Are you good at price action and technical analysis?

longandshort said:
You would think that if a tool was a source of edge, you’d get at least 50% of the questions right.
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You would think so, but you would be wrong. On two counts. First, if you can regularly identify low-risk entry points in directional price movement, then you don't actually need to be right at least 50% of the time for the approach to potentially be worthwhile. Is there something you're not getting here?

And, second, you conveniently mentioned the word tool. Tools are a good thing. For example, a screwdriver is great for screwing in screws. For hammering in nails, not so much. So each tool has a specific function. A trading "tool" may be a specific type of market price setup, which can then be used (traded) once such a setup occurs. However, you cannot use the trading "tool" indiscriminately at any time in the market any more than you can use a random workshop tool for any function. Did I really have to explain that to you? Surely you've heard about the need for traders to be patient enough to wait for the right moment, no? And that moment can easily vary from one person to the next. So when you present a chart, what, exactly, are you expecting from your respondents?
 
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longandshort said:
People clearly believe that it’s not random and that you can use price action to make trades (which are bets on future prices). The quiz I made is extremely simple in that it merely asks if, based upon what you’re seeing in the chart, you think prices will be higher or lower.

You would think that if a tool was a source of edge, you’d get at least 50% of the questions right.
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There may be people who believe the close of a 5m bar with respect to the prior bar is not random and place bets on it. In academic literature they are called futile traders.

Futile traders can be seen in all guises, including professional money managers who do not use technical data. Averaging down seems to be a common strategy among the professional folk. “As long as the fundamentals are still good….” a friend from college who is a fund manager told me.

A tool is just a tool. It can be utilized to gain an edge in the right hands. That is to say, the real source of the edge is the person with the knowledge, skill and experience using the tool. If that tool weren’t available (pre-chart days), another tool would be fashioned to get the job done.

An unskilled person would just hurt himself. Fortunately in trading it’s only loss of money. No one loses even a fingernail doing screwy things.
 
longandshort said:
Fair point and again, appreciate the clearer set of rules.

If I show a chart with 1yr candles and volume, what else would I need? Also what time period would the forecast period be suitable for. E.g. using this data you would bet that price is > or < within X interval.
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It depends on the type of trader you are attempting to quantify - for each use a different set of TF's.

By TF's
Position, Swing, Short Term, Day, Scalp

qualified by general strategy
trend, contra-trend, breakout, range, momentum, etc

You can reclassify by
HTF for bias
ITF for trade idea
STF for execution

Each of those various types of trader's with their own model or set's of models will have a variety of signals generated.

Let's say you constrained it just for positional traders, then you would exclude intraday traders and vice-versa for they engage in the market based on distinct personalities, each with their associated appetites for risk and reward. An intraday trader scalping the 5m and below aren't really paying much attention to monthly or weekly levels. A positional or swing trader perceives most intraday price oscillations as noise.

For me, I engage the markets in a variety of timeframes with different accounts; some are long-term positional which are more attuned to macro signals so Y, M, W and quarterly signals are forefront.
Other accounts are day trading, but not trading everyday, just when conditions align for what I'm looking for per that strategy. Those charts start at the HTF W, D and then drill down to LTF intraday 4h,1h,30m,15m,5m, sub 5m.

And then there are my crypto accounts, these are the long-term bags I'm holding and don't really look at now since I was profit drunk, complacent and got my ass handed to me.

I also have some albatross accounts, these are the ones where a bankruptcy came out of no-where or some other black swan event or where I was more a gambler, overleveraged and got liquidated. These are touchstones so I can keep a reminder that in trading, one is only as good as their applied risk management.

My trading has evolved over the years and where I used to spend all my time in front of a 5m chart, not-so-much anymore. I'm more fluid now, going up and down timeframes and certainly not in the markets everyday.
 
longandshort said:
Just a comment to @Frederick Foresight / @deaddog / @Sprout that perhaps you guys are not pure TA/PA types. There are plenty of people on this board who subscribe to the idea that you can trade very short time frames with just a chart. So far that does not seem to be the case.
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Hehehehe :)
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longandshort said:
Just a comment to @Frederick Foresight / @deaddog / @Sprout that perhaps you guys are not pure TA/PA types. There are plenty of people on this board who subscribe to the idea that you can trade very short time frames with just a chart. So far that does not seem to be the case.
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Define a pure TA/PA type.
I agree that there is no way to consistantly determine where the price will be at the close of the next bar. Wild ass guess at best with the information you have given in the test.
However if you were to show me charts with volume on different time frames so that I could determine trend, support & resistance, and interest; I could tell you if I would consider taking a trade.
I use a 5 yr weekly chart, 6 month daily, and might look at a smaller time frame for an entry.
I also look at the same 3 charts on SPY to get a feeling for the overall market.
 
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