Technical Analysis = CRAP

[Wayne Gibbous]

Quote from ProfLogic:

He can check it.
He can test it.
He can prove to himself it works.
He can't hack it.
He could duplicate it but it would take him 5 years to figure it out even if all of his quant and heavy math people helped him.

Thanks for your concern though.

Shouldn't be a big deal if it is not open and or easy to figure out. Surf may actually have good intentions, I don't know, but in most of his posts trading decisions are referenced as "We" think, etc. Do the "we" people also have good intentions? And when it comes to money, nobody can be totally trusted.

I have automated trading systems that work. Took me 10 years to really figure it out. Ain't nobody gettin' 'em. If no one thinks they can possibly make money, so what...

Good trading to all.

And good luck to Surfy!

 

[Lights]

TA is just a tool. what isn't sold in books is the fact that profitability really comes from innate characteristics, such as risk taking, courage, patience, pain tolerance and loss management, etc. ie two people can take the same exact trade and have 2 totally different outcomes. i have never read a trading book that teaches someone how to not piss in his pants.

Quote from Frits:

It surprises me that some traders still have the illusion that by using technical analysis they are able to predict the direction of the market.

Let's say for the sake of the subject that today some brilliant mind came up with an indicator that indeed is able to predict the market. Let's call this indicator "moneymaker" ! Now don't go running to the fridge to get that bottle of Dom Perignon just yet...

A) At a certain point in time (let's call this "T") the moneymaker signals that the market is about to go up!

You buy and with that you enter a long position. Smart move because the moneymaker signals a rising price.

B) At T+11 (or 19, 37 or 76) the moneymaker signals that the market is about to go down again.

You sell and with that you close your long position and collect your profits. Smart move since the moneymaker just signals a falling price. Profits in the pocket open that Dom Perignon the sabrage way (with a sword)! Or...

All seems very logic right?
Now I have two questions for you:
1. Who is dumb enough to sell in situation A? Would you sell? Who the f*ck is going short while the moneymaker, the brilliant technical indicator indicates that prices are going to rise!? So you can buy all you want, but there is no seller!
2. Who is dumb enough to buy in situation B? Would you buy? Who the h*ll is going long while the moneymaker indicates that prices are falling!? So you can sell all you want, but there is no buyer!

If, yes IF technical analysis is able to predict the market, that same magical ability would kill the ability to predict the direction of the market by itself.

Whenever you enter the market you have a 50% that it goes up and a 50% chance that it goes down. The trick is to limit your losses and ALWAYS let your profits run.

Quit following the advice on the use of TA that all the scammers on the internet try to give you in return for hundreds or thousands of dollars. They are the ones that failed in becoming profitable by trading. And now they are trying to make money by teaching you about technical indicators. Apart from the fact that it is useless, the info on TA is also to be found for free on the internet.

Shaka !

Frits Altenburg
P.s. this advice was for free

 

[RCG Trader]

Quote from ProfLogic:

Okay Dokay

Game Set Match Anna

She might be Bonnie to his Clyde

 

[sellindexvol66]

Quote from bone:

You know when a thread has deteriorated into a pissing contest amongst elves when I post something for you wonks to think about SERIOUSLY and the conversation does not change.

Let me guess, about two of you really trade.

The market is undergoing a paradigm shift - the only traders taking directional risk are the retail punters.

Hopeless. Really. I tried.

bone, i trade nothing but future spreads using a model i made for years and without giving out any edge from my experience you must be directionally correct even with these as far as the underlying (ie:corn) moves. i admit there are convergence plays out there that even resist underlying moves, but that is rare.

there is no way your clients are trading well without being good on direction. where i agree with you is the spread gives a little edge or push over simple es or whatever the wonk is trading as you describe. in my case i still need hours of study daily and decent directional skills.

lastly, in your defense i hope never ever to go back to individual futures trading ever again; but it is not the simple thing you make it out to be as i have many buds who tried what i do and failed.

 

[bone]

Quote from sellindexvol66:

bone, i trade nothing but future spreads using a model i made for years and without giving out any edge from my experience you must be directionally correct

Sure, the spread differential either converges or diverges - but that price action is much easier to model and trade than the underlying flat price. Not sure what you meant regarding the underlying, but any spread that mimics the delta directional traits of the underlying (Gold vs. Silver, or Nikkei vs. Kospi) we do not trade. Maybe another piece is that our models are different - nobody, including myself, needs to spend hours each day pouring over charts. I personally have about 400 spread combinations that I screen with a custom scanner, and tend to 'cherry pick' setups. The trade has to very obvious to me, if I have to spend an inordinate amount of time trying to pick apart a chart, to me that is not good risk/reward. In that sense, having a very large portfolio of spread combinations to monitor for ideal setups is a strength. If I had to restrict my activities to, for example, the CBOT yield curve things would be much tougher.

 

[logic_man]

Quote from bone:

Sure, the spread differential either converges or diverges - but that price action is much easier to model and trade than the underlying flat price.

Then unlevered returns have to be lower. "Easy" and "high returns" don't coexist, unless by "easy" you mean that after putting in years of effort, you now are optimizing an existing strategy rather than developing one from scratch, which is always hard.

 

[anglagard]

Technical analysis is not crap is just not perfect, it's better than random and that alone is an edge worth having.

 

[bone]

Quote from logic_man:

by "easy" you mean that after putting in years of effort, you now are optimizing an existing strategy rather than developing one from scratch, which is always hard.

That is fair, using the term "easy" I meant in comparison to trading a flat price directional market like ES or CL or 6E. I have been spread trading and using CQG, Bloomberg, and eSignal since 1992. What I am doing now is using what has been "optimized" in an evolutionary manner during those 19 years. "Optimized" meaning that I can account for both trending and mean reverting spread price action regimes. As you know, trading requires continual evolution and refinement.

Again, I pre-screen experienced traders as potential clients, this isn't really meant to be a 'one-size fits all strategy" and a panacea for newbies. My typical client is already going to be an established trader.

 

[logic_man]

Quote from anglagard:

Technical analysis is not crap is just not perfect, it's better than random and that alone is an edge worth having.

Yeah, I found the original poster's premise to be pretty far out there. First of all, no approach is ever going to be perfect and secondly, as long as an approach isn't perfect, it will never be adopted by every trader in the market, because someone will always think they can "build a better mousetrap". It's human nature to say, "Well, that guy using indicator X is right 55% of the time, I think I can develop indicator Y and be right 56% of the time".

So, while I'm not one to go shouting the rules of my approach from the rooftops, I'm not even sure that it would matter if I did, because the only person who'd end up wanting to use it "as-is" would be me anyway. And the market would continue on its merry way.

 

[logic_man]

Quote from bone:

That is fair, using the term "easy" I meant in comparison to trading a flat price directional market like ES or CL or 6E. I have been spread trading and using CQG, Bloomberg, and eSignal since 1992. What I am doing now is using what has been "optimized" in an evolutionary manner during those 19 years. "Optimized" meaning that I can account for both trending and mean reverting spread price action regimes. As you know, trading requires continual evolution and refinement.

Again, I pre-screen experienced traders as potential clients, this isn't really meant to be a 'one-size fits all strategy" and a panacea for newbies. My typical client is already going to be an established trader.

I've found 1 thing that works for directional trading, so you'll get no argument from me that it's darn near impossible.