TA =VS= Chart Patterns : Which is Better?
- Thread starter Scientist
- Start date
I disagree. History repeats itself. Otherwise there would be no need for S/R sense previous highs and lows would no longer be important.
- nathan
From Investopedia:
"A method of evaluating securities by analyzing statistics generated by market activity, such as past prices and volume. Technical analysts do not attempt to measure a security's intrinsic value, but instead use charts and other tools to identify patterns that can suggest future activity.
Technical analysts believe that the historical performance of stocks and markets are indications of future performance."
May just boil down to semantics but as others have pointed out I was under the impression that practically anything to do with historical data or a price chart came under the general heading of TA. Price/volume/open interest, price only patterns, indicators, time cycles, EW,Gann, pivots and imo probably even neural nets.
"- "Locals", pit traders, don't use TA, they just use chart patterns and volume..."
I suppose recent advances in wireless electronics may have changed this but would a pit trader normally have a chart in front of them? I certainly agree they would have some price levels in mind based on charts. I've only seen pit traders live in action on one occasion years ago (CME S&P) but aren't they mostly following order flow? Something that I would think would come under the general description of tape reading/DOM analysis.
Mark hit on some good points not the least of which is there is more than one way to make a buck. After roughly 18 years of staring at charts as well as experimenting with practically every indicator known to man. I've boiled what I do down to price action and only just recently a dash of volume.
"A method of evaluating securities by analyzing statistics generated by market activity, such as past prices and volume. Technical analysts do not attempt to measure a security's intrinsic value, but instead use charts and other tools to identify patterns that can suggest future activity.
Technical analysts believe that the historical performance of stocks and markets are indications of future performance."
May just boil down to semantics but as others have pointed out I was under the impression that practically anything to do with historical data or a price chart came under the general heading of TA. Price/volume/open interest, price only patterns, indicators, time cycles, EW,Gann, pivots and imo probably even neural nets.
"- "Locals", pit traders, don't use TA, they just use chart patterns and volume..."
I suppose recent advances in wireless electronics may have changed this but would a pit trader normally have a chart in front of them? I certainly agree they would have some price levels in mind based on charts. I've only seen pit traders live in action on one occasion years ago (CME S&P) but aren't they mostly following order flow? Something that I would think would come under the general description of tape reading/DOM analysis.
Mark hit on some good points not the least of which is there is more than one way to make a buck. After roughly 18 years of staring at charts as well as experimenting with practically every indicator known to man. I've boiled what I do down to price action and only just recently a dash of volume.
I have suggested this a time or two before.
A skilled automotive mechanic will always produce a result that is superior to an amateur. His advantage lies in his detailed, internalized, understanding of the way an automobile works and his superior training and skill, not in the tools themselves.
I could say a few words more but that would inevitably lead to some of you being insulted. You see if I am correct, then your inability to make money is not due to your choice of tools, but to your incomplete understanding of the mechanics of the marketplace.
Good luck,
Steve
A skilled automotive mechanic will always produce a result that is superior to an amateur. His advantage lies in his detailed, internalized, understanding of the way an automobile works and his superior training and skill, not in the tools themselves.
I could say a few words more but that would inevitably lead to some of you being insulted. You see if I am correct, then your inability to make money is not due to your choice of tools, but to your incomplete understanding of the mechanics of the marketplace.
Good luck,
Steve
SEMANTICS......I am always amazed when any subject about trading in general comes up there are a hundred different thoughts etc about the same thing.
In a nutshell, this is a prime reason why so many in the past, present and future have such a difficult time with the trading game.
Technical analysis is a field that involves past price movement, volume numbers etc, etc that is viewed and interpreted with the idea of gleaning from past action some sort of a glimpse into the future. (surely many will even challenge that last sentence but ....You get the point.).
TA is a tool, it is what it is and it is what YOU as an individual get from it. Some make millions from using TA and others might lose millions from using it. That is about as succinct as the problem can get. Either you use it according to your ENTIRE plan or you discard it.
TA as a tool is best viewed used with an eye towards SEEING WHY you made that last mistake. TA is a reflection of all the trades that were done during the day. There is nothing out there that is going to give you the same amount of information than a CHART, think about that for a while...............
You as an individual must find your own way, forget the dribble about ....is it TA or is it TI, etc. that kind of wasting time on semantics is never going to make you a dime.
Find something to try, fire real bullets and if it works, keep it, if it fails drop it and move on.
IT IS ALL OUT THERE, you just need to work it and correct your mistakes. This profession is unlike all others, no one is holding your hand anymore.
Mistakes are your best learning tool, either you find what works for yourself or you go get an app for Wal-Mart. good luck
Did anyone really think a game where you could make millions be easy?
In a nutshell, this is a prime reason why so many in the past, present and future have such a difficult time with the trading game.
Technical analysis is a field that involves past price movement, volume numbers etc, etc that is viewed and interpreted with the idea of gleaning from past action some sort of a glimpse into the future. (surely many will even challenge that last sentence but ....You get the point.).
TA is a tool, it is what it is and it is what YOU as an individual get from it. Some make millions from using TA and others might lose millions from using it. That is about as succinct as the problem can get. Either you use it according to your ENTIRE plan or you discard it.
TA as a tool is best viewed used with an eye towards SEEING WHY you made that last mistake. TA is a reflection of all the trades that were done during the day. There is nothing out there that is going to give you the same amount of information than a CHART, think about that for a while...............
You as an individual must find your own way, forget the dribble about ....is it TA or is it TI, etc. that kind of wasting time on semantics is never going to make you a dime.
Find something to try, fire real bullets and if it works, keep it, if it fails drop it and move on.
IT IS ALL OUT THERE, you just need to work it and correct your mistakes. This profession is unlike all others, no one is holding your hand anymore.
Mistakes are your best learning tool, either you find what works for yourself or you go get an app for Wal-Mart. good luck
Did anyone really think a game where you could make millions be easy?
i feel the same as i did in '03. there has been very few objective tests on the value of TA.... dr. andrew lo probably has done the most work in this field. google him to find his research
surf
I always thought TA = patterns and price action. Inidcators came along later. The problem seems to be that TA is not used properly as a managment tool. For some reason we are lead to believe indicators [or even patterns]will predict the market. This is an absurd assumption that has never been proven, yet I still see the term predict used over and over.
I use TA to take a guess on where to enter what I percieve as a low risk spot. Some spots on the chart have a higher odds chance of success, but in the end it is still a guess no matter what you use to enter. Once the trade is open, the chart serves as a management tool for risk. Price action is the only means to manage risk objectively.
No one has a problem trading as long as the price action moves in a decisive manner. Indicators have a way of keeping a bad trade alive when the price action gets sloppy and blurry. When this happens the trader becomes indecisive and falls into the trap.
Patterns never change once they form. Support and resistance never move once they are confirmed.
I use TA to take a guess on where to enter what I percieve as a low risk spot. Some spots on the chart have a higher odds chance of success, but in the end it is still a guess no matter what you use to enter. Once the trade is open, the chart serves as a management tool for risk. Price action is the only means to manage risk objectively.
No one has a problem trading as long as the price action moves in a decisive manner. Indicators have a way of keeping a bad trade alive when the price action gets sloppy and blurry. When this happens the trader becomes indecisive and falls into the trap.
Patterns never change once they form. Support and resistance never move once they are confirmed.
When I came to ET I was still searching for that magical combo of MACD,STOCH,MA....etc. The only indicators I have had on my screen for the last two years are Volume, 21 period ATR. And the last two years have been my personal best in trading. Its not rocket science. Its a total mindplay and the less my mind has to absorb the easier it is. Spaghetti charts drive me crazy.
Price, Volume for the obvious reasons...capitulation, blowoffs, accumulation and distribution. ATR just so I have some sense of an instruments range without watching every tick. And helping me determine a stop/target.