Given timeseries 1,2,3,4,5 and mean of 3. What are the next numbers?
Is 3 an estimate of future price? That's just an assumption, could be wrong.
Generally, the longer the period, the more accurate analysis. Low sample sizes has higher errors.
Informal survey on the accuracy of indicators
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Given timeseries 1,2,3,4,5 and mean of 3. What are the next numbers?
Is 3 an estimate of future price? That's just an assumption, could be wrong.
Generally, the longer the period, the more accurate analysis. Low sample sizes has higher errors.
It's never occurred to me that a moving average is an "estimate of future price", and I don't think it is - I literally don't even begin to understand why some people believe this.
What is the opposite of lagging indicators? You know of indicators that predict future prices?? If you do, why not choose those and make millions? Indicators work because a 20 day moving average will always correctly indicate what the 20 day moving average is.
For each analysis there is an optimal point (lenght of series of data used) , after that point the performance of the analysis will deteriorate.
If your statement would be true, you would incorporate data from a few centuries ago in your analysis.
Some remarks:
If you have a problem with an indicator:
I know a company from which the sanitary cleaners tell to the whole world that they have a very good salary. This is based on their own (very limited) knowledge of wages. They have a good salary in function of their knowledge. But they don’t realize how limited their knowledge is. To understand that issue, they need more knowledge than they have, and that’s the basic problem.
In that same company work a lot of highly educated scientists. They NEVER speak about their salary.
The same applies to this website:
People with their own (very limited) knowledge state that TA is useless. Those who really use it successfully will not make any statements. Why make others smarter (or less stupid)?
The best you can say is that TA does not work for you. But that can be a problem for your ego.
PS:
Many people confuse indicators with estimations:
- You have in reality a problem with the size of the lag, as lag will always exist because all you have is information from the past. Past equals lag.
- Your indicator is not an indicators, as an indicators should indicate something useful, which he apparently does not do.
- Standard, publicly know indicators, are public because they are useless. If they would be successful they would not be shared.
- Market conditions change, so indicators should adapt to the changed conditions. Just changing the length of a MA is not really rocket science that will help.
If you have a problem with an indicator:
- It is probably not an indicator.
- Or it might one be but you might be unable to use it correctly. So you have a problem with yourself, not with the indicator.
Is that true?
I know a company from which the sanitary cleaners tell to the whole world that they have a very good salary. This is based on their own (very limited) knowledge of wages. They have a good salary in function of their knowledge. But they don’t realize how limited their knowledge is. To understand that issue, they need more knowledge than they have, and that’s the basic problem.
In that same company work a lot of highly educated scientists. They NEVER speak about their salary.
The same applies to this website:
People with their own (very limited) knowledge state that TA is useless. Those who really use it successfully will not make any statements. Why make others smarter (or less stupid)?
The best you can say is that TA does not work for you. But that can be a problem for your ego.
PS:
Many people confuse indicators with estimations:
- Indicators are based on past information and their value is known with 100% probability as all composing elements are know and invariable.
- Estimations are completely different and can only be used in combination with probability. Without probability estimations are worthless.
This is going to continue to derail the OP's thread and this topic has probably been beat to death but perhaps someone could debate with me and maybe I'll learn something new or a way to look at things.
I personally throw Technical Analysis and Quantitative Analysis in the same group. Your taking a price series and analyzing past price to predict future price, or perhaps should say find a pattern that has a higher probability of predicting future price.
I put fundamental in its own category where your using any outside information that is not price into the analysis. Whether it is news, valuation, economic reports, disruption from a competitor, etc.
So the issue I've always seen with the argument of Technical Analysis is that it doesn't work. I would have to say that I can see the argument because their doesn't appear to be a single indicator that will profitably give an entry and exit signal.
To be profitable you need an edge which in my definition is just an entry and exit with a higher probability of providing a profitable trade.
I seem to see a lot of post here of people looking for these 70% w/l systems or even higher and I believe this is a wrong approach. Theirs so many move variables then w/l that make a profitable system. I believe I heard a podcast with Linda Raschke where a listener asked for a 70% w/l ratio and she laughed and said "You're looking for Santa Clause". Not to says such edges don't exist but are they the most profitable and use of time? I also remember Larry Williams mentioning his w/l ratio was something like 30 percent so right off the bat he said his trades we're by default a loser.
Now to take that information alone is not enough, am I correct? So if you take Larry's system with a 30 percent w/l ratio, no where did he mention the size of the loss and the size of the wins (risk/reward), the size of the trades/trading capital.
Theirs way to many moving parts in a trading edge to say that entries/exits are the key part. Risk management..... whether it's stop loss placement, bet size/account size, diversification, perhaps some sort of hedging, total amount in the market at any point, etc. What is the expected move out of the system from its entry, what is the expected move against the entry, whats the average payout vs average loss.
Then you could throw the variables of psychology into this. How much can trader "A" lose in a day or week before starting to make poor decisions. Are you more of a trend trader/momentum trying your hands on a mean reversion system?(That could be difficult depending on what your use too).
So all those variables I wrote above, in my opinion make an edge work, they all have to work together to provide a higher probability of profitable returns in the long run .
........... But then we seem to throw out technical indicators as useful because the line drawn by our mathematical equation doesn't provide winning trades....... How can a simple formula take into account all the aspects of a profitable edge...
Personally the only tools I use are Keltner Bands and a 3/10/16 MACD. The keltner channels allow me to see when a trend may have gone parabolic, or a pullback went to deep and out of character of the current trend. The MACD allows me to see divergence of momentum in swings. Just a tool to help me filter trades, they are by no means an edge by themselves.
I personally throw Technical Analysis and Quantitative Analysis in the same group. Your taking a price series and analyzing past price to predict future price, or perhaps should say find a pattern that has a higher probability of predicting future price.
I put fundamental in its own category where your using any outside information that is not price into the analysis. Whether it is news, valuation, economic reports, disruption from a competitor, etc.
So the issue I've always seen with the argument of Technical Analysis is that it doesn't work. I would have to say that I can see the argument because their doesn't appear to be a single indicator that will profitably give an entry and exit signal.
To be profitable you need an edge which in my definition is just an entry and exit with a higher probability of providing a profitable trade.
I seem to see a lot of post here of people looking for these 70% w/l systems or even higher and I believe this is a wrong approach. Theirs so many move variables then w/l that make a profitable system. I believe I heard a podcast with Linda Raschke where a listener asked for a 70% w/l ratio and she laughed and said "You're looking for Santa Clause". Not to says such edges don't exist but are they the most profitable and use of time? I also remember Larry Williams mentioning his w/l ratio was something like 30 percent so right off the bat he said his trades we're by default a loser.
Now to take that information alone is not enough, am I correct? So if you take Larry's system with a 30 percent w/l ratio, no where did he mention the size of the loss and the size of the wins (risk/reward), the size of the trades/trading capital.
Theirs way to many moving parts in a trading edge to say that entries/exits are the key part. Risk management..... whether it's stop loss placement, bet size/account size, diversification, perhaps some sort of hedging, total amount in the market at any point, etc. What is the expected move out of the system from its entry, what is the expected move against the entry, whats the average payout vs average loss.
Then you could throw the variables of psychology into this. How much can trader "A" lose in a day or week before starting to make poor decisions. Are you more of a trend trader/momentum trying your hands on a mean reversion system?(That could be difficult depending on what your use too).
So all those variables I wrote above, in my opinion make an edge work, they all have to work together to provide a higher probability of profitable returns in the long run .
........... But then we seem to throw out technical indicators as useful because the line drawn by our mathematical equation doesn't provide winning trades....... How can a simple formula take into account all the aspects of a profitable edge...
Personally the only tools I use are Keltner Bands and a 3/10/16 MACD. The keltner channels allow me to see when a trend may have gone parabolic, or a pullback went to deep and out of character of the current trend. The MACD allows me to see divergence of momentum in swings. Just a tool to help me filter trades, they are by no means an edge by themselves.
Single indicator? That's a huge mistake from you. Who says that TA is equal to a single indicator generating money? No wonder it does not work for you. You need a system build on TA.
To become succesful you need a lot of qualifications. Most posters here miss these qualifications. Putting X $ in an account, read some books and think you will beat the market is not enough. Unfortunatelly most "traders" start like that. Most think they are far more smart then they are in reality. The evolution of their account show them in general the hard reality.
Are you serious when you think that 1 indicator should generate money to make TA work????
I use TA..... In that statement I was hinting that the newer trader expects to find that something like RSI will provide a buy signal at 30 line and sell signal at 70 and trading should be that easy.
Horrible writer so I guess you got it all wrong the way I put it.
Let me rephrase that lol.
So the issue I've always seen with those that argue that Technical Analysis doesn't work is that they believe a single indicator will provide a profitable entry and exit signal which is merely a part of an edge.
Oh I'll add that the most important part is the trade plan which is where the edge lies.
Horrible writer so I guess you got it all wrong the way I put it.
Let me rephrase that lol.
So the issue I've always seen with those that argue that Technical Analysis doesn't work is that they believe a single indicator will provide a profitable entry and exit signal which is merely a part of an edge.
Oh I'll add that the most important part is the trade plan which is where the edge lies.
1) Just as accurate as in years past. My results are just as reliable as they used to be.
2) Less accurate than in years past. My results are not as reliable as they used to be.
3) I'm not sure.
4) My results are more reliable as they used to be.
I continued to learn more and better understand the market now.
2) Less accurate than in years past. My results are not as reliable as they used to be.
3) I'm not sure.
4) My results are more reliable as they used to be.
I continued to learn more and better understand the market now.
I agree.
A single indicator or a set of indicators, anyway.
I've gradually been learning here, over the last few months, to my slight surprise, that when you write "technical analysis" in a forum post, many people read the word "indicators" instead.
I know it doesn't make much sense, but I'm convinced that's what happens: a significant proportion of the forum's actively posting members are unaware that there's a whole other world of TA as well, which has nothing to do with "indicators" at all.
So most of the conversations here about "whether TA works" are actually full of people talking at cross-purposes.
Which is probably why they go on and on for ever, going round and round in increasingly large circles.
All my own trades are based on TA, but none of them is based on indicators, which I happen not to use.
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