the basic flaws in TA

[jaronimo]

Quote from OldTrader:

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

"He doesn't need to "post" his trades you idiot". WOW. Gotta resort to namecalling? Does that make you feel better now?

I just read about one of Buffetts trades, he cut a position cause he lost around $900 million trading the dollar. Maybe he should have looked at a chart???

Jim Rogers says TA is useless and never uses it, but in his book he talks about looking at a chart before putting on a trade. I may be wrong, but I thought that was TA.

George Soros used TA many times. Its just another one of his tools.


My intention in making my post is that every few days there is another group attacking TA. They claim it does not work, its bullshit, etc.

I use TA as a major part of my trading. Not the only part, but a big part. It works great if you know what your doing. The problem is its such a huge field and people try a couple of things and fail and then bash it. If its so bad, I just want to know what they are using now? If not using TA is so great, how come they won't post their trades?

This wasn't meant as an attack. There are just so many here that bash TA, I would like to know how they trade? I invite them to post trades real time and give a little information on the reasons for the trades. I come here to try to learn, not to attack. Its like mining for gold here, you have to throw out tons of useless dirt to find the one little nuggget.

 

[Babak]

Dave, before you question TA you might want to learn a little bit about it:

http://elitetrader.com/vb/showthread.php?s=&threadid=56736&perpage=6&pagenumber=5

Its what I used (above) to tell me that we were due shortly for a bounce. I have no idea what you were using (?) Gann, neo-Gann, astrology mixed with pixie dust, etc...

Good luck.

 

[marketsurfer]

Quote from hans37:

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?

i like your style, hans. nice to meet you.

surfer

 

[MoralHazard]

Good post. TA can work because information asymmetries go away slowely, and also perhaps because liquidity traders use common methods. Any others?

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:

 

[marketsurfer]

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.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:

Thanks, wolfe. what's the source of the research? this is getting closer to what i am looking for.

surfer

 

[doublea]

Quote from cnms2:

Dr. Alexander Elder. (successful TA, non-trend trader)

His book was just pure garbage.

 

[Cheese]

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.

I will speak up .. but only because I don't use charts or a chart for trading analysis. I use a predictive model which uses figures in tables.

Of course I look at a live chart as a visual aid to watch the moving price. I can also understand price configurations on a chart .. but bottom line, I don't use charts to base or construct my trading model.

 

[HorsesToTrading]

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.

Plenty of HF managers are pure fundamentalists...this guy Warren something he's sort of rich?

 

[jaronimo]

Quote from Cheese:

I will speak up .. but only because I don't use charts or a chart for trading analysis. I use a predictive model which uses figures in tables.

Of course I look at a live chart as a visual aid to watch the moving price. I can also understand price configurations on a chart .. but bottom line, I don't use charts to base or construct my trading model.

"I use a predictive model which uses figures in tables", sounds kinda technical to me, Maybe you could elaborate?

I am not saying that TA is the end all, be all. I am saying it is a tool that definitely works, and works well. I just think its pretty funny that it gets attacked here regularly. It is painfully obvious that many people cannot master TA as a tool. Its also funny that people get so defensive about it. How can you not laugh?

In my opinion using a predictive model that uses figures in tables, even though its not figures on charts, still sounds like TA to me. Theres more than one way to skin a cat. I love the fact that there are thousands of ways to pull money out of the market. That means no matter how things change, I can adapt and continue to pull out money.

 

[jaronimo]

Quote from HorsesToTrading:

Plenty of HF managers are pure fundamentalists...this guy Warren something he's sort of rich?

Yes, someone else mentioned that Warren fellow. I am a huge fan of his. I have also read about some spectacular amounts of money he has lost. My point is that even if old Warren is a 100% fundamentalist, he still has loses.

Maybe if he did some technical analysis he could avoid some of those loses?