TA - Objective or Psychological Skill?

[outsource100]

Quote from jack hershey:


On the otherhand, you may wish to reconsider that objective TA is a perversion of the real true subjective TA. My proofs are the reason I suggest this to you.

Only if your willing to mentor.I`d be curious to see it from the other side.So far,the progress i made was based on the subjective TA.

Something like this:

 

[Lucrum]

Quote from Specterx:

...Psychology, discipline and trade management are necessary boxes to tick but cannot turn a losing system into a winning system...

No, but lack thereof can turn a "winning" system into a losing one.

 

[cornix]

Quote from marketsurfer:

The very premise of objective technical analysis is fatally flawed.

The premise is that past price can be relied upon to increase the odds of a continuation or discontinuation of a move into the future.

Do you realize how ridiculous this sounds? Yet due to the power of hindsight bias, the idea has captured even the very intelligent among us as fact.

It is due to this pervasive hindsight bias that TA can ONLY be evaluated by rigerous testing. When these tests are applied, TA fails to provide any type of statistical odds outside of that which could be explained by simple randomness.

IF skilled subjective users of TA exist, their success is due to superior money management, perhaps intuitive ability, I don't know. I will not argue with those who claim to do it or if wizards or savants exist or not in the markets---- If someone says they have seen an angell or demon, I cant' argue with them-- just like the TA folks.

TA does have a purpose of describing what has happened and providing a context from which to make decisions. It DOES NOT answer the question to go long or short.


surf

Concept of past prices affecting future prices is not ridiculous at all. Furthermore, this concept is much similar to the reflexive theory presented by George Soros in his "Alchemy of Finance". Market participants see prices changing and base their future decisions much on that PRIOR price action.

As for tests, before I see every parameter of testing and how exactly testing was performed I can't say were they rigorous or amateurish.

And if money management alone was the key to consistent profitability, why trading is to hard?

 

[cornix]

Quote from Eight:

Classical TA is pretty subjective to say the least. EX: Moving averages all lag so the way to go is to use the EMA? That's laughable actually.

Moving averages can be objectively and very successfully used as a LEADING indicator.

 

[cornix]

Quote from marketsurfer:

How can TA be objective when there isnt' even unified charting criteria or definitions of patterns?

There is. What differs successful traders from losers is that first know patterns truly well, including nuances of truly profitable patterns, while losers believe if they read about a pattern in a book they are experts.

 

[cornix]

Quote from jack hershey:

You are mistaken.

If you wish, please consider how signals are invented or deduced by those who think in mathmatical terms.

The name of one signal generator is MACD. Its inventor chose the name wisely.

MACD generates six specific contexts.

The power of MACD had an original intent as a "gating" circuit.

And it is true that MACD can be used as a leading indicator of price. As it turns out some people have been able to process this consideration and others have not.

Please consider giving a read to the five precepts of Behavioral Finance.

Yep. I know very successful traders who also use stochastic for that purpose. And it's a leading indicator for them, not lagging.

 

[cornix]

Quote from justrading:

"Any intelligent fool can make things bigger, more complex, and more violent. It takes a touch of genius -- and a lot of courage -- to move in the opposite direction."

Albert Einstein


Also, can we agree that the inability to articulate or explain something in clear, simple terms does not mean the subject matter is complex?

Yet it still takes certain level of intellect to understand the basics of quantum physics. You unlikely could explain it to a monkey.

 

[cornix]

Quote from Specterx:

I'm not quite sure what you mean here - if something isn't an "objective edge" then it won't make money. Psychology, discipline and trade management are necessary boxes to tick but cannot turn a losing system into a winning system.

To have a winning system you need to be able to identify when to enter a position, and when to exit, such that over time the trades are profitable. I know from experience that there are certain TA tools which, in combination with experience, etc. allow you to do this.

Yes, that's exactly what I mean. Objective edge must exist in your trading decisions. It can be very nuanced and thus unlikely possible to automate (on computers of our days, maybe in future it changes), but it's still objective.

The rest just makes sure that edge is applied properly. Psychological component is extremely important for that reason: without discipline even objective edge will not help. And it takes a lot of time and learning for people to find their edge and learn to use it as an objective edge, without psychological traps most traders fall into.

 

[cornix]

Quote from outsource100:

Thinking doesn`t work,but mentoring does.

Subjective TA seems to be an objective to the ignorant.In ignorance you think of TA as objective, although in reality the TA is the subject and we are hypnotized to see its objects.Unintelligent people like JH take the subject as an object. It is ignorance to confuse the eye with the seer or the brain with the knower.The objective TA is a perverted reflection of the subjective TA.

Wrong. If I enter/exit trade based on 1,2,3-like algorithm it's an objective decision making process. Either price action satisfies the set of my rules or it doesn't. Nothing subjective there.

 

[cornix]

Quote from MrN:

Call it technical analysis or Pattern recognition, the truth remains: Knowing how to find market patterns that will be valid over the next trading period, on a relatively consistent basis, takes a large amount of talent and skill. It is not stuff you can just pick up out of a book, etc.

Agree. Basically it just requires a lot of patience and be willing to do the hard work. A lot of it. Studying charts for months and probably years, then carefully collecting statistical information, spending endless hours in Excel is not something most think trading is like.

In reality it's extremely boring and draining work. Both the research and trading itself. Patience and focus.

Ironically, this business attracts just the opposite: born gamblers who like excitement. And correct trading, just like correct poker is very dull, not exciting at all.