I am convinced that there is no such thing as a "holy grail" for the market, but there are certainly some very profitable ways to exploit statistically highly recurrent price patterns (rather than TA rules). If you'd ask me who of the 'known' traders is the closest to the way I trade, I would say it's Dan Zanger. Because he uses only chart patterns, price and volume. No TA, no other form of snakeoil. Because non-TA trading means non-lag trading, I consider this quantitatively far superior to using indicators, which is something I used to do for a long time.
Ever since I was 'forced' not to use any 'spaghetti' on my charts for a few days, I threw TA away completely, and never used it again. I now sincerely frown upon TA altogether, since I am pretty convinced it's all snakeoil.
Reasons? Well, there are several:
- TA is generally lagging, so signals come too late. TA people basically rehearse, while pro's anticipate price action.
- TA is based on past behaviour, and the past has nothing to do with the future
- TA is generally calculated singularly from price or volume. But volume can at times almost completely negate price, and vice versa. There is yet no good TA to do do a proper mechanical calculation of the P/V relationship. Therefore TA, generally solely calculated from price, is at least heavily misleading at times.
- TA inclines to give the observer a directional bias, and nothing is worse in trading than having a bias
- TA 'bolognaise' obstructs the clear reading of charts, and particularly chart patterns.
- Price levels, S&R's, basic trend rules (higher lows, lower highs etc) are more important than TA. Why not focus your attention on them instead?
- "Locals", pit traders, don't use TA, they just use chart patterns and volume. Most people who started in the pit never changed this, even after they went screen-based.
There are sure many more reasons, but it seems there are a lot of people who still believe in TA. For me, the jump away from TA has made me significantly more profitable, and I wonder how others think about this.
If the whole thing ends up in a blood bath of TA-users VS non-TA users - Fine. Anything is good.
Scientist.
Ever since I was 'forced' not to use any 'spaghetti' on my charts for a few days, I threw TA away completely, and never used it again. I now sincerely frown upon TA altogether, since I am pretty convinced it's all snakeoil.
Reasons? Well, there are several:
- TA is generally lagging, so signals come too late. TA people basically rehearse, while pro's anticipate price action.
- TA is based on past behaviour, and the past has nothing to do with the future
- TA is generally calculated singularly from price or volume. But volume can at times almost completely negate price, and vice versa. There is yet no good TA to do do a proper mechanical calculation of the P/V relationship. Therefore TA, generally solely calculated from price, is at least heavily misleading at times.
- TA inclines to give the observer a directional bias, and nothing is worse in trading than having a bias
- TA 'bolognaise' obstructs the clear reading of charts, and particularly chart patterns.
- Price levels, S&R's, basic trend rules (higher lows, lower highs etc) are more important than TA. Why not focus your attention on them instead?
- "Locals", pit traders, don't use TA, they just use chart patterns and volume. Most people who started in the pit never changed this, even after they went screen-based.
There are sure many more reasons, but it seems there are a lot of people who still believe in TA. For me, the jump away from TA has made me significantly more profitable, and I wonder how others think about this.
If the whole thing ends up in a blood bath of TA-users VS non-TA users - Fine. Anything is good.
Scientist.
