Has TA ever been proven?

jem · Oct 28, 2003

I would answer yes in the currency markets

In technical analysis of stocks and commodites, a women who researched for the Federal Reserve did what she called a bootstraped statistical anaylsis of the currency markets. Her research showed that prices traded around the numbers like 90 or 100 a statistically significant amount of time releative to every other number. The issue was published 2-5 years ago. Probably closer to two and lent it to a friend at a hedge fund to win a bet.

She then said and then if you did the analysis looking at the numbers in the way the market was usually not quoted there was not a similar finding.

garfangle · Oct 28, 2003

Quote from easyrider:

Because one sees other traders using it and making money? [/B]

Some traders trade in suits at a fancy firm and some trade naked at home. Just because it can be observed doesn't prove its validity.

dbphoenix · Oct 28, 2003

Quote from ChartingMarkets:

The answer is that these Price Patterns as they have been generally named over the decades are formed in their distinctive shapes because of the human emotions of greed and fear that are actually molding them. In other words 1000 years from now the same patterns will exist unless for some reason all human beings decide to develop the Vulcan (Star Trek example) methodology and abandon emotions altogether for pure logic.

Wow, somebody on this site understands this. I hope beginners will print this post out and study it.

hoodooman · Oct 28, 2003

Bet the farm on the s&p when the old vix hits 50. Short it when the old vix goes to 10.

ChartingMarkets · Oct 30, 2003

Quote from harrytrader:

Yeah there are patterns in market but I deny that they are due to crowd psychology - as the overwhelming paradigm affirms without ever proving it - whereas I get the same patterns with the Vulcan methodology that is to say a quantitative rational econometric model see for example my last article :

How market rotates at top
http://www.econometric-wave.com/articles/2/home.html.html

Harrytrader I also deny what you said, however I guess that is what makes a forum. With all the computer models in the world programmed to try and beat the market and forgo emotional decisions, what is forgotten is that its people programming the computer. In the end its the same thing, people are trading people not computer trading computer. The computers are programmed by people thus they only know what they have been "taught" in a finite way. Elliot Wave theorists relying on the harmonic wave theory and the fib retracements that are built into the internal mathematical laws of nature are but simply people trading people as well. This is my opinion.

harrytrader · Oct 30, 2003

Sorry but my theory is not based on fib retracement it is based on CAUSAL ECONOMETRIC MODELLING that is to say a QUANTIZED MATHEMATICAL MODEL that deals with RATIONALITY OF COSTS AND BENEFITS and so it doesn't suppose any psychological fads like the elliottists. It doesn't involve the crowd at all or even fibonacci ratios as hypothesis. Elliott framework is numerology that stays highly subjective and cannot be considered as a scientific theory, just a framework but which is based on fake hypothesis. My model implies high volatility that can and probably creates of course fear and greed but as EFFECT NOT AS CAUSE. Confounding Effect with a cause is in fact a trivial error. So human psychology is still useful to know but affirming that a rational approach isn't possible I deny since I have found such a rational one and in fact Gann said also that he had found such rational equations but he didn't want to reveal them even to his close associates - instead he gave esoteric rules.

Quote from ChartingMarkets:

Harrytrader I also deny what you said, however I guess that is what makes a forum. With all the computer models in the world programmed to try and beat the market and forgo emotional decisions, what is forgotten is that its people programming the computer. In the end its the same thing, people are trading people not computer trading computer. The computers are programmed by people thus they only know what they have been "taught" in a finite way. Elliot Wave theorists relying on the harmonic wave theory and the fib retracements that are built into the internal mathematical laws of nature are but simply people trading people as well. This is my opinion.

ChartingMarkets · Oct 30, 2003

Quote from harrytrader:

Sorry but my theory is not based on fib retracement it is based on CAUSAL ECONOMETRIC MODELLING that is to say a QUANTIZED MATHEMATICAL MODEL that deals with RATIONALITY OF COSTS AND BENEFITS and so it doesn't suppose any psychological fads like the elliottists. It doesn't involve the crowd at all or even fibonacci ratios as hypothesis. Elliott framework is numerology that stays highly subjective and cannot be considered as a scientific theory, just a framework but which is based on fake hypothesis. My model implies high volatility that can and probably creates of course fear and greed but as EFFECT NOT AS CAUSE. Confounding Effect with a cause is in fact a trivial error. So human psychology is still useful to know but affirming that a rational approach isn't possible I deny since I have found such a rational one and in fact Gann said also that he had found such rational equations but he didn't want to reveal them even to his close associates - instead he gave esoteric rules.

Harry I read your entire website. You come off to me as a highly intelligent person who has a very sharp handle and a profound way of looking at things in our universe. One quesiton?
Are you up any money this year? Thats all that matters at the end of the day. Thanks and good luck.

SProbability · Oct 30, 2003

Quote from garfangle:

Would like to know whether there have been research papers from top finance journals that document and statistically prove a significant correlation (R^2 > .70) in any number of technical analysis variables (MA, MACD, RSI, charting, et al) across a broad variety of markets: equities, futures, bonds, forex, etc.

If there is no such data or the data is mixed/misleading then how can one rely on such techniques to trade?

Ciao.

http://www.businessweek.com/2000/00_16/b3677113.htm

harrytrader · Oct 30, 2003

Of course, on the contrary is it a problem for you

. As far as I know this is a question asked by somebody else than you and me, you answered, I answered also, if my answer displeased you, it's your right but don't try to escape into vague generalities.
The question is about (scientific proofs) and THAT is the very point of how I want to approach the market and design trading systems. I will write soon an article untitled "For a true scientific approach with a Universal Trading System Design" I use the term universal in the sense of Carnot - the father of Entropy Principle - which I have prepared in fact a (bad translation ) from french for the future article that I will write: you can read what is in blue and perhaps anticipate what I mean (for that substitute production of motive power with production of money and machines with trading system

).

<IMG SRC=http://www.econometric-wave.com/articles/images/carnot_reflections_on_the_Motive_Power_of_Fire.gif>
http://www.econometric-wave.com/articles/images/carnot_reflections_on_the_Motive_Power_of_Fire.gif

Quote from ChartingMarkets:

Harry I read your entire website. You come off to me as a highly intelligent person who has a very sharp handle and a profound way of looking at things in our universe. One quesiton?
Are you up any money this year? Thats all that matters at the end of the day. Thanks and good luck.

T-REX · Oct 30, 2003

Technical Analysis is just a method used to read the market.
You can use Technical Indicators or read price charts.
It does not matter what you use as long as it is quantifiable and profitable on a consistant basis.

Characteristics of TA are

1. Discretional
2. Mechanical

both derrive thier value from some form of TA.
Econometric modeling is a form a TA on a Fundamental scale.

You can qualify these methods by watching the market calls generated on an on going basis. Once you have had an opportunity to evaluate the results you will see that every successful Hedge Fund, Mutual Fund, and Individual Trader has utilized to one point or another the use of TA.

As you can see TA has taken on a much broader meaning than the traditional sense and use of the term. It is quite amazing how over the years TA has grown from point & figure charting to tape reading to chart formations, to technical indicators to watching Government reports to Fed interest rate cutes , to "The CNBC Fade the GAP" method to "buy the rumor sell the fact", to astrology & horoscopes to monkeys throwing darts on a board to taking POLLS on ET.