Quote from NihabaAshi:
You do realize that there are different ways to use TA (technical analysis).
* Discretionary
* Mechanical
* Automated
Regardless if someone uses TA or not...
Only a small percentage of traders are profitable.
Also, from what I've seen about the small percentage of profitable traders...
Most of them are discretionary traders that have a strong understanding of the markets...
An understanding that can't be backtested but can be validated via their consistent trading results.
Mark
I am with you on this one Mark.
In order to back test, the devotee writes a strategy to the best of his/her ability.
Any variable (and there are many) that is not accounted for in the coding is thus treated as a fixed value in the back testing.
Thus the entire outcome balances on a small proportion of big winners.
I might add that a discretionary approach using a mechanical strategy should convert all fixed values into variables.
Oh the sheer power of the human mind.
Also bear in mind that the devotee's propensity for risk should never be allowed to remain a fixed value. It must be accounted for as a variable if the outcome is to have any value beyond being just another computer game.
Ironically, I imagine that people who spend years coding and backtesting strategies have a very low propensity to identifiable risk and are thus unsuited to trading.
This does not deter them in any way and they box on building back tested strategies that they cannot bring themselves to trade.
If that amount of time and energy was devoted to the real time screen, they may eventually overcome their fear of reality and turn it to their advantage.
regards
f9
