

i wonder what %age of people who use TA actually believe that?

fwiw, i use both. obviously when intraday scalping YM, fundamentals are irrelevant.

on many longer term investments, fundamentals are far more important than TA.

for example, i bought AAPL when Steve Jobs took over. i guess that's fundamental analysis. but i didn't do it witholut ALSO looking at the chart. so, that's TA.

i bought HANS (my most successful investment @ over 500% return in about a year) primarily based on fundies, but the TA was there too.

CWPC was another where TA complimented fundies.

otoh, i'd say about 1/2 of my daytrades on stocks (not swing or longterm) are exclusively TA. although, if u even concentrate on a specific sector, that is fundamental analysis, then use charts to find likely candidates that is ta.

 

[Thunderdog]

Upon reflection, I think that the people who are most opposed to either the term, or general premise of, Technical Analysis are the ones who do not employ fundamental analysis but don't wish to be associated with the TA camp for any number of reasons. Therefore, they go out of their way to draw dubious distinctions in a misguided effort to distinguish and differentiate themselves from what they believe to be are "losers." Posting on threads such as these may not be the best way to deal with this hang up. How much more refreshing, cleansing and therapeutic it would be for a group of such people to get together for meetings periodically and begin one at a time: "Hello. My name is Bartholomew, and I use TA." The truth will set you free. Deal with it.

 

[whitster]

lol. my name is whitster

....

....

<courage mode>

i USE TA

 

[Bitstream]

Quote from optioncoach:

Uh.... you mean this:

eggggsactly

 

[OddTrader]

Quote from optioncoach:

You do know my feeling.

 

[segv]

Quote from nitro:

That is probably not correct either empirically nor scientifically.The trading frequency of traders is based on a serial correlation of what the result of the feedback is, that is they will trade more often and more confidently when winning, and will retreat in the face of a superior opponent when they are losing. So frequency is not tied to having to have action except for the gambler, but to whether it is positive of negative feedback that a trader gets from his decisions.

I am not sure that we are in disagreement here, Nitro. If we view trading as a voluntary action, of which the feedback event is the consequence (profit or loss), then the process resembles operant conditioning. In that model, as you said, the frequency of trades increases with positive reinforcement (profit), and decreases with punishment (loss). I agree. What I was eluding to was very generally, is that most traders will simply rather trade than not trade. Further, they would prefer a feedback schedule with regular positive reinforcement and punishment, to a schedule with frequent punishment and few positive reinforcers. That is, even if the latter has a positive mathematical expectation greater than the former. Would you agree?

Again, I disagree. If it were simply survival bias and mostly if not all chance for those that make money, then there would be strong correlation between a random group of isolated traders, and say a group in close proximity to each other, say the turtles, many of whom made fortunes trading.

I do agree that the markets are no longer as transparent as they once were and that your statement is more likely to be true now than it was years ago.

nitro

I am definitely not saying that all winners in our game are the product of survivorship bias. I am however suggesting that there is a certain large percentage of winners that are naturally (randomly) the product of survivorship. With a fixed table, after 100,000 rounds, only the winners are left. But in our game, there is a constant influx of new players to feed the lucky and the skilled. And indeed, there is (or there was the last time I checked) a high degree of correlation among groups of winners like the Turtles, correct?

-segv

 

[Buy1Sell2]

Why is it that more often than not , when a price pulls away from a Bollinger Band it ends up at the opposite BB?

Why is it that more often than not an RSI reading in OB/OS territory will turn around and head to the opposite side?

Why is it that more often than not, MACD lines which are either above or below zero will cross each other and then cross zero and repeat the procedure over and over?

Why is it that more often than not, lower peaks in the Histogram accompanied by higher peaks in price, is the followed by a selloff--and vice versa?

I could go on and on of course-- but I think you get the picture here that I believe in using the probabilities presented by TA . And that's all they are--- probabilities.

 

[marketsurfer]

Quote from segv:

That assertion is ridiculous. The moment a trade happens it is "in the past". Under your definition, noone would know the price of the market without being a "technical analyst". The common and classical definition of "technical analysis" obviously refers to the "chartist". Just look at the software programs labeling themselves as "technical analysis" packages.

-segv

i like your style, sergv.

you mentioned previously you would share some resources that further elaborates on your methods. please do.
thanks,

surfer

 

[DynamicReplic8r]

Quote from Buy1Sell2:

Why is it that more often than not , when a price pulls away from a Bollinger Band it ends up at the opposite BB?

What are you talking about. When the market is trending, then more often than not, when it pulls away from the BB it stays between that band and the 20 period EWMA. That's called a trend and you can see it without the BB. Maybe in a sideways market it tends to bounce between the bands. That's called a range, and you should be able to see that without the bands also. Nonetheless, that's not how BB should be used. When they are tight, it is an indication that a breakout may occur soon. Something that you should be able to tell by glancing at the chart anyway. Furthermore, when the price hits the bands you have no idea whether it's going to keep going up or bounce back down.

 

[Buy1Sell2]

Quote from DynamicReplic8r:

What are you talking about. When the market is trending, then more often than not, when it pulls away from the BB it stays between that band and the 20 period EWMA. That's called a trend and you can see it without the BB. Maybe in a sideways market it tends to bounce between the bands. That's called a range, and you should be able to see that without the bands also. Nonetheless, that's not how BB should be used. When they are tight, it is an indication that a breakout may occur soon. Something that you should be able to tell by glancing at the chart anyway. Furthermore, when the price hits the bands you have no idea whether it's going to keep going up or bounce back down.

Yes of course, I did say I could go on and on with the questions. Certainly tightening of the bands indicates a potential breakout. However, markets are range bound more than half the time and bounce between the bands more than half the time--thus my comment about more often than not. I believe that when used in concert with other indicators and price that BB is a tremendous entry tool.