Secret edge , loophole .....

[Surprise]

Quote from jack hershey:
. Consider, for at least a moment, the potential rewards you could gain if you were able to let go of the collection of beliefs you now have and simply be open to thinking critically about any input you may recieve.

EXACTLY !!

 

[pwrtrdr]

Quote from illiquid:

It would have been nice not to have this thread to devolve into another "does TA work?" debate, but it seems to have gone into this direction. What I'm going to write may sound harsh to some, but if one cannot be honest here then I see no other reason to come to this site at all.

I don't think the OP meant to target TA and chart pattern traders specifically, but I think they were the first to take offense to the idea that consistency in markets was impossible over the long run. Folks, let's face it, identifying technical setups is not hard. I picked up my first book on chart patterns 20 years ago and as a freshman in college knew all the major formations like the back of my hand. Sure, back when there were no computers and everyone needed to draw daily charts by hand, there was something to be said for chart reading, divining patterns in price that revealed underlying demand or supply. But these days, how long does it take any novice to spot a head and shoulders, an ascending triangle, basic lines of support and resistance? How difficult is it with today's software to generate an alert when one moving average crossed another? There's just very little real work involved these days with the usual pre-canned indicators and chart patterns first outlined in Edwards and McGee. And as anything else, you get out what you put in.

Technical trading is IMHO, trading on incidentals. It's what many of us dyi individual traders with nothing to rely on but the tape resort to. But often what they are looking at as the impetus to open a position just isn't related to the primary force behind price movement. What succesful trading can be, even for us at home, is far more than that. Why can jpmorgan and goldman have quarters with no losing days? Because they don't need to make stabs in the dark or read tea leaves; they are institutions with a direct line on the pulse of what moves a market. They know the fundamentals, they know the news and the reactions to news, they know the expectations; they know who's likely gotten long where and the levels at where they'd get stopped out. Etcetera. They are light-years ahead of the part-timer who believes a 30-second perusal of a 5, 15, and 60-minute chart should net this month's mortgage. Sorry if this post has morphed into a diatribe on TA, but it's honest and comes from my own experience. I used to trade like many others here, collecting and filing away all my "ideal" model trade results to show any doubting thomases, while the whole time not really noticing or quickly forgetting about the number of identical setups that failed miserably.

Getting back to the original topic, I never broke through as a trader until I applied context to just about everything I saw. There are times you will see the exact same setup, the exact same tape, but just know because of context, that this time it will go the other way. Nowadays when I see a countervailing technical formation or indicator in a position I want to be in, I actually feel even more enthused about the potential momentum of the trade. Because in today's thin trading, WE have become the targets, the easy meat -- the mom-and-pop retail money has been out of the markets for a while now. The hedge funds, the HFT robots, they know exactly who they are making money from, and they know all the "classic" setups that we do.

So my advice is, know your technicals, but don't rely on them completely. Don't count on consistency in the markets; rather, realize that attaining consistent results as a trader involves constantly adapting to situations, constantly pushing yourself, constantly able to wear different hats at different times. Don't let yourselves become easy static targets, fight the temptation for taking the easy way out every time, think one or more steps ahead. The day you start to notice that a failed signal becomes more profitable than the original setup is the day you take a big step forwards.

- agree

Fireplace are you going to comment of this post ?

 

[Fireplace]

Sure, anyone who tries to apply some cookie cutter TA pattern without understanding the building blocks of the pattern is destined to find inconsistency in TA. Context is key to determining the validity of a 'pattern' IMO.

That being said, the markets repeat the same patterns over and over and over across all different time frames. It's just a matter of breaking price down (I use volume in combination) and seeing the way it flows. Then, developing an approach to capture the price gyrations.

Quote from pwrtrdr:

- agree

Fireplace are you going to comment of this post ?

 

[pwrtrdr]

Quote from Fireplace:

Sure, anyone who tries to apply some cookie cutter TA pattern without understanding the building blocks of the pattern is destined to find inconsistency in TA. Context is key to determining the validity of a 'pattern' IMO.

That being said, the markets repeat the same patterns over and over and over across all different time frames. It's just a matter of breaking price down (I use volume in combination) and seeing the way it flows. Then, developing an approach to capture the price gyrations.

 

[Cheese]

Quote from austinp:
With all due respect, that is just another flailing trader posting his frustrations without merit. He simply hasn't figured it out yet. Any moving market makes repeated, predictable, highly predictive pattern sequences for exploitation. That never changes.

Exactly.
There is no law against noobs writing drivel but it is very repetitive at ET.

The so-called herd ipso facto is propelling price up when price direction is up and propelling price down when price direction is down. The task for the amateur trader is to get on board. Exploit the intraday gyrations (eg CL). Buy the upswings, sell the downswings. Do the hard work, study, preparation and get hold of a sound methodology.

 

[Trader666]

Where did your intuition hang you up here Jack?

Quote from jack hershey:

Trading is counterintuitive and it is not easy to recognize where your intuition hangs you up.

 

[failed_trad3r]

yup, once people realize the edge is with longer term trading they will realize. Daytrading is a zero-sum game, thus a pipedream for most people. Just like in poker. Because of that, learning people to daytrade for a living is like learning people to poker for a living, almost despicable.

I will say this, the edge provided by buy and hold is not zero-sum. It's a complicated capital formation structure thats adds value, in that its not a zero-sum game. The market has an edge.

 

[failed_trad3r]

Quote from twofacedjoker:

Do keep flipping that coin.

<img src="http://i55.tinypic.com/34y5suh.png" border="0" alt="Image and video hosting by TinyPic"></a>

this chart about the flash crash suggest something about the cause of the flash crash, but I heard another more plausible explanation by nanex. That it had to do with disappearing liquidity by computers, just like in 1987.

We have had 2 events in 23 years. These are just extreme events and does not means the stock markets themselves are a coin flip. For longer term trades there's a true edge.

 

[d08]

Quote from failed_trad3r:

yup, once people realize the edge is with longer term trading they will realize. Daytrading is a zero-sum game, thus a pipedream for most people. Just like in poker. Because of that, learning people to daytrade for a living is like learning people to poker for a living, almost despicable.

I will say this, the edge provided by buy and hold is not zero-sum. It's a complicated capital formation structure thats adds value, in that its not a zero-sum game. The market has an edge.

If you want to rely on buy-and-hold returns then why not just buy some index and sit on it. There is no need to spend time analyzing the market. Most of us wouldn't survive on just buy-and-hold returns, therefore start looking into trading. People here are talking about the ability of a person finding an edge that doesn't die over time, not the obvious edge the equity market provides - which actually isn't an edge at all since everyone knows it.

 

[failed_trad3r]

Quote from d08:

If you want to rely on buy-and-hold returns then why not just buy some index and sit on it. There is no need to spend time analyzing the market. Most of us wouldn't survive on just buy-and-hold returns, therefore start looking into trading. People here are talking about the ability of a person finding an edge that doesn't die over time, not the obvious edge the equity market provides - which actually isn't an edge at all since everyone knows it.

Most people trade for the wrong reasons. They don't trade for money, but for excitement. Buy and hold is boring, even though theres a true edge in it. WHile the edge that daytrading provides is much like poker, a zero-sum game.

In poker you have something called big winners. Now, I don't deny that in daytrading you will have big winners to. But also alot of losers. Mind that I'm not trying to judge daytraders themselves, just the ones that are foolish to believe daytrading is not a zero-sum game. And the ones that get fooled by vendors. Just like in poker, if all people are aware what game they're playing, its game on.