How is it not hard evidence?
TA does work because ...
- Thread starter kut2k2
- Start date
1) it's backtested
2) the poster didn't even provide the backtest. All he did was make a post.
1) a properly conducted backtest is hard evidence.
2) he provided the backtest. You have all the info you need to confirm or disprove it.
HNS time traveled into the future then determined he would go back in time to before he was born and deploy his strategy on GMC rather than Edsel (which went bankrupt). I form opinions quickly sometimes, perhaps too hastily in this case but I believe there's a logical fallacy inherent in thinking those results can be attained without first filtering the list of symbols based on those that survived and thrived.
For those who don't just dismiss the HNS system out of hand, here are the obvious shortcomings to be dealt with:
Buy and Sell have the same triggers. Probably some performance gain from making them different.
System appears to be SAR (stop and reverse). Surely that can be improved with a real exit between the trade entrances. I recommend the chandelier stop.
Buy and Sell have the same triggers. Probably some performance gain from making them different.
System appears to be SAR (stop and reverse). Surely that can be improved with a real exit between the trade entrances. I recommend the chandelier stop.
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1) No it's not. A back test does not show any ACTUAL proof that it can be done by someone, only that it's a possibility. The back test does not account for different future market conditions and therefore your results can be misleading. Markets are much different now than they were 47 years ago in regards to volatility, trading strategies, participants, structure, etc and are continually changing. The backtest also fails to account that anyone who spent 47 years for a shitty 300% return would have stopped a long time ago in search for a much better investment option or trading strategy of which many better ones are out there.
2) The only thing that backtest has confirmed is how crappy mechanical systems can be. You are literally at the bottom of the food chain.
Brooks' concepts (price action concepts in general) are based on the market's current price behavior (the action of price in real time at the hard right edge) offering signals and/or triggering entries based on the price behavior that occurred in the past up to this point (now).
What this means is that the strategies self-adapt to changing conditions, which is why the same setups have been repeating for decades. Think about what it means when price reaches a key support level in a well-defined trend and moves up, then pulls back close to that key level. To me (and to most price action traders) it means that if I place a limit order to buy a few ticks ahead of that level, I can place a small stop loss and if the very common 1-2-3 pattern occurs off that support level, price is likely to make a strong run toward the previous high and very possibly make a new high, giving me a kickass risk:reward ratio. This common pattern has been repeating for decades and is useful whether the volatility is high or low.
With price action concepts (as opposed to indicators) there's no such thing as "way too overbought to buy, price should reverse here" (and vice versa for shorts).
dratsum, I'm happy that you understand how I've illustrated my adaptation of price action here on ET and that you've derived so much benefit from it. Rest assured that it makes a lot of sense to others and that's why it works so beautifully. The "others" it makes sense to are probably not the folks posting here on ET.
There's also Nial Fuller who's apparently a price action genius. Trades pin bars patterns etc and says his stuff has worked on charts as far back as he can go.
Looking to check out his vids tonight.
Looking to check out his vids tonight.
Because it translates human behavior, and human behavior is what moves the markets, it doesn't matter if you are an institutional trader or a self-employed trader: you want to buy lower and sell higher. Hell, even automated trading is (sometimes) programmed to think and see price action like humans, with the exception of most high frequency trading. Now, large institutional market movers can't just hit "fill 10000000000 shares", they do it slowly in a timed fashion, in part giving rise to the classic trend geometry we all are used to see and follow. There are interesting techniques institutional movers use to fill whatever they need to fill without causing strong market impact (Google it) because, after all, they also want the best prices they can get.
Technical analysis is nothing but a reflection of human behavior, human expectations and fear. Now, there are deeper issues and limitations of pure and naked technical analysis. Sometimes opposing market movers try to manipulate prices up or down, but we can see such activity with advanced tools. They call it tape reading but it's very different from the classical tape reading. Tools like volume profile are very useful.
Technical analysis is nothing but a reflection of human behavior, human expectations and fear. Now, there are deeper issues and limitations of pure and naked technical analysis. Sometimes opposing market movers try to manipulate prices up or down, but we can see such activity with advanced tools. They call it tape reading but it's very different from the classical tape reading. Tools like volume profile are very useful.
chart patterns show traders behaviour