Career as FX technical analyst/chartist

[Zzzz1]

a) I never made a claim about frequency distributions (not even sure what you are referring to here)
b) One can cluster future possible outcomes and attach probabilities to them of occurring. One can indeed also attach probabilities to ANY future possible outcome via a probability distribution in a continuous realm (as opposed to discretized steps)
c) your assertion why sometimes normal distributions are used is incorrect. They are used because they sometimes reasonably well approximate the true distribution of future events, but most importantly it is used because they greatly ease the mathematics behind them, especially in options pricing theory.
d) Without probability concepts one would never be able to accurately price and trade options, for example. In fact everything in options theory is based on measure theory that is intricately linked to probability theory.
e) It is not true that it "has been proven that a normal distribution does not apply to market behavior", as pointed out above, it does approximate market behavior in some cases and in fact much more sophisticated distributional models are used than normal distributions in other cases.
f) your cynical comment re "convenient probability distribution choice" is somewhat mislead; in fact convenience does not preclude accuracy. Risk-free pricing is an incredible convenience and it at the same time leads to laser sharp and accurate options pricing, where closed-form solutions are available.
g) Your comment of William Eckhardt re trading size has nothing whatsoever to do with probabilities.

Frederick, I have huge respect for your laser sharp line of reasoning and political stance in P&R but judging from your comments to which I reply right now, this topic is maybe something you don't want to get onto too thin ice. I get the very strong impression that this is not an area you earn your daily bread with, but others do (wink)

Let's be clear. As far as the markets are concerned, the frequency distribution of the past is not a probability distribution of the future. You simply cannot account for all of the possible variables going forward because it is not a closed system like a casino. The more heavily and doggedly you rely on "probability," the more likely you are to hurt yourself by placing more confidence where it is not due.

It has already been proven that a normal distribution does not apply to market behavior, but people use it because it allows for more "confidence" of probabilities. Sort of like looking for a lost item not where you misplaced it, but where the lighting is good. It's convenient. While some people may play such "probabilities" better than others, I think you need to give these numbers a much wider berth than the numbers themselves would suggest. I think the term "balance of probability" is more apropos than "probability." As I recall, John Meriwether of LTCM relied a bit too heavily on the probabilities. And remember what William Eckhardt said: "Trading size is one aspect you don't want to optimize. The optimum comes just before the precipice." That's in part because you can't rely too heavily on probability when you are in fact operating in an environment of uncertainty. Uncertainty demands much more respect than probability.

 

[Zzzz1]

I never talked about "past" price movement. So care to enlighten us what "valid" TA is? I honestly like to know. I believe the biggest problem in this whole discussion is the improper definition of TA and that not everyone agrees on the basic definition.

Come on. Now you're resorting to straw man arguments and generic TA and mumbo jumbo.

Relying on past market data falls within the purview of TA, as compared to FA. The problem stems from your conflating junk TA with valid TA. The problem is further exacerbated because there is a lot of junk out there and we all seem to disagree on where the point of demarcation is between the two.

 

[Zzzz1]

so, again you refuse to share with us even a single example of what you resort then to "valid" or "modern" TA? So far it is impossible to learn from you even though I make every effort...

As I said, you are basing your opinion on an example of what you think TA is, being indicators. I, and many others like me who have been eating this stuff up for 40 years do not believe in the value of indicators. They were mostly designed as an add on to sell software.
So, what you are missing out on is the TA that began with Dow Theory, and the old school TA that was built on Dow Theory. So before you make judgement, you owe it to yourself to look into that area of TA. You will find that it is as true as it was 100 years ago, and more dependable than most of the newfangled stuff of recent years.

Bedtime...

 

[Deuteronomy_24_7]

Mate, you gotta drop your hate tirades. Nobody derailed any thread, nobody is attacking technical analysis in more than a small part of posts. Everyone refers their posts to the occupation as technical analyst. So, calm down and practice your black Magic and be happy but stop attacking everyone else who does not believe in it.

Exactly right, but I doubt 'Inspector Javert' will ever give it a rest. He seems to derive some sort of satisfaction from it -- hard to understand... but I'm not a shrink!

 

[Southampton]

Yep.

Well, I have friends who today are writing TA reports at brokers and giving timing advice to clients.

Well, truth be told, brokers profit from transactions--TA is a good way to get the clients churning their money. When I say institutions, I am talking about those funds and groups who need to profit to survive not "induce clients" to trade. There is a huge difference.

AND THIS DIFFERENTIATION IS THE FIRST STEP TO UNDERSTANDING HOW MARKETS REALLY WORK.

peace,

Hampton

 

[algofy]

Well, truth be told, brokers profit from transactions--TA is a good way to get the clients churning their money. When I say institutions, I am talking about those funds and groups who need to profit to survive not "induce clients" to trade. There is a huge difference.

AND THIS DIFFERENTIATION IS THE FIRST STEP TO UNDERSTANDING HOW MARKETS REALLY WORK.

peace,

Hampton

And when you say markets, you mean $100 nadex accounts?

 

[Frederick Foresight]

a) I never made a claim about frequency distributions (not even sure what you are referring to here)
b) One can cluster future possible outcomes and attach probabilities to them of occurring. One can indeed also attach probabilities to ANY future possible outcome via a probability distribution in a continuous realm (as opposed to discretized steps)
c) your assertion why sometimes normal distributions are used is incorrect. They are used because they sometimes reasonably well approximate the true distribution of future events, but most importantly it is used because they greatly ease the mathematics behind them, especially in options pricing theory.
d) Without probability concepts one would never be able to accurately price and trade options, for example. In fact everything in options theory is based on measure theory that is intricately linked to probability theory.
e) It is not true that it "has been proven that a normal distribution does not apply to market behavior", as pointed out above, it does approximate market behavior in some cases and in fact much more sophisticated distributional models are used than normal distributions in other cases.
f) your cynical comment re "convenient probability distribution choice" is somewhat mislead; in fact convenience does not preclude accuracy. Risk-free pricing is an incredible convenience and it at the same time leads to laser sharp and accurate options pricing, where closed-form solutions are available.
g) Your comment of William Eckhardt re trading size has nothing whatsoever to do with probabilities.

Frederick, I have huge respect for your laser sharp line of reasoning and political stance in P&R but judging from your comments to which I reply right now, this topic is maybe something you don't want to get onto too thin ice. I get the very strong impression that this is not an area you earn your daily bread with, but others do (wink)

a) I think a lot of people who think they are using "probabilities" confuse the two.

b) Say what?

c) Yes, they are approximations, at some times better than at others. That is why they require a wider berth. Because in additional to their only being probabilities, they are also not accurate representations of those probabilities.

d) You got me there. I don't trade options, and couldn't if my life depended on it. I understand that the theory relies on a normal distribution curve, which is an approximation of actual market behavior, and that some people are better at gaming it than others. But I am utterly out of my depth here.

e) "Approximation." Wider berth. Balance of probability. Less precision than the numbers would suggest or imply.

f) Options again? I know nothing. But I'm guessing that your "laser sharp and accurate" reference is fanciful.

g) I said "in part." I understood his point. But as it relates to this discussion, you cannot overlook that sizing is based in part on "probabilities" of outcome, which rely on rough approximations, and that if you play it too close to the line, you're playing chicken with the gods. Again, safer to go with "balance of probability" rather than illusions of precision, allowing more room for error than the "probabilities" would suggest.

As I said, I know nothing about options. I'm not a math guy; I barely got through calculus at school. And though I studied up to intermediate level stats, I finished school in the mid '80s. As for trading, I've managed to make lunch money and occasional bus fare in the markets, but I play to my strengths. So TA as I define it: using past market data to arrive at trade timing. Oh, and all kinds of arithmetic.

 

[Southampton]

And when you say markets, you mean $100 nadex accounts

algofy said:
if a strategy was profitable and scalable, I would pay up substantially, whatever it took as long as it kept working.

Let's stop all this blue balls and let's see this damn indicator, I'm ready to start busting some nuts with it.


?

Jealousy must suck, holy grail seeker--- ready to start "busting nuts" with a dreamers scam?--- You will pay ANYTHING for success---just keep searching here for the holy grail--- you almost found it! LMFAO

 

[Money Trust]

so large shops and professional traders are not demanding accurate analysis that creates low risk, high reward trading ideas? I guess what you actually wanted to say is that professionals are not as easily conned.

If that's what you interpreted my words as meaning, then have at it.

 

[algofy]

Jealousy must suck, holy grail seeker--- ready to start "busting nuts" with a dreamers scam?--- You will pay ANYTHING for success---just keep searching here for the holy grail--- you almost found it! LMFAO

The only true holy grail is fading your awful calls.