the basic flaws in TA

I have never met a rich fundamentalist.


Why is it that the TA argument is constantly defended here, but nobody from the FA side has ever posted 100% consistent winning trades?

I find it hard to believe that there is not one person here who thinks that TA is bullshit, and that they can prove everyone wrong by using only fundamentals to post nothing but winning trades.

Theres gotta be someone that has never looked at a single chart but is making truckloads of money every day. Please speak up and show us the light.
 
Quote from jaronimo:

I have never met a rich fundamentalist.


Why is it that the TA argument is constantly defended here, but nobody from the FA side has ever posted 100% consistent winning trades?

I find it hard to believe that there is not one person here who thinks that TA is bullshit, and that they can prove everyone wrong by using only fundamentals to post nothing but winning trades.

Theres gotta be someone that has never looked at a single chart but is making truckloads of money every day. Please speak up and show us the light.
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I guess you never met Warren Buffett.

OldTrader
 
Quote from OldTrader:

I guess you never met Warren Buffett.

OldTrader
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No, I never did meet him. Is he the only one? Surely if FA is the only perfect way, theres gotta be hundreds or thousands of them out there.

Do you know him? Maybe you can convince him to post some trades to show us the light?
 
Surfer

I did not mean any personal attack but I am merely trying to point that we all have flaws and inconsistencies and a lot of the assumptions in T.A. are no exceptions.

That being said I find it more useful to use T.A. tools as CONFIRMATION rather then JUSTIFICATION of a trade.

We are always just guessing in this business because NO ONE really has a clue HOW the market will react.

Even if you knew the inside scoop on the next interest rate move you could not be guaranteed anything because at the end of the day the natural market dynamics of psychology will decide the outcome.

I think the best answer is to just play the probabilities and combine that with strict risk/reward ratios and you have the best possible CHANCE of success long term.
 
Quote from jaronimo:

No, I never did meet him. Is he the only one? Surely if FA is the only perfect way, theres gotta be hundreds or thousands of them out there.

Do you know him? Maybe you can convince him to post some trades to show us the light?
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He doesn't need to "post" his trades you idiot. His trades are so big that he has to publicly file them with the government. That said, you'd think a net worth of $40Billion or so would be a rather persuasive argument to all but the biggest fools.

Is he the "only one"? No, of course not. Jim Rogers comes to mind. He claims he has no idea of how to read a chart. He was George Soros partner in the beginning, in case you don't know. In fact, perhaps Soros is primarily a fundamental guy, although I don't know that for a fact.

By the way, did anyone say that "FA is the only perfect way"? That is, other than you?

OldTrader
 
>> “. . . tell me, what patterns or TA tactics have you found that can be tested to show increase one's odds upon entry.”

There are many, but don’t expect someone to give you free money.

==========

Here’s one example that shows that TA works. This data is taken from a study: “Informed traders on the NASDAQ: Evidence from proprietary traders at a U.S. day trading firm”

“This paper analyzes a unique database on 15 proprietary day traders at a large U.S. day trading firm. The 15 proprietary traders conducted 96,326 trades and accounted for .10% (or 10 basis points) of the NASDAQ volume during a 68-day consecutive trading period in the first half of the year 2000.”

. . .

“The traders studied for this analysis are highly skilled professionals who trade daily off momentum movements and have little regard for fundamental analysis.”

Momentum is one of the tactics of TA. Here’s a summary table of the trader’s performance using this TA strategy. Note that 80% of the traders out performed the S&P during the study, and only two had negative returns:
 

Attachments

well it's a cyclical thing.

in a raging bull market or bear market, it is true that all one needs is TA. i witnessed foreign guys who barely spoke english all they needed was a chart and three letters. 98-99 was a massive uptrend. the biggest trin trade in history. watching charts, just need to buy on pullbacks. this is basic TA, once you recognize an underlying trend. same applied in 2000-2001 in a huge downtrend. fade price rallies on the chart. also, to assume traders did not recognize these two trends is naive.

unfortunately for most, we've been in a consolidating market, other factors such as fundamentals and market psychology is of more value.

Quote from marketsurfer:

Hi,

As a reformed heavy TA trader, having seen the light of the basic flawed logic at the core of TA, I am starting this thread to see what will develop. Perhaps, I will come back into the fold of TA traders..... keeping an open mind.

1. I often hear newtonian physics referenced when TA is discussed, generally, it goes like this--- " an object in motion tends to remain in motion, untill acted upon by an outside force" obviously the TA practioner is refering to price-- price will continue in the same direction that it is traveling untill acted upon by an outside force. This is absolutely insane ! price is not an object in motion, regardless of what it looks like on a chart. I have heard the gurus of TA and trendtrading refer to this analogy. If the basic analogy contains serious flaws, how can the rest of the concept support itself??

2. All factors are reflected in price, therefore all one needs is the price to make succesful trades. Once again this commonly stated "fact" by TA practioners is serious lacking when examined. price is but one aspect of true analysis and understanding, The TA practioners handicap themselves by repeating mantras such as this.

can anyone add to the list of plain stupid TA "facts" ?

more to come.....

surfer :)
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Quote from WolfVector:

>> “. . . tell me, what patterns or TA tactics have you found that can be tested to show increase one's odds upon entry.”

There are many, but don’t expect someone to give you free money.

==========

Here’s one example that shows that TA works. This data is taken from a study: “Informed traders on the NASDAQ: Evidence from proprietary traders at a U.S. day trading firm”

“This paper analyzes a unique database on 15 proprietary day traders at a large U.S. day trading firm. The 15 proprietary traders conducted 96,326 trades and accounted for .10% (or 10 basis points) of the NASDAQ volume during a 68-day consecutive trading period in the first half of the year 2000.”

. . .

“The traders studied for this analysis are highly skilled professionals who trade daily off momentum movements and have little regard for fundamental analysis.”

Momentum is one of the tactics of TA. Here’s a summary table of the trader’s performance using this TA strategy. Note that 80% of the traders out performed the S&P during the study, and only two had negative returns:
More...



That's great, however that's not terribly conclusive to me. The study you mentioned did not attempt to control for the effects of risk management on their portfolios(as you described it).

How do you know their results compare favorably to random entry with excellent risk management skills?
 
hmm


marketsurfer,

You playing head games again? :) :)

Considering you trade using ranges, thats TA, Are you saying TA doesn't work?

I think you just like saying what does work don't work to keep everybody off track hahaha
 
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