TA - Objective or Psychological Skill?
- Thread starter cornix
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Yeah, I remember Tharp's son-- Rob. he took some serious abuse posting here from the resident trolls and was one of the first readers of the surf report. Whatever happened to him?
I know Dr, Tharp admitted that he couldnt' trade, was caught up in some kind of scandal, ran tests proving random entries and TA based entries basically have the same probability of success. What's the latest on him?
1. robert was trading out of a friends office. I think Robert got hammered one time on an opening orders glitch and stopped trading with them. However, I do not really know the details. I just know he was trading openings and then stopped trading... around the time other people got hurt by a glitch. I lost track of him after he stopped trading in the office.
2. the Van Tharp scandal I recall is that one of his students claimed to be super successful hedge fund guy in the palm beach area.
Van Tharp had promoted the success to some of his students and some of them lost a lot of their money it it. I went to lunch with a guy who lost almost all of his net worth in that fund. It was pretty sad.
So that was not good... but I also know Van worked with market wizards... because he put me in touch with a few.
I thought Mr. Tharp had some very useful insights into trading. I do know his money management stuff was pretty esoteric at the time.
No, that is not what he tested and he didn't prove anything. You're just out bashing TA and have no idea. As I have mentioned to you before:
Tharp had access to a profitable system and they replaced the entry logic with "random entries". Using various MM rules they could "prove" the system was still profitable.
More specifically, the exits were certainly not random. So saying he demonstrated that a "random entry" system can be profitable using "money management" only, is wrong. He demonstrated that a profitable system remained profitable. Most likely curve fitting the data (just guessing here, but hey, he was trying to make a point in a book).
If you've done any systems testing you know entry/exit/profit/money management-logic are interrelated in mysterious ways and trying to optimize or test one part without affecting another is near impossible. It's like a game of whack-a-mole.
Finding a profitable random entry system for a limited time series is not really a problem. If you're writing a book and need to make a point, it's not an issue. Making it work across multiple timeframes and instruments is a completely different thing.
I still think TYWTFF is a very good book if you're into "systems trading" but you should always do your own due diligence - testing in this case - and don't believe what anyone tell you is "true".
Ya and obviously he added the psychology element in order to execute the MM and entry/exits rules since the times of the Market Mastery newsletter, the Special Report on MM and the 'Peak P. Course'.
Yes, patterns can be objectively defined and traded mechanically, but that does not necessarily translate into a profitable system.
Let's say you have a gap at the market open. Not all gaps are equal. You need to consider the magnitude of the gap and the prior day(s) pattern. You could for example objectively define a small gap as one where price opens inside yesterday's range and a large gap one where price opens outside yesterday's range.
Based on that information (and possibly the price action at the open), do you fade the gap or do you expect the market to continue in the direction of the gap (which happens quite frequently). Of course, statistics on prior similar occurrences should be used in this decision process.
Now, that's only considering the gap.
There's a multitude of other factors involved in analyzing intraday price action.
Is the market mean reverting? Or momentum driven?
Will that head and shoulder pattern fail - which often happens when the momentum is strong - or does it complete according to the textbook definition?
When do you stop buying the dips and selling the retracements?
So, that's the challenge. Consider all relevant factors, understand them, put them together and create a system that's profitable through ever changing market conditions.
Not easy at all.
My two cents.
Let's say you have a gap at the market open. Not all gaps are equal. You need to consider the magnitude of the gap and the prior day(s) pattern. You could for example objectively define a small gap as one where price opens inside yesterday's range and a large gap one where price opens outside yesterday's range.
Based on that information (and possibly the price action at the open), do you fade the gap or do you expect the market to continue in the direction of the gap (which happens quite frequently). Of course, statistics on prior similar occurrences should be used in this decision process.
Now, that's only considering the gap.
There's a multitude of other factors involved in analyzing intraday price action.
Is the market mean reverting? Or momentum driven?
Will that head and shoulder pattern fail - which often happens when the momentum is strong - or does it complete according to the textbook definition?
When do you stop buying the dips and selling the retracements?
So, that's the challenge. Consider all relevant factors, understand them, put them together and create a system that's profitable through ever changing market conditions.
Not easy at all.
My two cents.
One of the good quality is to be able to ask clear and well thought questions.
Now you have these questions, how do you go about finding the answers?