Technical Analysis Doesn't Work

[learner2007]

Quote from marketsurfer:

but isn't 3/10 worse odds than random?? you need to be lucky on your entries with or without TA.

surf

No No No. You don't have to be lucky using TA. The whole
point of using TA is to use the analysis and tools that
have proven to be dependable say over70% of the time.
So you don't need luck, as you are using the law of
averages. If these tools were not dependable the majority
of the time, they would not have developed into being
the basics of TA.

 

[PitchBlack]

The purpose of TA is to replace luck by reliable probabilities.

Luck in TA means that the results are better than these reliable probabilities.

 

[learner2007]

Quote from spike500:

The purpose of TA is to replace luck by reliable probabilities.

Luck in TA means that the results are better than these reliable probabilities.

EXACTLY!!

 

[myminitrading]

I'm thrilled to see so many who don't us technical analisys, being successful in the market requires long study, and the use of mathematics,and many more complicated formulas not available to the average man or woman.

To think that someone can be successful in the markets with a simple chart is just foolishness.

To all new traders cast aside your silly charts and hit the books.

 

[marketsurfer]

unfortunately, whenever TA is tested-- the results are no better than random. what can i say?? believe objective testing, or believe stories, tales and trader myths?

surf

 

[El OchoCinco]

Quote from myminitrading:

I'm thrilled to see so many who don't us technical analisys, being successful in the market requires long study, and the use of mathematics,and many more complicated formulas not available to the average man or woman.

To think that someone can be successful in the markets with a simple chart is just foolishness.

To all new traders cast aside your silly charts and hit the books.

And what exactly are you studying in the books?

What is in a book that will make you a better trader over studying price charts (assuming you are not just a long-term buy and hope investor).

EDIT: are you saying that one should read books alone and never study price charts?

 

[El OchoCinco]

Quote from marketsurfer:

unfortunately, whenever TA is tested-- the results are no better than random. what can i say?? believe objective testing, or believe stories, tales and trader myths?

surf

Do you ever look at the studies to make sure they are not biased or flawed.

I read one study where someone did a simple moving average crossover test for the last 20 years and found it did not better then long the index. Does that sound like a study that disproves TA? Academic studies that attempt to prove OR disprove TA have all been flawed because they make some bad assumptions, look at an indicator in isolation or assume as do many people incorrectrly that the indicator alone will give you the tading signal.

I also find it amazing that people simply and blindly accept academic studies as fact without questioning them because they are smart academics. Statistics is not an exact science, its results are always governed by the person's inputs and bias.

It comes as no surprise to me that someone who does not believe in TA can do a study and show that it does not work (Random Walk Down Wall Street).

 

[Thunderdog]

Quote from myminitrading:

...being successful in the market requires...the use of mathematics,and many more complicated formulas not available to the average man or woman...

And so begins another journey into the lost world.

 

[Thunderdog]

Quote from optioncoach:

Do you ever look at the studies to make sure they are not biased or flawed.

I read one study where someone did a simple moving average crossover test for the last 20 years and found it did not better then long the index. Does that sound like a study that disproves TA? Academic studies that attempt to prove OR disprove TA have all been flawed because they make some bad assumptions, look at an indicator in isolation or assume as do many people incorrectrly that the indicator alone will give you the tading signal.

I also find it amazing that people simply and blindly accept academic studies as fact without questioning them because they are smart academics. Statistics is not an exact science, its results are always governed by the person's inputs and bias.

It comes as no surprise to me that someone who does not believe in TA can do a study and show that it does not work (Random Walk Down Wall Street).

When marketsurfer adopts the broken record debate method, there is really little point in engaging him any further. My last post to him in this thread could have been time better spent.

EDIT: For example, in his post immediately below this one, he notes that TA is not objective. He has made this point repeatedly. However, it had already been pointed out to him time and again that it is the user who can choose to be objective or subjective. The tool, in its simplest form can be used as objectively or as subjectively as the user chooses. Further, if TA is indeed not objective at all, then how could academic studies have been conducted in the first place? You see, marketsurfer can speak from both sides of his mouth when he so chooses. He cannot yield to the notion that academic studies were likely to be naive and not conducted by someone who has seriously studied price behavior before designing the study. He also seems to be genetically incapable of recognizing that his recent adoption of "scientific statistical principles" also fall within the realm of TA because they use historical market data. His chosen point of demarcation is arbitrary. I use TA and even I will concede that there is more crap than usefulness in what passes for TA. But let's not throw the baby out with the bath water.

 

[marketsurfer]

Quote from learner2007:

No No No. You don't have to be lucky using TA. The whole
point of using TA is to use the analysis and tools that
have proven to be dependable say over70% of the time.
So you don't need luck, as you are using the law of
averages. If these tools were not dependable the majority
of the time, they would not have developed into being
the basics of TA.

hey bro, i use to be a true TA believer also, so i understand where you are coming from. im not saying that TA serves no function, in fact, several of my friends are serious TA practioners.

however, after studying for a long time i came to these conclusions:

TA has dramatic hindsight bias issues, it not objective, is untestable, is undefinable, if anything its an art and can't be quantified. can some people make it work?? yeah, seems likely, however these same people could probably do AS well with random entries.

good luck,

surf