TA - Objective or Psychological Skill?

[dom993]

Quote from NoDoji:

You seem to have a nice automated system going

Thank you ... for best performance it requires using no stops, which isn't as bad as it seems, but it takes a lot more capital per contract to trade it safely (I use 45,000 / contract). On the plus side, commissions & slippage are almost negligible compared to the average win and average loss size.

Quote from NoDoji:

I'm an intraday scalper and my favorite setup is continuation in a strong trend or strong trending move. For CL, I use a 1-min chart to enter in the direction of the trend on 1-min pullbacks. The best resource for the specific 1-min patterns I use for this setup is Volman's Forex Price Action Scalping, the FB and SB setups being the main ones.

Thank you, I have the book, I will revisit those 2 setups. Is there a way to contact you, outside of ET forums?

 

[dealmaker]

Quote from dom993:

Thank you ... for best performance it requires using no stops, which isn't as bad as it seems, but it takes a lot more capital per contract to trade it safely (I use 45,000 / contract). On the plus side, commissions & slippage are almost negligible compared to the average win and average loss size.



Thank you, I have the book, I will revisit those 2 setups. Is there a way to contact you, outside of ET forums?

Are you $ cost averaging as the position goes against you?

 

[dom993]

Quote from dealmaker:

Are you $ cost averaging as the position goes against you?

No - the base system trades fixed size 1 contract (which is what I do right now).

The system can also scale-in 1 contract for each subsequent signal in the same direction as the current open trade (with a slightly better average per trade than the base system) - in that mode, there is no requirement that those additional contracts be added at a "better" price ($ cost avg) - or at a "worse" price (pyramiding on winners) than the last contract.

Despite the better avg/trade, using scale-in also increases the max drawdown, somewhat faster than the total P&L increase, so this isn't perfect, but to me it illustrates the value of these additional signals.

 

[dom993]

Quote from marketsurfer:

No, most of the things he lists happen prior to price being formed. TA is the study of past price, not activitities leading up to price. surf

PS-- per your listed definition:

"In finance, technical analysis is a security analysis methodology for forecasting the direction of prices through the study of past market data

Quote from MAESTRO:

Ok, I am tired arguing. I see no point anymore. Read your own definition of technical analysis a few posts ago. Your refusal to see the difference renders my further explanations useless. Good luck, let TA be with you!

Cheers,

MAESTRO

(done arguing)

I do not limit TA to the study of past price - actually, the definition says "past market data", and to me, the order book/flow is part of market data ...

... not that I believe in the study of the order book/flow to give anyone a better edge than the study of prices/volumes/times ... the volume that moves the market is "aggressive", either MKT or STP orders, in either case those orders are totally invisible to the order book & only transpire through the study of past transactions.

Take a market like 6E for example ... do you guys really believe that the order book/flow has anything to do with future prices? It has ZERO to do with it. 6E is just one of the gazillion ways the EUR/USD pair is played (most of the volume being spot forex, inter-bank transactions).

I believe HFT is a good example of what all this micro-structure driven trading leads to ... avg net per share 1/20th of a cent, down from 1/10th a couple years ago ... wow, this is really a business-model that everyone should follow ... or is it?

 

[marketsurfer]

You have some good points, Dom. But being married to a finance micro structure PhD, my views have become very twisted.....

 

[cornix]

Quote from marketsurfer:

You have some good points, Dom. But being married to a finance micro structure PhD, my views have become very twisted.....

There's a huge difference between people who research something and people who do something. My own PhD status and the fact I am 5th generation of PhD's in a row allows me to say with full responsibility that outsider study of any event is far not enough to make conclusions.

To perform truly thorough test of any SINGLE TA pattern would require from a researcher knowledge of every microscopic nuance of it and rules of application, which therefore would demand months of full time study... only to understand ONE pattern to be able to test it somewhat close to how successful trader uses it.

So bottom line: anyone who wants to become a trader better listen to what profitable traders say, not what academic researches conclude.

 

[justrading]

Quote from marketsurfer:

You have some good points, Dom. But being married to a finance micro structure PhD, my views have become very twisted.....

Don't be modest Surf, you managed that all on your own.

 

[bighog]

Volume usage compared to price usage in TA are separate and UNEQUAL. When making an assumption about price moving from level A to level B we all look at prior price action and not the amount of volume that was involved. That alone makes the usage of volume mute. If I was Long and price went from 1619.25 to 1624.50, that matters a whole bunch. If that price move involved 10k or 100k in volume made no difference. Volume makes no difference to the bottom line unless I was the exchange or the casino.

Volume has no acceptance of value in a game of chance. Price alone has value because its value changes will change OUR perception of value and that and that alone drives us to enter/exit trades.

Flipping a coin creates volume but no value, correct? If we placed a value on how many times heads came up in a row then the coin flips mattered but the volume of flips continue to remain meaningless.

If I was LONG and price dropped down and stops me out, would it make any difference what the volume was? Would my loss be only half as much if only half the volume as usual was entered by a single trader using some weird strategy? Not hardly.

So, bottom line, price has value to TA where volume is a distraction in TA.

When anticipating where price might go next based on prior price movement itself, we as day traders are actually getting inside the other players heads and visualizing where "THEIR" actions will come from when faced with what price creates in their mind as price does what it will do..........that is we can visualize their fear/greed. It is a simple matter of assuming "THEY" (and myself included) will do this or that if and when price goes here or there. The amount of coin flips it takes for price to do what it will makes ZERO difference.

 

[ammo]

if price went from 19 to 24 and my target was 28,i might lighten up at 24,if they trade 55k at 24 on a 2 minute bar,i would probbably flatten

 

[atticus]

Quote from sellindexvol66:

gvz is a mini size contract..i traded it many times..but its waste of time until more liquidity can come in. being a mini imo is what prevents true players...but u can trade it; and yes..there is huge edge in that curve.

I had no idea it was a mini until your post. Oh well.