Technical Analysis Doesn't Work

[kut2k2]

Quote from SupremeTrader:

Trading is a business that encompasses the simultaneous culmination of self-management, portfolio management, money management, risk management and enormous discipline.

TA is just a miniscule aspect of it. And TA alone cannot make anyone money. Period. What the heck is this discussion about then?

Not sure what real distinction there is between "money management" and "risk management", or between "self-management" and "enormous discipline", but it looks like you've rounded all the bases. More than once.

As far as what this discussion is all about, rcanfiel maintains that traditional (Classical?) TA doesn't provide the necessary edge for a viable trading strategy, and is therefore a scam. I happen to agree with him that most published TA is garbage, although I cannot maintain that all of it because I have not examined all of it.

Oh yeah, and marketsurfer has tried to highjack the thread with his vendetta against ALL TA, Classical or otherwise.

Now you're caught up with the rest of us.

 

[rcanfiel]

Quote from luckyluciano:

keep telling everyone TA doesn't work!!! but it sure does make me alot of money!!!


Private testimony has little bearing. You are completely nondescriptive of your method, how long it "has made me a lot of money, " etc. Anecdotal evidence or testimonials disproves little.

 

[ljmlmvlhk]

Quote from NihabaAshi:

……His results change from negative to positive and I haven't heard from him since that discussion.

Not even a thank you nor an admittance that there's more to trading than the entry signal.



Mark [/B]

…………………………………………………………………………………

Hmmm, frustrating when giving valuable advice and the other party takes it on board with what I would consider is a ‘cold shouldered’ attitude of zero appreciation.

But IMO TA & FA go hand in hand with trading or investing.
How can one trade and ignore some sort of TA signal? Just looking at a chart is TA.
As soon as you peek at a chart one is weighing up something visual about the past
share price action.

Does rcanfiel never look at a chart - ever?

But there again, he probably does but leaves out the squiggly lines like RSI, STO etc.
Fair enuff, I don't think much of that stuff either.

 

[NihabaAshi]

Quote from kut2k2:

...As far as what this discussion is all about, rcanfiel maintains that traditional (Classical?) TA doesn't provide the necessary edge for a viable trading strategy, and is therefore a scam. I happen to agree with him that most published TA is garbage, although I cannot maintain that all of it because I have not examined all of it...

Classical TA involves price action only methodology.

rcanfiel has excluded such from this discussion that TA doesn't work.

Actually, he had no choice but to exclude classical TA because he is on record here at EliteTrader.com to have said trendlines and s/r levels have value.

The other TA (indicators) that's canned in charting programs and used as is really is what he has a problem.

Further, its the root of his generalistic statements and the statements of others that he continues quoting that Technical Analysis Doesn't Work.

Yet, he still wants proof via someone coughing up their computer code of the indicator to prove to him that TA has value.

However, that's problematic considering that profitable traders don't use the stuff he wants proof about.

I'm sure by now he's realized that.

In fact, marketsurfer is on record in this thread to have stated that if your profitable using TA any other way (outside of indicators)...

These traders are excluded from this debate even though he too makes generalistic statements that Technical Analysis Doesn't Work.

In fact, he goes as far to say that even if you have broker profit/loss statements (some do here at ET and post such on a daily basis) to prove that TA works...

Your just a lucky trader or using other variables with TA.

How many years of brokerage statements by someone that uses TA is needed for proof that TA works...

3, 5, 10, 15, 20 or what?

Lets get back to those indicators (the real discussion here).

Most beginners are using the canned stuff and most are not profitable via the canned stuff.

Those that are profitable have figure out that you need discipline, proper capitalization, money management and proper trade management in combination with the indicator strategy to be profitable.

Yep, those traders too are excluded from this discussion by marketsurfer and rcanfiel.

Thus, whom are they really asking for proof that TA works?

There question is aimed at those traders that are profitable via the canned stuff out of the box that hasn't been modified nor added to to make work.

Most likely the question is aimed at a beginner trader because a veteran trader knows there's more to it than just an entry signal.

By the way, I have never met a beginner trader like that so technically they are right as long as they continue excluding those that are profitable while using TA for the reasons stated above.

Mark

 

[Cutten]

I think most technical analysis doesn't work. Then again, neither does most fundamental analysis - most portfolio managers underperform the S&P despite using fundamental analysis.

I think there has not yet been sufficient testing to say that technical analysis doesn't work. Some traders and funds who use technical analysis have compiled statistically very significant long-term performance track records, so we should not dismiss it out of hand. And most studies purporting to dismiss it have been extremely simplistic. I personally have used pure price action to make tens of thousands of intraday trades since 1999, and have a track record that is many sigmas beyond that expected by chance.

I think the jury is still out. However, I do believe that basic stuff in the public domain such as Elliot Wave, Gann, moving averages, Bollinger bands etc do not give any trading edge whatsoever.

 

[scorpion]

well it works for me & many other traders i know, will it work for all, probably not, its all subjective, its a art not a science.. two eaches own ..

 

[rcanfiel]

Quote from NihabaAshi:


<i>Yet, he still wants proof via someone coughing up their computer code of the indicator to prove to him that TA has value. </i>

Almost all studies show that TA consitently fails to outperform, especially when commissions and slippage are included.

The problem is, the continuing and wide rabid belief in the TA field, in spite of the evidence. The problem is NOT that some other people have come to realize this.

The debate was never about whether an individual trader believes in it or tries to wave his own broker statements. This has little value as proof. An incident does not prove or disprove a tenet. Science is about testable, repeatable, verifiable. Statistics is about quantifiable evidence, large sample sizes, etc.

Most "for TA" content on this thread has done little to evidence the TA value side, outside of closely matching the predictions of the OP.

<i>These traders are excluded from this debate even though he too makes generalistic statements that Technical Analysis Doesn't Work. </i>

You can't dismiss the other side of the coin, any more than a defense attorney can expect to have a case thrown out because he doesn't agree with the defense.

Mark [/B]

 

[kut2k2]

Quote from rcanfiel:

Almost all studies show that TA consitently fails to outperform, especially when commissions and slippage are included. ... Science is about testable, repeatable, verifiable. Statistics is about quantifiable evidence, large sample sizes, etc.

Most "for TA" content on this thread has done little to evidence the TA value side, outside of closely matching the predictions of the OP.

Evidently the same can be said about the "against TA" content.

You resurrected this thread after more than a week of dormancy with this post about some new study. When it is pointed to you that we know nothing about whether the study used reasonable position sizing et al., you have no comment. Why is that?

The classic example of the "wrong odds" coin toss: If the toss is heads, you win double your bet; if the toss is tails, you lose your bet.

Clearly you have an advantage. But if you bet anything other than 25% of your risk capital, you have misused your advantage. Less than 25% means you don't gain as fast. Ditto anything between 25% and 50%. Anything more than 50% is worse than not betting at all.

So even in a situation where your advantage is unequivocal, it doesn't pay to go whole hog. Money management is always a factor.

So why are we denied knowledge of whether these researchers used a reasonable position-sizing methodology in their "scientific" studies? It matters.

 

[NihabaAshi]

Quote from rcanfiel:

...Almost all studies show that TA consitently fails to outperform, especially when commissions and slippage are included...

I don't have a problem with that statement.

The fact is this, I haven't met a profitable TA trader that uses that type of TA that you any many others keep thinking its common place among those that use TA.

It's kind'uv like going to a World Championship boxing match to do statistical analysis on the types of punches being used.

However, you decide to use one of the skinny fans at ring side for your analysis.

You don't have to do all that work when we all already know what the results are going to say. :eek:

Just do a poll at EliteTrader.com in that you ask traders that are profitable to state in general terms what type of TA they are using.

Next, compare that type of TA with the stuff you've been testing yourself and quoting other sources about.



My point is this.

Get off your lazy butt...go find some profitable traders with verifiable proof via brokerage statements...

Then do your analysis on the type of TA the profitable traders are using.

It's that simple and explains why you guys continue excluding these types of traders.

Like it or not, your going at it backwards in that your basically asking traders that aren't profitable to prove to you that TA works.

Think about that statement above for awhile.

Mark

 

[marketsurfer]

Quote from NihabaAshi:

I don't have a problem with that statement.

The fact is this, I haven't met a profitable TA trader that uses that type of TA that you any many others keep thinking its common place among those that use TA.

It's kind'uv like going to a World Championship boxing match to do statistical analysis on the types of punches being used.

However, you decide to use one of the skinny fans at ring side for your analysis.

You don't have to do all that work when we all already know what the results are going to say. :eek:

My point is this.

Get off your lazy butt...go find some profitable traders with verifiable proof via brokerage statements...

Then do your analysis on the type of TA the profitable traders are using.

It's that simple and explains why you guys continue excluding these types of traders.

Like it or not, your going at it backwards in that your basically asking traders that aren't profitable to prove to you that TA works.

Think about that statement above for awhile.

Mark

generalities and anecdotal evidence is all your stating.

Can the TA your talking about be reduced to a set of rules? if so, it can be tested and shown to work or not work. i agree, intuitive processes can't be tested, however, my friend flavia has done much work in this regard and has made some progress in quantifying the intuitive www.marketfocusing.com . i have never seen a test that indicates TA "works" or provides an edge of any type. of course, im not talking about the ART of TA which may have some value. just like trend---why is this stuff so nebulous and untestable???

surf