Proof that technicals/ charts work-- SINA

[DTB2]

I only trade for big moves. Where do big moves first appear? Breakouts.


Adjust your risk/reward accordingly. Scalping breakouts for small wins is sure death to the account due to the higher proportion of false breakouts. If one is in for big moves, the falsies are of limited consequence.

All about a compatible trading style and positive expectancy.

 

[Sergio77]

Quote from NY_HOOD:

http://stockcharts.com/h-sc/ui?s=Sina

Look atbthis chart if SINA . If you look at i think july 22nd where it broke out of consolidation and just used a simole stop loss, you would have made out extremely well. This is a text book example of a breakout. No, i did not trade it. I didnt follow sina in july.
Wish i had.

This is called hindsight.

 

[Sergio77]

Quote from Swan Noir:

This is how he titled his post:

Proof that technicals/ charts work-- SINA

You cannot prove that all swans are white by pointing to a white swan. This you must have learned in high school.

After you understand this you must modify your statement to:

Indication that technicals/ charts worked in a particular case of -- SINA

Now, the burden of proof is on you to show how from a particular indication you can secure a general rule.

You know this is high school stuff but most kids play with their ipad or smart phone while the teacher is struggling to convey the message.

 

[jack hershey]

Quote from Sergio77:

You cannot prove that all swans are white by pointing to a white swan. This you must have learned in high school.

After you understand this you must modify your statement to:

Indication that technicals/ charts worked in a particular case of -- SINA

Now, the burden of proof is on you to show how from a particular indication you can secure a general rule.

You know this is high school stuff but most kids play with their ipad or smart phone while the teacher is struggling to convey the message.

Making money in markets comes from price change. Any price change is available to anyone who wishes to participate.

All price changes make money.

To get very very technical, you draw a line from the beginning to the end of the price change segment.

this is the beginning of learning about:

a. how to make money, or

b. how the markets work.

Of the two paths, one builds the mind and the other leads out a door called an exit from becoming a trader.

It is not difficult to look at a space where the market is operating. A computer screen will do.

In the space where a market operates, the operation may be sensed. As the shapes on the screen are looked at, they are seen to change. These three things (space, shapes, and change of shape) are matched with the mind's long term memory to create "perception" in the moment.

So people partner with the market to learn.

It is much less than high school thinking that is involved. Fifth graders can learn how the market operates.

Only one process is required to study the market and learn how it operates.

Draw the lines that link the price change profit segments.

Then deduce the common characteristics of these intervals.

This process has been done for a long time and a body of knowledge was created. The body of knowledge is very organized and it can be used to understand the market's system of operation.

All the market is, is a sequence of trend segments.

If you understand the name trend segment, then there is nothing else.

A person created a mistaken story to explain something. He designated the common view by a name: white swan. His mistake was using an adjective. He composed the Venn diagram to be a Universe of swans who were all white. the universe of swans includes all swans and it is not a rigorous thing to assign an adjective to the noun of the universe.

Strangely some people older than fifth graders believe this mistaken person.

his life and activities prove something about people. Some people are willing to pay him for his work.

So how can I do a duplicate of his story and be correct when he does a story and is incorrect.

I modify segment by using a valid delineation (sorry about the humor). The adjective is bigger than the noun. This keeps me valid mathematically.

The generalization of the system of market operations (I am naming a thing) is a valid search opportunity.

A searcher cannot make logical mistakes as he builds his search.

For this effort the name of the work can easily become "the research". The search was done and proven. white and black swans appeared since swans were considered.

The choice is to either do:

1. The history of the searching, or

2. Duplicate the original work.

Why do most people never actually see the system of operation of the market? They are not looking at a bona fide space.

 

[Swan Noir]

Guys, his entire premise is BS. This one really is that simple. He has taken one successful breakout and formed a universal theory that TA works. That makes him a freakin' moron and that also makes not being willing to recognize that reality an exercise in foolishness. Why complicate it?

 

[Rodney King]

http://peterlbrandt.com/has-chart-trading-become-unreliable/

<i>There was a time (in the 1980s – many of you were not even born then) when as a chartist I would enter a trade based on a classical chart pattern and mentally and emotionally “bank” the profits. Patterns were extremely reliable. But, when patterns did not work, at least traders on the other side of the market made money! If I am long and wrong, I want traders who are short to make money. That is the way it should work. The worst possible trading environment, in my opinion, is when both long and short position traders are eating humble pie.

There is one other dimension to this. In the “good olde days,” when a chart pattern failed it told me something important about the market. Now, patterns just fail and provide no lessons. I have never been a very good “range” trader.

My guess (I wish I had kept good data back then) is that 50-plus percent of chart patterns worked in the 1980s. I define “working” as reaching the measured-move target without digging back into the completed pattern. Usually patterns worked immediately and decisively.

In recent years only 25 percent of patterns have worked. We have entered a period I call “chart morphing.” This may represent the new norm. Chart morphing occurs when one identified chart pattern breaks out, but fails, only to become a component of a larger chart pattern, that in turn breaks out, but fails, only to become a component of a larger chart pattern, etc., etc.</i>

 

[blakpacman]

Quote from Rodney King:
In recent years only 25 percent of patterns have worked. We have entered a period I call “chart morphing.” This may represent the new norm. Chart morphing occurs when one identified chart pattern breaks out, but fails, only to become a component of a larger chart pattern, that in turn breaks out, but fails, only to become a component of a larger chart pattern, etc., etc.</i>

Great quote. Wise words from a vet who trades based on TA.

 

[jack hershey]

Quote from Rodney King:

http://peterlbrandt.com/has-chart-trading-become-unreliable/

<i>There was a time (in the 1980s – many of you were not even born then) when as a chartist I would enter a trade based on a classical chart pattern and mentally and emotionally “bank” the profits. Patterns were extremely reliable. But, when patterns did not work, at least traders on the other side of the market made money! If I am long and wrong, I want traders who are short to make money. That is the way it should work. The worst possible trading environment, in my opinion, is when both long and short position traders are eating humble pie.

this is a simple description of the FACT that markets have two sides.

I began in the 50's. There was one pattern that described a trend segment. It is true today and has worked all the while.

So trading has a Universal rule: Always trade with the correct sentiment. This rule always works all the time.

There is one other dimension to this. In the “good olde days,” when a chart pattern failed it told me something important about the market.

Here is the statememt of the second Universal rule of trading: Always know when a trend is failing. Trends overlap so when a trend is failing it has already begun its overlap with the next opposite trend.

Now, patterns just fail and provide no lessons. I have never been a very good “range” trader.

There is always a lesson. At this moment, for such a person with this belief, he is told one thing. Read the home page of Behavioral Finance to find out what is being told to this person. BF tells him how to learn from this mistake he is making.

My guess (I wish I had kept good data back then) is that 50-plus percent of chart patterns worked in the 1980s. I define “working” as reaching the measured-move target without digging back into the completed pattern. Usually patterns worked immediately and decisively.

Compare yourself to this statement. Then look at the first and second statements. There is a contradiction. Compare trend failure with trend target. Since the market is always correct, what is the truth about traders setting targets? The truth is this: traders cannot set targets except for one kind. The trader's target must always be the target achieved by the market.

Think about when the market reaches its target. It is only one place. The Universal rule is that you take the profits by going from one target to the next target as the target is told to you by the market.

In recent years only 25 percent of patterns have worked. We have entered a period I call “chart morphing.” This may represent the new norm. Chart morphing occurs when one identified chart pattern breaks out, but fails, only to become a component of a larger chart pattern, that in turn breaks out, but fails, only to become a component of a larger chart pattern, etc., etc.</i>

as you read this you see that something has changed. Here is what changed: the poster became a more sophisticated trader. Actually if he went back to the beginning of his career he would see what he sees today.

The growth that has occurred is the same for every trader who gains more and more skill. This set of stages is well defined in the literature. The paragraph he wrote just above describes how fractals are interlocking. Mid post, he described "range" and this word means sub fractal actually. Trends within trends is one way of thinking about how the market is built of interlocking fractals.

This is a real breakthrough in the growth in the learning of a trader. Someday, he will advance out of beginner trading into intermediate trading.

 

[goodgoing]

Quote from blakpacman:

Great quote. Wise words from a vet who trades based on TA.

Sounds to me like a clear warning to traders to stay away from old TA, more than anything else...

Anyway, a breakout can be either UP or DN, and the probability is 50% to win in the best case, then take out commissions and in the longer-term you are out of the game.

 

[themickey]

Quote from Rodney King:

http://peterlbrandt.com/has-chart-trading-become-unreliable/<i>
We have entered a period I call “chart morphing.” This may represent the new norm. </i>

I relate to this. Market patterns morph, they work for a while, then go to another stage. Hence why trading is difficult. Your charts will display a tradeable pattern, but it will disappear over time for another to evolve. Eyeball any major index chart pattern and you will recognise the rate of the move changes, anyone who uses cycles will be destined to failure as the rate of the cycle changes both in time (frequency) and size. This includes breakouts and most other T/A tools.