TA - the final answer...

[farmerjohn1324]

This thread will be a continuing journal of me backtesting different TA indicators and combinations of indicators. Technical indicators are all derived from raw numbers and are mathematical equations.

Therefore, if TA has any merit, it should be able to be proven that by using an indicator or a combination of indicators, that it should be possible to gain a mathematical edge of >50%.

I already started this on another thread that I will copy here shortly.

I don't care if this thread goes on for months.

I am very open to suggestions of what to back test.

 

[Laissez Faire]

Therefore, if TA has any merit, it should be able to be proven that by using an indicator or a combination of indicators, that it should be possible to gain a mathematical edge of >50%.

That's simply not correct.

 

[farmerjohn1324]

That's simply not correct.

Explain in detail.

The only problem that I see is that there are so many possible parameters that it would be impossible to test every combination.

 

[Laissez Faire]

Explain in detail.

I use a statistical model for prediction which is based on data and parameters, but not indicators. I know others do, too. This is technical analysis based on past prices, but not indicators or charts.

I think indicators can be quite useful, but the ones I've talked to who built a profitable system using indicators are all using custom indicators which are not available in the public domain.

Read The Man Who Solved the Market to get some insight into what it takes to build a profitable trading system. Think years and years of research.

The general problem with the common indicators is that they're either lagging (your signals will be late and you'll miss the move) or too fast (you'll get whipsawed).

 

[maxinger]

This thread will be a continuing journal of me backtesting different TA indicators and combinations of indicators. Technical indicators are all derived from raw numbers and are mathematical equations.

Therefore, if TA has any merit, it should be able to be proven that by using an indicator or a combination of indicators, that it should be possible to gain a mathematical edge of >50%.

I already started this on another thread that I will copy here shortly.

I don't care if this thread goes on for months.

I am very open to suggestions of what to back test.

Seems like the way you define TA is that TA is basically about using indicators and indicators only.

3 to 4 decades ago, I started trading with hundreds of indicators.
It took me very long to delete all those hopeless useless confusing worthless indicators.

Now my chart contains only candlesticks and perhaps zig-zag line.
I just focus on price action / movement, patterns, shapes

Lots of people use indicators and they backtest and backtest with many many years of historical data. Good luck to them.

So what is the TA FINAL ANSWER?
The final answer is that because there is demand, there will be supply.
People want indicators thinking it is a holy grail.
So brokers, professional talkers, professional writers, charting service providers, trading platform providers are providing lots and lots of indicators.

 

[farmerjohn1324]

I use a statistical model for prediction which is based on data and parameters, but not indicators. I know others do, too. This is technical analysis based on past prices, but not indicators or charts.

I think indicators can be quite useful, but the ones I've talked to who built a profitable system using indicators are all using custom indicators which are not available in the public domain.

Read The Man Who Solved the Market to get some insight into what it takes to build a profitable trading system. Think years and years of research.

The general problem with the common indicators is that they're either lagging (your signals will be late and you'll miss the move) or too fast (you'll get whipsawed).

Ok so you need to have the math skills of a theoretical physicist. This is beyond my ability to do. I don't have the time or energy to invest into something that complicated...

But perhaps there's a toned-down version? Instead of making $20 billion like him... I'll be happy with $20 million. Or even $20,000 to start with lol.

Does your system consistently make you profits? What type of ROI do you expect to make per year?

 

[virtusa]

Explain in detail.

The only problem that I see is that there are so many possible parameters that it would be impossible to test every combination.

Maybe you will now understand why it takes years and years to find what you are looking for. It is like looking for a needle in a haystack.
There are thousands of indicators; as each indicator has several parameters you have quickly millions of combinations to check out. And if you want to use several indicators in combination, your millions of combinations will be multiplied again to reach maybe over a trillion possible combinations.

And probably none of these combinations will be good enough, as the indicators you find for free, or for free as they don't work. If they would work, they would not be for free and they probably would never be on internet or anywhere else.

 

[themickey]

TA - the final answer...

 

[virtusa]

Now my chart contains only candlesticks and perhaps zig-zag line.
I just focus on price action / movement, patterns, shapes

Each trader will find what works for him. For me pure price action does not work. For you, what I use maybe will not work;
The only thing that matters is what works for you; even if nobody else can work with it.

 

[farmerjohn1324]

Maybe you will now understand why it takes years and years to find what you are looking for. It is like looking for a needle in a haystack.
There are thousands of indicators; as each indicator has several parameters you have quickly millions of combinations to check out. And if you want to use several indicators in combination, your millions of combinations will be multiplied again to reach maybe over a trillion possible combinations.

And probably none of these combinations will be good enough, as the indicators you find for free, or for free as they don't work. If they would work, they would not be for free and they probably would never be on internet or anywhere else.

Then there's no point in me trying to make "sense" out of TA.

Although I have had several nice predictions lately based on fundamentals. Unfortunately, they were very easy because of the temporary corona situation.

I could have made an enormous % return if I bought and held the S&P futures that I had in April. But I decided to call it quits and focus on building houses for a profit.

I don't think I'll ever be an astrophysicist who figures out the 1 out of a trillion indicator combos that works... I'm still hopeful there could be a watered-down version of this.