After using this trading simulator I'm convinced technical analysis simply doesn't work

[wrbtrader]

I didn't outright say S/R doesn't work. Just that often it gives false signals where you expect the price to go up but then out of nowhere a massive down tick completely destroys the trend.

I can show you examples if you want.

What's the % frequency of such and you confident enough to be able to exploit it via taking trades in the opposite direction when you had expected the price to go up ?

Simply, follow your stats when your expectations are different than your stats.

For example, I often see people at this forum say that "breakouts will often fail" but there's never any specific details about the frequency of such. More importantly, is such were true, why don't they simply just take a trade in the opposite direction of the breakout based upon their stats of failed breakouts ?

My point is that there's more to the story such as even if a trader had stats like 69% of breakout fail...they will still lose money when taking trades in the opposite direction of a breakout in their attempt to profit when the breakout fails.

Reason is because just because they see it doesn't imply they know how to trade it.

P.S. Someone here at ET said he had proof that 71% of breakouts do fail. He put his stats to test and was still a losing trader of failed breakouts. Try to guess why ?

Answer: No matter what are the perceptions and no matter what are the stats...some traders still don't know how to profit (don't know how to trade) even with all that info (data) at their fingertips.

 

[dartmus]

You are as usual off-topic! Set on Ignore List.

Pointing out distinct differences exist between the algos which create synthetic and real data is likely to be very beneficial to everyone trying to gain futher insight into the nature of the algos everyone is trying to discover. Without logical application of rules TA wouldn't exist. The 1st rule is make sure you're using real data and u understand why it's necessary to use real data.

If u don't get this that's fine

 

[maxpi]

- Short/long term crossovers don't work unless you just use it to buy/hold for the long run. Even then, plenty of whiplashes undo your gains....
- Support/Resistance works sometimes but not most of the time..
- Chart patterns rarely work...
- MACD, RSI and ADX just gives too many false signals...
- Buy/hold wins everytime if you're "lucky" to hang on to a good stock....

That's about the size of it really. All these low end software packages come with all sorts of indicators and that leads people to think they are the way to go. If someone finds something that works for a while it's almost inevitable that their system will take it all back and more at some point.

 

[nxt7]

That's about the size of it really. All these low end software packages come with all sorts of indicators and that leads people to think they are the way to go. If someone finds something that works for a while it's almost inevitable that their system will take it all back and more at some point.

I've learnt not to look for 100% accuracy with indicators based on advice here. But whatever backtesting I do, the sample size is far too small to be any reliable. Like sure, I may get a 70% accuracy sometimes, but doesn't seem all that reliable if the sample size is only 0.9%...

FYI, though I may be skeptical I still haven't completely discounted TA's usefulness.

 

[nxt7]

What's the % frequency of such and you confident enough to be able to exploit it via taking trades in the opposite direction when you had expected the price to go up ?

Simply, follow your stats when your expectations are different than your stats.

For example, I often see people at this forum say that "breakouts will often fail" but there's never any specific details about the frequency of such. More importantly, is such were true, why don't they simply just take a trade in the opposite direction of the breakout based upon their stats of failed breakouts ?

My point is that there's more to the story such as even if a trader had stats like 69% of breakout fail...they will still lose money when taking trades in the opposite direction of a breakout in their attempt to profit when the breakout fails.

Reason is because just because they see it doesn't imply they know how to trade it.

P.S. Someone here at ET said he had proof that 71% of breakouts do fail. He put his stats to test and was still a losing trader of failed breakouts. Try to guess why ?

Answer: No matter what are the perceptions and no matter what are the stats...some traders still don't know how to profit (don't know how to trade) even with all that info (data) at their fingertips.

Often its those false signals that really tick me off. For example the MACD often dips over and under its signal line several times before settling into a definitive trend. Same think with Stochs, RSI, ADX, Chaikin Oscillator, Mass Index and Rate of Change. How does one trade something like that without hindsight?

 

[eganon69]

Often its those false signals that really tick me off. For example the MACD often dips over and under its signal line several times before settling into a definitive trend. Same think with Stochs, RSI, ADX, Chaikin Oscillator, Mass Index and Rate of Change. How does one trade something like that without hindsight?

Think of the MACD crosses as a letting off of the accelerator or brake on your car. You can still be going 60 mph yet let off the accelerator and slow gradually to 45 mph before picking up the pace. The crosses in and of themselves mean momentum is slowing or increasing (let off of accelerator) but does not define direction. How far MACD is above or below the ZERO line HELPS defines direction.

 

[eganon69]

Look at this 60 min chart of the $SPX. Notice that the MACD crosses several times ABOVE the zero line and defines an UPTREND that is merely slowing and speeding up. Also notice that when the MACD goes below the zero line the price touches the bottom of the UP trend and would have been a good place to go long. Finally notice that the MACD never goes more than ~-2.5 below the zero line before turning higher indicating the trend is merely reverting to the mean and not ending. Think of MACD as an indicator of trend momentum. When well above zero its a strong trend. Obviously the opposite is true well below zero. When oscillating around zero (slightly above or slightly below) a trend may be reversing or just slowing and reverting to the mean. Lastly notice the MACD peaks and histograms are getting lower and lower as the price is going higher and higher. This is called a divergence and indicates that the up trend is likely slowing in strength and may be getting ready to reverse. There are no absolutes in TA. Just probabilities. Reading charts well will increase the probability that you go long when there is an uptrend and go short in a down trend. Thats about as simple as I can explain it in a 1 chart and 1 paragraph post.

Good Luck

 

[Redneck]

After using this trading simulator I'm convinced technical analysis simply doesn't work

Now I still want to believe TA works and that its probably me not using it properly.

But after this, kind of wondering what strategies there are left that give one the "edge" after months/years of experience...

Whether you believe it does..., or it doesn't - you are 100% absolutely correct

Who are we to try and convince you differently

More to the point..., why should we

=============================

Between this..., and the psychological crap you have going on - should keep you busy for awhile

=============

I had understanding for you about the psychological issues..., not so much anymore as your're disparaging my craft's tools

Hand me a scalpel..., or paint brush - I'd certainly make a mess of the surgery..., or art masterpiece (unless it paint by numbers)

Hand me some TA - I'll blow your f'n mind


RN

 

[wrbtrader]

Often its those false signals that really tick me off. For example the MACD often dips over and under its signal line several times before settling into a definitive trend. Same think with Stochs, RSI, ADX, Chaikin Oscillator, Mass Index and Rate of Change. How does one trade something like that without hindsight?

I notice you didn't answer my questions about your perceptions versus your statistics and why you're unable to follow those stats.

Anyways, if your use of indicators is so difficult...don't use them. Many traders that use TA do not use indicators. Instead, spend most of your time learning about the markets and why the markets does what it does which in my opinion is where the starting point really is at.

Then if you understand the markets...learn about yourself (the psychology) and how you view the price action. Do those two things for many months prior to trying to develop a trade method on indicators or without indicators.

You give the impression that you started with indicators first without knowing the markets and without knowing yourself as a trader. That's a tough road to travel and usually doesn't end well.

If you stop trying to find the answers in indicators and you try other things and it still doesn't work...you may need to come to the conclusion that this trading gig is not for you.

 

[formikatrading]

First of all, technical analysis doesn't "work" -- it's a set of tools. You need to start observing indicators and how to interpret them from your experience and not reading somebody's textbook explanation of how to use them.