Quote from marketsurfer:
In other words, TA based entries have a less than 50/50 chance of being accurate? Why would you believe they have anything to do with your success? In fact, it sounds like TA is hurting you.
Why couldn't random entries produce the same or better win rate? Apply money management, and random entries sounds like an equal or potentially better system.
surf
TA provides a foundation on which, and framework around which, you can build a consistently profitable trading plan.
You use the terms "accurate", "win rate" and "money management" above as if they have meaning in isolation. They have no meaning in isolation; they are only useful in trading relative to each other, meaning all of them must be taken into account to create consistent profitability in a time frame meaningful to the trader's income/wealth objectives.
Here's my post from another thread regarding this:
You can use any framework for trading as long as it --- and your trading rules surrounding it --- are consistent.
Consistency is not certainty. Consistently profitable trading is based on positive expectancy, not certainty.
Your trading plan based on research and testing over a large sample size (such as applying a set of trade entry and trade management rules to 500 appearances of a particular setup and finding enough positive expectancy to produce a net profit after slippage and commissions) will provide the consistency you seek without any need for certainty in predicting the outcome of any individual trade.
Think of a well-researched and tested trading plan as a car that will take you through the streets of the Market City each day as you look for potentially profitable opportunities. If you took the car to a good mechanic and got the seal of approval (research, development & testing phase) before buying it, the chances of a breakdown are reduced. If you drive mindfully and safely, and wear a seat belt (stay focused and patient, follow your setup/entry rules, and honor your risk management plan), your chance of getting killed in an accident is quite low, and your chance of being available to take advantage of every opportunity is high.
I know several traders who have absolutely everything they need to extract ample profit from the market every week. They have well-researched and tested trade ideas with specific rules for entry and exit, yet they're unable to realize their dream because of common bad habits related to fear of uncertainty and/or a never-ending quest for certainty (usually in the forms of further testing, changing rules, adding/removing indicators, testing other markets, and so on).
There is a level of certainty in trading and if I were to express it in terms of tossing a coin for a living, it would look much like one of these scenarios:
1. You toss a fair coin. For every head you receive $130; for every tail you pay $100.
2. You toss a coin that is balanced to come up heads 60% of the time. For every head you receive $130; for every tail you pay $130.
3. You toss a coin that's balanced to come up heads 30% of the time. For every head you receive $500; for every tail you pay $180.
4. You toss a coin that is balanced to come up heads 90% of the time. For every head you receive $50; for every tail you pay $250.
None of these scenarios is random, because the entire package --- the combination of win rate, risk/reward, and number of consecutive trades required to realize the positive expectancy of the system --- is required for success.
I (and almost all the consistently profitable traders I've met) have used the technical analysis of price action in combination with contextual filters and MFE/MAE analysis to develop an objective trading system. Some have automated their systems, thereby proving the objectivity of this approach.
I'm sure that "price drivers", fundamental analysis, tape reading, volume analysis, dark pools, HFT, arb strategies, complex option strategies, lagging indicators, and other methods can work profitably as well. When someone makes claims regarding any of these, I'd want to investigate the process for profiting from them, and apply that process to a thorough statistical analysis before taking the claim at face value.
Some methods (mostly technical price action strategies) are available at no cost or low cost (books, on-line resources, trading rooms).
Since these methods are available for free or for low cost relative to the speed with which beginners blow $5K and $10K accounts, what are you trying to save everyone from, Surf?
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