Is Technical Analysis a joke??

[ironchef]

take the drop in the S&P yesterday, did anyone call the 2.3% rise today - before the fact?

Statistically, after a big drop the next day has a > 50% probability of an up day.

I am no mathematician or statistician but in this business it pays to understand a little statistics and probability. Like playing blackjack, the card distribution is random but if you can count cards, the outcome has a slightly > 50% in your favor. You do need to play more than a few times to take advantage of the slight statistical advantage. I think trading is in general similar.

 

[Snuskpelle]

If this is indeed what you do, you belong to the top 1%.

Nope, this is not what I do.

 

[Atikon]

I think it's a fools errand to compete against the best quants in the world who have algorithms set up on HFT Trading Machines.

You have to trade where machines are not yet present and that is mid-long term (3-xx months). Short Term Trading is more profitable but, for the reasons I mentioned, imho not worth competing in.

 

[never2old]

Statistically, after a big drop the next day has a > 50% probability of an up day.

I am no mathematician or statistician but in this business it pays to understand a little statistics and probability. Like playing blackjack, the card distribution is random but if you can count cards, the outcome has a slightly > 50% in your favor. You do need to play more than a few times to take advantage of the slight statistical advantage. I think trading is in general similar.

thanks for the response & with all due respect, I appreciate all responses to my sometime/somewhat dumb posts & questions .... even at my age I'm still learning new things, I am a sponge

probabilities based on what - do folks compare that to roulette, that a black last time, red the next spin ... is it any different with trading the market?

on sports betting, Ed Thorp figured he had it mastered until the TA was changed - so today, can you still count cards, or even time the market?

Surely trading is a crap shoot, there cant be a TA that predicts a better than 55% outcome - if so, I'd like to see it?

I reckon a TA probability is worthless IMO & as you mentioned is a probability of +/- a number.

for the young folks out there, anyone ever wonder how the TA was done before all the electronic tools or on-line trading way back in the dark ages?

 

[ironchef]

I think it's a fools errand to compete against the best quants in the world who have algorithms set up on HFT Trading Machines.

You have to trade where machines are not yet present and that is mid-long term (3-xx months). Short Term Trading is more profitable but, for the reasons I mentioned, imho not worth competing in.

That is why I don't day trade, don't scalp, don't trade indices or high volume options. I go where it is not too crowded.

 

[never2old]

I think it's a fools errand to compete against the best quants in the world who have algorithms set up on HFT Trading Machines.

You have to trade where machines are not yet present and that is mid-long term (3-xx months). Short Term Trading is more profitable but, for the reasons I mentioned, imho not worth competing in.

I'm being cynical because I envy the folks that call it right 55% of the time.

In that movie titled 'Limitless' where the guy had a pill that made him a super trader?

or Jim Simons secret that lets him leverage 27x - to Ed Thorp & his 'Beat the Market' money made charging folks fees in his hedge fund.

for reference purposes only - there is an old timer Maths guy website/blog that claimed true success with Algorithms, posted daily performance returns. Seems he lost because he did not see the meltdown. I subscribed, never made money.

https://www.roebucksystems.com/historicaldata.html

yet to see the before it happened event TA

 

[ironchef]

thanks for the response & with all due respect, I appreciate all responses to my sometime/somewhat dumb posts & questions .... even at my age I'm still learning new things, I am a sponge

probabilities based on what - do folks compare that to roulette, that a black last time, red the next spin ... is it any different with trading the market?

on sports betting, Ed Thorp figured he had it mastered until the TA was changed - so today, can you still count cards, or even time the market?

Surely trading is a crap shoot, there cant be a TA that predicts a better than 55% outcome - if so, I'd like to see it?

I reckon a TA probability is worthless IMO & as you mentioned is a probability of +/- a number.

for the young folks out there, anyone ever wonder how the TA was done before all the electronic tools or on-line trading way back in the dark ages?

We are probably similar in age, both baby boomer generation. Perhaps trading is a hobby, if so enjoy your hobby, it is better than playing blackjack and roulette. At least in trading they have not completely shut down all the tricks we can use.

I trade full time and really enjoyed the challenge of finding a few golden nuggets among rocks now and then.

Best wishes.

 

[never2old]

We are probably similar in age, both baby boomer generation. Perhaps trading is a hobby, if so enjoy your hobby, it is better than playing blackjack and roulette. At least in trading they have not completely shut down all the tricks we can use.

I trade full time and really enjoyed the challenge of finding a few golden nuggets among rocks now and then.

Best wishes.

thanks for jumping into this & age has its benefits.

I don't trade/invest real money unless I'm better than a sure 55% success rate.

I have never sports bet ever in my life, though with this virus thing, sports betting is quiet, I was thinking - what is it about casino & sports betting that compares to stock market trading.

As an aside take on TA, being a senior with more than too much time on my hands, I looked around at the many betting sites (trying to compare to stock market betting) I came across a few where Basketball & Baseball (Taiwan, Nicaragua, Russia, Belarus) are the only odds worth betting on when the odds are better than 2.25 on each side - believe it or not.

Not counting free bets, how could a equal wager on a better than 2.25 odds on each side lose a bet?

Same with the general premise of TA and all those that follow TA's on the markets, all we need to get is better than a 55% win rate each time

 

[Scataphagos]

I am starting to finally believe that TA ain't all it's touted to be. I get solid Sup/Res numbers from some great Tech Analysis experts, this is only on the indexes as I trade QQQ and SPY,,, snd then we just slice right thru those levels. I think all the patterns of handles, flags, hanging man, cups, hammers , etc... is crap.

What all of it misses is how exactly price moves. Price moves by investor activity. there are only 4 moves, Buy / Sell / Hold / stay out (or I guess moves if we consider shorts).
So, to me predicting the future based on chart patterns of the past is like predicting the next spin of the roulette wheel based on the last X number of spins. Which does not work.

I am starting to fully believe in doing the opposite of investor sentiment. I watch the Put/call ratio, AAII survey, etc... just do the opposite.

thoughts? comments?

Here's a little story...

My first lab in college chemistry was to light a candle and write down all of my observations about it.

I came up with about 30. When I got my graded lab report back, the prof included a list of observations I could have made. There were 80 items on that list. Meaning... I sat 2 feet away for the better part of an hour and observed intently... and still missed half of them.

TA is like that. TA works all day, every day, in all markets and in all time frames. We all have charts. We all see the same thing. It's right there in front of our faces all day long.... yet few of us "get it".

 

[never2old]

Here's a little story...

My first lab in college chemistry was to light a candle and write down all of my observations about it.

I came up with about 30. When I got my graded lab report back, the prof included a list of observations I could have made. There were 80 items on that list. Meaning... I sat 2 feet away for the better part of an hour and observed intently... and still missed half of them.

TA is like that. TA works all day, every day, in all markets and in all time frames. We all have charts. We all see the same thing. It's right there in front of our faces all day long.... yet few of us "get it".

thanks for posting that.

makes sense in that likely less than 40% don't get it ever ....

the person(s) the wrote the charts/TA's probably don't understand or see that either.

the Professor, student or lab assistant will all see things differently.