If T.A. works, if you're swing trading, how far in the future can you see?

[TrendSpider_Jake]

Hey guys,

I know there are a lot of people who don't believe in T.A. This is not your thread.

For the rest of you, I just wanted your opinion on how far in the future a person could reasonably project/guestimate assuming no surprise shocks to the economy?

TIA,

SM

I would say it depends on the timeframe you are looking at. Different timeframes will give different perspectives. With the monthly chart, you can probably look out 3-6 months and get a general idea of what the trend may do (assuming no crazy news or systemic risk event).

 

[Frederick Foresight]

I thought trading was more about placing a good bet in the moment rather than "seeing into the future" for any length of time.

 

[murray t turtle]

Seeing into the future: priceless.

%%
LOL priceless. Small caps most likely, price more, strong stock seasonals.S&P futures would be more accurately named S&P derivatives LOL. SPY 200dma is $275 area. NOT a prediction]Edit remark ; Futures are not really about the future.LOL]

 

[Sprout]

Classic TA (old school) is based on chart patterns & volume as taught by the founders, not indicators. Measured moves are used to identify a potential profit targets when price closes outside well defined classic chart patterns. It does not work with any real certainty so good risk/trade mgmt always takes priority.

The breakout from the ES rising wedge to the first leg down is 215.33 points (A). An equal sized move down of 215.33 points is projected from the reaction high on leg A. Down leg B moved another 215.33 points as projected from down leg A. This is what is called a measured move in classic TA, it does not attempt to forecast the time it takes for the moves to play out - although they are typically strong directional moves. I figured a picture is worth a 1,000 words.

Only an estimated 3% of all market participants use classic TA - I like that, not much competition.

View attachment 194152

I haven't really explored measured moves and don't quite understand them. What would be the measured move prior to the forming 'rising wedge' and attempt to predict the extent of the rising wedge?

In the methodology I use, just knowing the next turn seems to be enough.

 

[murray t turtle]

I haven't really explored measured moves and don't quite understand them. What would be the measured move prior to the forming 'rising wedge' and attempt to predict the extent of the rising wedge?

In the methodology I use, just knowing the next turn seems to be enough.

%% Plenty of measured moves do 50%; many do not do that also.More than one way to do it; i measure month HI , month low//candles......

 

[schweiz]

I thought trading was more about placing a good bet in the moment rather than "seeing into the future" for any length of time.

Did you miss the latest upgrade?

I think most people can see into the future. If you use s/r you buy or sell at the level of your rules. So you knew already longtime before the entry that you would enter. Only problem is that these "seeing into the future" generates a lot of bad signals... So the next step is to "see in future" if the trade will be profitable or not...

Same applies for RSI, Stochastics...

 

[Frederick Foresight]

Did you miss the latest upgrade?

I didn't see it coming.

 

[Frederick Foresight]

I think most people can see into the future. If you use s/r you buy or sell at the level of your rules. So you knew already longtime before the entry that you would enter. Only problem is that these "seeing into the future" generates a lot of bad signals... So the next step is to "see in future" if the trade will be profitable or not...

Same applies for RSI, Stochastics...

Sounds a bit more like wishing into the future rather than seeing into it.

 

[murray t turtle]

I would say it depends on the timeframe you are looking at. Different timeframes will give different perspectives. With the monthly chart, you can probably look out 3-6 months and get a general idea of what the trend may do (assuming no crazy news or systemic risk event).

%%
Enough of the time; to make a profit, 3-6 months, OCT -APR anyway, for stocks.
And if you factor in every 4 or 8...years+/ , a bull market could change into a bear [shorter]market, so much the better.

DOW theory still works well enough; even though one could miss SEPT-OCT sharp move like 1987, if all one looked @ was dow theory.[A weakness of dow theory, still helpful anyway.....]A good trend up or down will tend to overpower crazy news,or fake news, except when the main trend finally changes, usually measured in years; sometime in months.If anyone can catch crazy moves intraday; more power to them.......

 

[Cat88]

Technical analysis should 'see' as far as your results tell you it does.

If your indicator is working enough to make you profitable on that setup then great, if not then it's probably not a very good indicator. Try refining it.

One thing that can be a good exercise for dealing with FOMO (fear of missing out) is checking what the max profitable price was 30, 60 and 90 days after you exited (assume you're trading daily timeframes). One thing I realised you doing this exercise was that I would have mixed results if I let my trades run more, with some outstanding winners but also some quite profitable trades falling back to zero.

What is the value of letting your trades run longer? Do you pyramid into trades? Basically if you let the trade run, according to how you trade, what would the result have looked like? If you don't have consistent rules around that (i.e. you have arbitrary trade management depending on how you're feeling) then there's not really any point discussing more because you won't consistently apply the results of this research.

Alternatively it could be a really valuable bit of research to do because if it tells you that every so often by closing out a trade at a certain point that you're going to miss out on an extra bit of profit but that most of the time the price will fade away, then that can give you a lot of confidence to take the right action consistently for your portfolio.

That's a powerful piece of knowledge.

An example that I did not expect was from a friend who said that most of his winners started winning more or less straight away so if he had a trade that was a loser after three days then he just cut it because the likelihood of it becoming a winner was almost zero. The important knock on effect was it freed up his mental capacity to move on and be looking for better opportunities.