TA - Objective or Psychological Skill?

[marketsurfer]

Quote from wrbtrader:

surf, you talking about stocks while debating against most here that are futures traders ???

Yes,stocks.

 

[Red John]

Quote from wrbtrader:

There are hundreds of different types of breakouts and hundreds of different ways to trade them.

Anybody that say they've tested them all and none of them work without coughing up test results, without any definitions, without any chart examples of what they've tested...take what they say with a grain of salt.

Absolutely concur, WRB Trader

 

[cornix]

Quote from marketsurfer:


Come on, see reality, HFT has forever changed the market-- it doesn't "help"you--- google NANEX or Eric Hunsander if you don't believe me-- this is a major issue from EVERY real manual trader I know-- why it's shrugged off here as being irrelevent is a major tell that reality isn't as it seems on this thread.

surf

Maybe it made things worse for some traders. I didn't notice anything bad happening lately. Certainly trading is not harder than it was say 5 years ago. Volatility and liquidity changes, but that's all I noticed.

 

[cornix]

Quote from marketsurfer:

First, most HFT is done on tiny size, millions of times. Here is the data--

http://www.nanex.net/FlashCrash/OngoingResearch.html

Sure, you can still make money, just like you can by guessing with good money management--- take a profitable break out for instance, truth is, break outs continuing into profitability are much fewer today than they were 5 years ago, this is due to the fluttering erratic nature of the market on the micro scale due to HFT--- that's just one example. For anyone to say this doesn't make a difference on any level is either inexperienced, paper trading or making it up. The research is here proving it. surf

Frankly if algos affected something that's most likely breakouts and "flash crashes" getting STRONGER, not weaker.

 

[cornix]

Quote from marketsurfer:

I can't argue with your personal experience. However, I do know that research, my experience and that of bonafide succesful traders I know tell me that there is no edge in trading break outs anylonger.

surf

It only tells you those traders are unable to trade them. Nothing else. As for "researchers" I don't even treat them seriously, cause they obviously have very superficial understanding of TA trading.

 

[cornix]

Quote from NoDoji:

I choose a price action pattern to study, open a spreadsheet and log data surrounding every appearance of that pattern until I've compiled stats for enough trades to determine if some sort of statistical significance jumps out at me.

I do everything by hand, no automated backtesting for me.

I already know in advance that I'm looking for two kinds of opportunities, so that narrows down the data I need to collect.

1) I look for patterns where the R:R is equal, but the win rate is at least 60%

2) I look for patterns where the R:R is positive enough to overcome a win rate of 50%

I eyeball things at first and do quick mental calculations. Or sometimes while trading day after day, I notice a certain thing seems to happen "a lot". I know from experience that this belief that something happens more often than not is frequently nothing more than selective memory, so I define the pattern and the context in which I imagine it's happening more often than not, and I then do the statistical analysis by looking for every appearance of the pattern over the past 4 weeks to see if there's any significance to it, or if I was merely remembering the successes and ignoring the failures. If a 4-week review shows promise, I continue to evaluate the setup until I have a sample size that satisfies me.

I probably did this the hard way, but it's done. I've been trading the same two core setups for a long time now.

There you go! Excel is trader's best friend! And that's exactly where most people start to stumble in their career: hours and hours, endless hours of very boring home work, often leading to nothing... then back to the blackboard and... hours and hours again.

But that's "how traders really work", unlike "catch a happy trade, get rich quick" dilettante mentality.

 

[cornix]

Quote from Ol' Yella:

This is an interesting debate on HFT. I have heard from many people in the industry that HFT has pretty much put the manual daytrader out of business.

Yet, on the internet, that doesn't seem to hold true.

Anyone ever find one of these internet people in real life and verify their success? Or is it a never ending chase like finding bigfoot?

Maybe one day we'll find one... until then we'll just have to keep on squatchin'

I know a few personal stories about SCALPERS being affected. But they basically compete in the same niche, so no wonder.

If you ask any successful day trader (shooting for intra-day swings of more than just a few ticks), doubt result will be the same. I don't even know when and where HFT steps in, who cares? Trades are still trades, signals are signals. It's not even interesting to me who's that moving the market in the "now" - human or algo.

One sure thing I have never witnessed or experienced in live trading, but always hear on the Internet is 1-10 contract pikers complaining HFT and stop hunters are all the way after them.

But my psychology background of course tell me that's the way to rationalize...

 

[cornix]

Quote from NoDoji:

I believe HFT definitely hurts the retail investor.

However, HFT doesn't hurt the retail price action day trader who uses a thoroughly tested trading plan.

Now I am really confused...

How can HFT even get noticed by INVESTOR who by definition steps in for a long-term so that a few ticks back or forth are nothing for the strategy?

 

[cornix]

Quote from wrbtrader:

Most retail traders do not use a thoroughly tested trading plan. Thus, most retail traders are doomed to failure not to the fault of HFT. Yet, minority of traders that are profitable, I'm sure HFT has an impact but not in a way it will turn someone into a losing trader.

Anyways, I don't know a lot of HFT such as how it suppose to be hurting retail traders except for a few online news articles. Yet, I will say that when I noticed those words "High Frequency Trading (HFT)" started being used by institutional traders in the late 1990's...

Back in the 90's, HFT was in seconds. Soon around the financial collapse of 2008...it was in milliseconds.

I started seeing more retail traders complaining about how difficult trading has become especially on those days of "technical glitches" in the markets resulting in sudden price spikes or sometimes via what's called flash crashes. Yet, there have been key changes in the markets too that have impacted retail traders and investors greatly that have nothing to do with HFT.

Simply, poor trading and poor investing is primarily caused by other reasons. HFT is just part of the problem for some and the solution (profits) for others.

Regardless, I'm convince HFT is behind strange high volatility/choppy price action I see a few times per month where the spread gets crazy out of whack with consistently large orders.

It would be an interesting study to see (maybe it exists) how success rate of newbie traders changed today vs. 80's and 90's. Have a feeling it wasn't so much more winners back then, despite no HFT.

 

[cornix]

Quote from wrbtrader:

surf, you talking about stocks while debating against most here that are futures traders ???

Yea, was just going to ask, how does it affect stock index futures?