Technical Analysis Doesn't Work

[rcanfiel]

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...

This is not the problem. The problem is:

1) there are many studies showing that TA is pretty much random

2) TA believers have little evidence of their own that it works, except personal testimony, anecdotal experiences, a bit of bragging, and other statistically meaningless diatribes

Results: TA believers try to undo the studies by picking away at them (even though most of this is unfounded), since they have little statistically valid evidence of their own.

And following replies will remain pretty similar to this.

 

[Thunderdog]

Since you foresaw how people would respond, what was the purpose of starting this thread?

 

[El OchoCinco]

Quote from rcanfiel:

This is not the problem. The problem is:

1) there are many studies showing that TA is pretty much random

2) TA believers have little evidence of their own that it works, except personal testimony, anecdotal experiences, a bit of bragging, and other statistically meaningless diatribes

Results: TA believers try to undo the studies by picking away at them (even though most of this is unfounded), since they have little statistically valid evidence of their own.

And following replies will remain pretty similar to this.

Problem is you ignored my question even though I took the time to respond to yours. The reason many TA studies are picked apart because they are flawed.

And you also overlooked that I was being fair to you in that I was referencing TA academic studies that both PROVED and DISPROVED TA so I was not giving you a biased answer.

If you blindly accept a study as gospel without reading the fine print then that is your choice but a study is not law. If it is flawed in its assumptions and methods it is flawed. If you do not want to believe me then find an academic you respect and ask him his opinion in general on academic studies.

You claim criticisms of TA studies are unfounded but you provide no intelligent discussion of why a logical criticism has no merit.

Bottom line you do not like TA so it is ironic that you refute every argument blindly with no justification and blame everyone else for doing just that. I cannot have a realistic discussion with a hypocrite.

I am not trying to be rude with that last comment, but you use studies to support your position which are funamentally flawed and cut down evidence to support the other position as fundamentally flawed so your bias sets up a discussion where you only see your view anyway.

What is the point of closed-minded discussion? If you believe what you beleive what is the point?

I alreayd realize that I do not need to proceed further because you do not want to have a discussion just state your point.

 

[fearless9]

my my R canfiel you have been busy.

I have mentioned it before and now I shall repeat it.

TA is the mathematical manipulation of up to eight input factors in order to highlight price/volume action.

It can mechanize repetitive pattern forms allowing the trader to concentrate upon what he or she should be focused upon.

Namely, the general condition of the price/volume action and specifically the timely entrances and exits for maximum advantage at minimal risk.

TA does not have a personality and cannot be discussed as though it is distanced from price/volume action.

because ....

TA is a derivative of price/volume action and to cover this outrageous statement I refer you the source of the inputs.
Strange as it may seem they come directly from the exchanges.

The argument, "does TA work or not" is immense fun but does not lead the efficient trading of the markets, in fact it trails and this is where this thread can and has taken a turn for the worse.

Only the well informed trader can perform this function and he/she will employ what tools are necessary to get the job done.

Should they wish to highlight certain aspects of price/volume action, then they will do so.

If you are wondering whether I use such tools, the answer is ....
Yes, of course.

Does TA work?

I really do not know as I have never allowed it open access to my account.
Last time I looked, I was still running the show and calling the shots.

 

[Landis82]

Quote from Thunderdog:

Since you foresaw how people would respond, what was the purpose of starting this thread?

Just to get people to "bite" and pull their "chains" . . . The fact that this thread has gone on for 20 pages with hardly a "supportive" post by Mr. Canfield until nearly 18 pages "in" should tell you that.

Quite typical.

 

[Cache Landing]

Quote from optioncoach:

Quote from marketsurfer:



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

1. I cannot make money using TA
2. If I cannot make money using it, then no one else can.

Isn't there a reason that the scientific method moved away from inductive logic? For some reason I seem to recall something about inductive logic being prone to incorrect assumptions. Nah.... I must be mistaken!

BTW, TA put me into SPX calls at 1:30pm and back out of them at 2:45pm. Just dumb luck though I'm sure.

My 2 cents. TA works as a self fulfilling science. If enough people believe that a certain buy point exists, then it does. If enough see a particular sell point, then it will likely be realized. That's why I always say, if you are going to trade based on TA, make sure everyone else sees that same indicator.

 

[fearless9]

Quote from Landis82:

Just to get people to "bite" and pull their "chains" . . . The fact that this thread has gone on for 20 pages with hardly a "supportive" post by Mr. Canfield until nearly 18 pages "in" should tell you that.

Quite typical.

Landis 82

You should try reading more carefully.

 

[NihabaAshi]

Quote from optioncoach:

Problem is you ignored my question even though I took the time to respond to yours. The reason many TA studies are picked apart because they are flawed.

And you also overlooked that I was being fair to you in that I was referencing TA academic studies that both PROVED and DISPROVED TA so I was not giving you a biased answer.

If you blindly accept a study as gospel without reading the fine print then that is your choice but a study is not law. If it is flawed in its assumptions and methods it is flawed. If you do not want to believe me then find an academic you respect and ask him his opinion in general on academic studies.

You claim criticisms of TA studies are unfounded but you provide no intelligent discussion of why a logical criticism has no merit.

Bottom line you do not like TA so it is ironic that you refute every argument blindly with no justification and blame everyone else for doing just that. I cannot have a realistic discussion with a hypocrite.

I am not trying to be rude with that last comment, but you use studies to support your position which are funamentally flawed and cut down evidence to support the other position as fundamentally flawed so your bias sets up a discussion where you only see your view anyway.

What is the point of closed-minded discussion? If you believe what you beleive what is the point?

I alreayd realize that I do not need to proceed further because you do not want to have a discussion just state your point.

Well said and that concludes today's discussion.

Take care all.

Mark

 

[Buy1Sell2]

Any use of price or a derivative of price is TA. The discussion about whether or not it is useless is moot since everyone uses it, even fundamental players. They will say, "historically we should not see beans above 12.00 or below 5.00". --Folks that's TA--

This discussion is ridiculous and is on par with the idiotic tomes and novellas that have been written condemning and denying the existence of trend. --Guess what? You need trend even if it is on a small level for prices to move!!! " Hey , I think I'll buy the Sep Euro FX here at 1.38130 and sell it in fifteen minutes for 1.38130. --If you are approaching trades like that, I hope your broker is calling and thanking you--

 

[marketsurfer]

Quote from jack hershey:

What you can say is that you are not well read in the financial industry field.

Read Park and Irwin (2004). They are mentioned on page 2 of one of the recent studies you said you did not understand (Batchelor and Ramyar (2006).

This problem you have may very well be why you could not interview Derman successfully.

Read well what I write to respond to the OP. Do not ask questions if you can help it; you apparently have no undetstanding of trading nor investing to make money.

first the derman interview was a smashing success with several positive reviews and large exposure acround the world. please don't comment on things you know nothing about..

i have read the study you list, it makes no positive conclusions regarding TA---so please stop throwing things into the mix with no support other than "jack says so". how about posting a synopsis of the study here, point to exactly what you are talking about, cause i sure can't find it.

regards,
surf