Technical Analysis Doesn't Work

[traderdragon2]

LOL you just keep digging your own hole deeper. You have no idea how incredibly stupid you sound to all the real traders around here right now (the few that are around).

Youre like the little claiming 2+2 is 9, and calling everyone stupid who disagree's with you. No need to state the obvious anymore LMFAO. Youre hanging yourself with every post LOL

Heres some more rope kid....LMAO

Quote from kut2k2:

Talking out of your ass doesn't make you a smartass, it makes you a dumbass.

The fact that you can't - yes, CAN'T - explain how you supposedly test for a trading edge without consideration of position size makes you nothing but a fool with delusions of cleverness.

 

[rcanfiel]

Quote from ProfLogic:

Haven't looked much, huh.

When you know the circumstances of the comments I direct toward him and the history that surround their background then you may interject your opinions when asked for them. Since neither are the case, go back to commenting on those other things you no nothing about and stay out of conversations that do not concern you. It's obvious your parents didn't teach you that sticking your nose in where it didn't belong was rude. It's also obvious you do not do it in when you are out in public.

interjections are not made with seeking your permission. I don't see "ask proflogic first" attached to your ID. Everything else you said is fluff. But knowing nothing is definitely one of your specialties.

 

[PitchBlack]

Quote from traderdragon2:



Position sizing is applied after finding a real edge to ensure behavior acceptable to the trader, controlling real life slippage, max drawdown, risk of blowout, etc.

I wont debate this anymore. Real traders will agree with me and say DUH, the clueless posers will try to debate this non-issue.

I'm a TA fan, but i must admit that about the above you are completely right.
I have my own system that gives enough profit to trade it, regardless the size of the position.
I researched the effect of varying the size of te position depending on "something". My conclusion was (after checking + 1000 trades): i take always a 100% position, because if i don't, i miss profits due to the smaller position taken. I cannot say in advance which trdae will generate lots of money and which not. In fact i would be able to, i could cut my number of trades singnificantly without missing profits.

In a very good system positions don't have to be changed.

 

[Paulds11]

Provocative words from the obviously bright thread starter, however..

The question ultimately is about trading using indicators and the assertion that an indicator other than price is not a constructive tool as an aid to profit.

What has been forgotten is that this isnt the issue. The issue in profiting from the markets is an understanding of people and thier buy sell behaviors. That is what drives the market.The issue is that a significant number of people use it as part of thier decision criterion and as such it therefore must be a component of any traders toolbox because it provides the trader with access to market Psychology. e.g.

A simple support and resistance set up may be neither here or there in absolute terms, but so many people use it that its use is critical to anticipating market moves especially at the point of breach. This is a given and does not require proofing, it is self evident and as such can be used effectively as a guide to market "sentiment" and therefore as a tool to aid a projection of future price movement over various timescales.

Conclusion: The reason technical indicators work is not because they absolutely compute descriptions of a market (in a random market they would be utterly useless in the main), but they work because other traders use them to make decisions. As such understanding them is a route to understanding Psychology of the market. Understanding Psychology is a route to predicting and anticipating price action.

If you can predict or anticipate price action.. you have an unbelievable edge.. you are reading into the future. You will be at restaurant abroad making decisions about Bollinger Vs Krug, (if thats your bag)

Paul

 

[rcanfiel]

Quote from Paulds11:


A simple support and resistance set up may be neither here or there in absolute terms, but so many people use it that its use is critical to anticipating market moves especially at the point of breach. This is a given and does not require proofing, it is self evident and as such can be used effectively as a guide to market "sentiment" and therefore as a tool to aid a projection of future price movement over various timescales.

Conclusion: The reason technical indicators work is not because they absolutely compute descriptions of a market (in a random market they would be utterly useless in the main), but they work because other traders use them to make decisions.

Unfortunately, none of this is true. These are beliefs, not a reality. People keep saying things like this, but that does not mean anything. Having been subjected to many studies, TA does not provide any discernible value-add.

Slapping on belief sets to this is a waste of time.

 

[PitchBlack]

Behavioral finance and behavioral economics are closely related fields which apply scientific research on human and social cognitive and emotional biases to better understand economic decisions and how they affect market prices, returns and the allocation of resources. The fields are primarily concerned with the rationality, or lack thereof, of economic agents. Behavioral models typically integrate insights from psychology with neo-classical economic theory.

Behavioral Finance has become the theoretical basis for technical analysis.


How many traders use behavioral finance? Almost none. That's why their TA doesn't work. The market is driven by human beings.

 

[Paulds11]

Quote from rcanfiel:

[Unfortunately, none of this is true. These are beliefs, not a reality. People keep saying things like this, but that does not mean anything. Having been subjected to many studies, TA does not provide any discernible value-add.

Slapping on belief sets to this is a waste of time. [/B]

rcanfiel, If I may be so kind as to ask you read the post again you may extract the information you need. Rather your repost is full of Hyperbolee and refuses to acknowledge an absolute fundamental truth so self evident no example is required.

Time and time again, when one observes and draws lines of support and resistance (which are Technical indicators) one sees clearly that breach of either by price action in a statisticaly significant sample set often results in a projected CONTINUANCE of price action?.. why is that? because so many traders use that as a marker, a signal for a break in the market psycology. To deny this fundamnetal fact used on Bloomberg, CNBC, CNN, ALL investment banks in the city using technicals (and I dont know any that do not), is to be shielded from your environment.

I think you are making a fundamental mistake by being so dogmatic about this it is clouding sensible judgement. The truth is markets break and rise on technicals (Oil breaking $70 dollars threshold, dollar@pound breaking 0.5) AND Fundamentals (subprime issues now spreading to banks.. part sentimental actually).

You will begin to look less than competant if you cannot see this basic fact. However not all technicals are the same of course..... I could say more but Ill keep this clean and respect your "current" viewpoint.

 

[Thunderdog]

Quote from rcanfiel:

...Having been subjected to many studies, TA does not provide any discernible value-add...

I think it is interesting that you have not yet responded to my earlier post on page 64, wherein I address your reference to academic studies:

http://www.elitetrader.com/vb/showthread.php?s=&postid=1558816#post1558816

Also, unless I missed it, you did not address NihabaAshi's remarks on page 65 regarding the essential ingredient of money management which must be carefully designed around a specific trading strategy. Then again, I suppose it is easier to simply drone on with your blanket remarks which are about as incisive as the studies you refer to.

You are not looking for an exchange of ideas. You are looking for a podium and an audience. Since you are clearly superior in intellect to all those around you, why slum it by condescending to the rest of us rabble and plebeians?

 

[Paulds11]

Quote from spike500:

Behavioral finance and behavioral economics are closely related fields which apply scientific research on human and social cognitive and emotional biases to better understand economic decisions and how they affect market prices, returns and the allocation of resources. The fields are primarily concerned with the rationality, or lack thereof, of economic agents. Behavioral models typically integrate insights from psychology with neo-classical economic theory.

Behavioral Finance has become the theoretical basis for technical analysis.


How many traders use behavioral finance? Almost none. That's why their TA doesn't work. The market is driven by human beings.

Spike 500

Colourfull indeed.... but absolutely the voice of reason.. how anyone else can possibly think otherwise is living in a fantasy world... The Markets are driven by people pure and simple and technicals always ultimately are interpretations of that point..... Those that deny or refute this are to me akin to claiming the earth is still flat whilst ignoring the issues of gravity and proof we have in orbits climate and satellite behavior..simply astonishing denial if you ask me.. theres no reasoning with that.. though we do remain open to any coherent argument to attempt to explain otherwise of course... but I hear see or smell no factual rebuttall of substance.. only Hyperbole...

Well said spike500

 

[jeffalvinson]

If TA doesn't work, then why did the 3 day rally on the SPX
fail exactly at the declining 20 day moving average?
"That's a classic textbook technical resistance point for a short term downtrend."