Technical Analysis Doesn't Work
- Thread starter rcanfiel
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Quote from FGBS:
There are loads of succesful Tech traders, check cta for their members and where they work...
most published performance listings of CTAs are pathetic. Most do worse than say a 15% return for the year which is pathetic, given the use of leverage.
"None of these arguments would hold much weight as compared to longterm, rigorous statistical sampling & testing of a mentioned method or indicator, over a diversity of markets and market time periods." --> This is where you prove that you completely msised the point. Patterns happen for a while, they might even last for a couple of months but they don't last forever and they definitely dont work for every product...
tested with little evidence of success. WHEN they occur meams little
1) You have to be kidding... this is you being worse than your own argument 1... you do realise you are refering to a group of people that leverages at 20:1 and find it surprising they can't beat the experience of banks/hedgies/experience? And how do you explain the 5%? seems about right for guys leveraged at 20:1
this is mostly gibberish
Good luck (as I also believe luck plays a prt)
a surprising admission, but probably what many TA followers mistake for success, because they have 6-9 months of it and think they are onto something
and I can't wait for your review of, fundamental analysis adds no value 90% of investment recoomendations from sell side analysts provide no extra predictional power over the direction of equity trading!
have no issue with fundamentals
There are loads of succesful Tech traders, check cta for their members and where they work...
most published performance listings of CTAs are pathetic. Most do worse than say a 15% return for the year which is pathetic, given the use of leverage.
"None of these arguments would hold much weight as compared to longterm, rigorous statistical sampling & testing of a mentioned method or indicator, over a diversity of markets and market time periods." --> This is where you prove that you completely msised the point. Patterns happen for a while, they might even last for a couple of months but they don't last forever and they definitely dont work for every product...
tested with little evidence of success. WHEN they occur meams little
1) You have to be kidding... this is you being worse than your own argument 1... you do realise you are refering to a group of people that leverages at 20:1 and find it surprising they can't beat the experience of banks/hedgies/experience? And how do you explain the 5%? seems about right for guys leveraged at 20:1
this is mostly gibberish
Good luck (as I also believe luck plays a prt)
a surprising admission, but probably what many TA followers mistake for success, because they have 6-9 months of it and think they are onto something
and I can't wait for your review of, fundamental analysis adds no value 90% of investment recoomendations from sell side analysts provide no extra predictional power over the direction of equity trading!
have no issue with fundamentals
Quote from NihabaAshi:
First of all, to understand the between the lines statements by rcanfiel you need to know one key fact about him...
He knows TA works and has gone on record here at EliteTrader.com to state that TA has value via using support/resistance analysis or trendline analysis.
Yet, he didn't go into any supportive details to prove why he felt there was value in s/r analysis or trendline analysis.
Knowing the above puts a different light upon his current thread.
What is he really trying to say?
* He is talking about indicators ONLY even though he prefers to just say Technical Analysis is Useless.
* He is talking about the use of traditional indicators and not anything involving something that's been customized as a blackbox system.
Reason why he doesn't discuss systems is that he's a system developer and has gone on record to state he has found value (it had an edge) in about 1% of the stuff he's tested.
* He has excluded price action only TA methods and there's a reason to such exclusion.
The most successful traders I have met in person that are profitable for many years and still are along with watching them trade in person on a few occasions...
These are traders using price action only TA methods in combo with something else.
These are the types of traders that causes a system developer without proven system that's profitable to question his/her own efforts about the route they have choosen when they see what the other guy/gal is doing that's profitable.
That in itself (many price action only TA methods) makes it very difficult to blackbox or to verify other than viewing the trader's profit/loss statements.
* There are many traders at ET posting their profit/loss statements showing consistent profits and they are using TA.
So why ignore these traders or exclude them from the TA debates?
I was scratching for answers about that myself.
I concluded that rcanfiel and marketsurfer are looking for a simple method that can be coded for testing.
Nothing more and nothing less.
Yet, they know that the profitable traders using TA are using it in combo with something else to determine their entries and exits.
They also know that most profitable traders using TA are not going to reveal the details of how they are combining TA with that something else.
That's the problematic issue for guys like rcanfiel and marketsurfer.
Traders are willing to show their statements that TA works but they are unwilling or don't care to show the details of their TA.
Therefore, if a trader has questions about the merits of TA...
You (rcanfiel and marketsurfer) really need to be very specific about your arguments instead of making generialistic statements.
You should also not use proof of stuff that's been tested that doesn't reveal any information about the trade management of the TA signal.
My point with the above...
There's testing information with statistics available on the web for free in which is shown that there are particular TA methods that are not reliable even though we know nothing about the trade managment that was used.
(Note: rcanfiel has often used these sources as references of proof.)
There's also lots of traders that shows their profit/loss statements and they are profitably using TA even though we don't know the trade managment being used and in many cases don't know what type of TA is being used.
Conclusion, whom are you willing to believe?
I choose the traders with verifiable profit/loss statements especially if they are using TA methods involving s/r levels or trendlines that rcanfiel saids has value.
I still think its very odd to see the usual type of exclusion talk or ignore tactics...
* No price action only TA methods
* No traders with verifiable statements.
http://www.elitetrader.com/vb/showthread.php?s=&threadid=83837
There are other traders on the internet with verifiable statements going back many years that has been using the same TA (accordingly to them) after finding something that works in combo with something else.
Analogy: Technical Analysis is like a track n field event. Just because you can't figure out how to do the long jump doesn't mean someone will not be able to figure out how to do the 100 meter dash.
Geesh...I keep forgetting...what's the debate about again???
Well said.
Mark
(a.k.a. NihabaAshi) Japanese Candlestick term
A lot of good thoughts in here. Thanks for the time invested in it. It does help to focus.
Yes, the main thing on TA indicators is traditional. It is impossible to test the quintillions of combinations everyone could ever think of. But the traditional ones are part of many books, advisories and other things marketed to (newer) traders, and they are worth scrutinizing. If I could edit the OP, I would add something about this. Although I do not say that this means that alternative creativities on indicators will have more or less success. That is up to each trader to decide
Quote from Buy1Sell2:
Only a total moron would conclude that effective use of TA does not increase probability of better entry/exit ---or that following a trend is not the way to trade. It's time to get real folks and become professional traders. Thank you for your time--
Since there are volumes of studies to the opposite, it is perhaps better stated that only a total moron would conclude that effective use of TA DOES increase the probability.
In other words, in the absence of any proof, then TA remains a belief rather than a proven hypothesis
Quote from optioncoach:
and I overlooked the point made by the below poster. win rates are not important, it is money made v. money lost on average. A win rate of 20% might suck but not if you make 10 points per win and lose 2 points per loss. You are still net ahead.
Correct, Profit Factor means a lot more to me than win/loss
and I overlooked the point made by the below poster. win rates are not important, it is money made v. money lost on average. A win rate of 20% might suck but not if you make 10 points per win and lose 2 points per loss. You are still net ahead.
Correct, Profit Factor means a lot more to me than win/loss
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