Technical Analysis Doesn't Work

[marketsurfer]

Quote from oddiduro:

Wow, I guess surferman ran away with that exposure

ha, no running here--although this recently fat boy should be.

yes, i was a TA true believer for years--studied it, used most of the charting programs, read all the major books and many esoteric ones on the subject. however, i have evolved as a trader past this point-----when i talk about the channel, show charts, etc its for illustrative purposes--TA is great for demonstrating what happened and to show a strategy. charts are extremely seductive and misleading in a real time environment. per your example, the channel figures are a not a result of TA any longer, and my entries are no longer based on the gann wheel, although the results are similar. you can say, i am trying to see the wiring under the floor, past just price/volume/time; beyond the price Xray of TA.

remember, im talking about objective binary TA. I do believe there is value in the "art" of TA at times--just that its subjective. plus other methods of pure price like tape reading either manually or auto work well for short term. hope this clarifies my position.

surf

 

[marketsurfer]

my colleagues and i have searched for an edge using binary objective TA for years--- something that could be programmed--- i don't believe it exists even though many claim it does. when these supposed creators are asked to show any proof--- reactions are typically like those exhibited here--- i remain open if anyone disagrees and are willing to demonstrate in a testable fashion.

regards,

surf

 

[jack hershey]

Quote from marketsurfer:

my colleagues and i have searched for an edge using binary objective TA for years--- something that could be programmed--- i don't believe it exists even though many claim it does. when these supposed creators are asked to show any proof--- reactions are typically like those exhibited here--- i remain open if anyone disagrees and are willing to demonstrate in a testable fashion.

regards,

surf

Change colleagues.

 

[kiwi_trader]

Quote from marketsurfer:

ha, no running here--although this recently fat boy should be.

yes, i was a TA true believer for years--studied it, used most of the charting programs, read all the major books and many esoteric ones on the subject. however, i have evolved as a trader past this point-----when i talk about the channel, show charts, etc its for illustrative purposes--TA is great for demonstrating what happened and to show a strategy. charts are extremely seductive and misleading in a real time environment. per your example, the channel figures are a not a result of TA any longer, and my entries are no longer based on the gann wheel, although the results are similar. you can say, i am trying to see the wiring under the floor, past just price/volume/time; beyond the price Xray of TA.

remember, im talking about objective binary TA. I do believe there is value in the "art" of TA at times--just that its subjective. plus other methods of pure price like tape reading either manually or auto work well for short term. hope this clarifies my position.

surf

If you trade profitably using price or price and volume (not fundamentals and sentiment) then you are using TA.

Technical Analysis = Using Price or Price and Volume movements (and their histories) to determine entries and exits.

 

[marketsurfer]

Quote from kiwi_trader:

If you trade profitably using price or price and volume (not fundamentals and sentiment) then you are using TA.

Technical Analysis = Using Price or Price and Volume movements (and their histories) to determine entries and exits.

subjective interpretive TA i can't argue with. objective binary TA is what i have never seen work or believe it does.

surf

 

[oddiduro]

Quote from marketsurfer:

subjective interpretive TA i can't argue with. objective binary TA is what i have never seen work or believe it does.

surf

Where traders go wrong in my experience is trying to use a binary TA system in the wrong environment. If you use a mech system on the wrong time frame, or in the wrong range, then there will be problems of course.

One of Jack's students designed a java platform that ranks his stocks, and literally reduces the work to a mechanical level. I know this works because I have used it.

Your TA method may no longer use the Gann wheel, but it is deriving these ranges that you put up based on some sort of adaptive algorhythm that tells you where to draw these channels.

By the very nature of the system, you must use price movement in your calculations, therefore, you are using TA.

The market is always either accelerating, holding constant, or decelerating. A binary system can easily capture ONE of these three conditions based a set of mechanical rules. Because of this, it becomes simply a matter of identifying which system should be employed. This too can reduced to true/false statements.

I said all that to ask the question of why would one be trying to debunk TA based the inability of a binary trading system to see multiple market conditions? By it's very nature, as far as I am aware, a binary system can only identify one condition at a time. So when the condition changes a different binary sequence has to be used.

This seems to be common sense to me.

Best Regards
Oddi

 

[jack hershey]

You can go back a ways and see where surf started using various words in his vocabulary.

Also anyone can make up a dichotomous key to get to any answer he wishes regarding market action. This is not something that may occur to some kinds of people when they think.

The increasing use of digitalizing is becoming broader based and very deep in detail at this point.

It is possible that surf is falling on his face by tripping over what binary means in market analysis. He may think that it is one of two alternatives only.

To keep it simple, give consideration to trading opening gaps.

The best routine would be to buy near the prior day's market close. You can do this with a single indicator that only gives one of two signals. We do it with slush money, ordinarily, where the goal is to make over 10% a day each day. It is not something that would draw the interest of most traders.

By using a go/nogo signal in the late afternoon, you simply take on a trade with money that is ordinarily swept into an interest bearing account.

This is an uncomplex, binary method that deals with a single indicator near the end of each day. To make 10% or more doing this during one day, is not difficult because there are few members of the universe on any given day. Favorites do occur simply because they show up time and again and are very reliable.

I would recommend this to students who are liberal arts majors and do not have good paying summer jobs. By using the 60 days of a summer vacation and running a few streams of capital at 10% a day, a person can build up funds for tuition, room and board and a car and its maintenance and driving costs. This is not something anMBA or quant student can do; it is too simple for them to grasp.


you use one indicator that gives a binary signal and you apply it to a narrow universe of stocks. They will gap up the next morning after they signal to the trader to enter in the late afternoon.

This is the essence of a binary TA indicator that surf has never seen or will never see until he and his colleagues do it.

A person who does this works in one of the 300 blocks of Madison Ave in a city named New York. Madison runs north and south as does 5th Ave.

A way for surf to get this straight would be to have him take phone calls (local, maybe) and do the Nike thing with some money. Or he could read a journal that contains the info.

What makes understanding how binary TA works is the transference of the information from one person to another. Surf commonly gives up this or that as the years go by. In this matter there is a requirement that surf get something. That is a challenge, I know from a colleagues experiences with him.

Would reviewing a list of 1000 charts that did this help?

 

[Lights]

excellent post. deploy the appropriate system to the season.

Quote from oddiduro:

Where traders go wrong in my experience is trying to use a binary TA system in the wrong environment. If you use a mech system on the wrong time frame, or in the wrong range, then there will be problems of course.

One of Jack's students designed a java platform that ranks his stocks, and literally reduces the work to a mechanical level. I know this works because I have used it.

Your TA method may no longer use the Gann wheel, but it is deriving these ranges that you put up based on some sort of adaptive algorhythm that tells you where to draw these channels.

By the very nature of the system, you must use price movement in your calculations, therefore, you are using TA.

The market is always either accelerating, holding constant, or decelerating. A binary system can easily capture ONE of these three conditions based a set of mechanical rules. Because of this, it becomes simply a matter of identifying which system should be employed. This too can reduced to true/false statements.

I said all that to ask the question of why would one be trying to debunk TA based the inability of a binary trading system to see multiple market conditions? By it's very nature, as far as I am aware, a binary system can only identify one condition at a time. So when the condition changes a different binary sequence has to be used.

This seems to be common sense to me.

Best Regards
Oddi

 

[cdcolvin]

Quote from rcanfiel:

This is a thread dedicated to the principle that Technical Analysis (by and large) has little to no value. It is contended that people continue to learn, sell, promote or believe in technical analysis, contrary to the many studies that continually (snip)</i>

You must be a democrat. Presents a problem with no suggestion for a solution.

 

[ljyoung]

To keep it simple, give consideration to trading opening gaps.

Welcome back, Jack. As we all know it is extremely rare for an equity (not a futures contract) to open exactly where it closed. That being so, what magnitude must a gap be in order to qualify as a "GAP"? Is 0.01 enough? Must the gap be a certain percentage of the equity's price or is the magnitude simply an absolute amount?

lj