the basic flaws in TA
- Thread starter marketsurfer
- Start date
sure... can you just tell me how I do that?
Quote from marketsurfer:
please samson stop the spurious correlations. allow me to set the record straight--i was NEVER a trend trader/follower as defined by the popularizers of trend following. i trade some markets directionally, and yes, profits arise when one is in the correct direction. however, it is not the commonly understood concept of trend trading of buying higher highs and selling lower lows.
Yes, i was a technician--untill i realized that when tested, the standard technical patterns had no greater percentage of carry thru than random distribution within the parameters would dictate.
i fully expect the inquisition to this thread and welcome it, but kindly lay off the personal attacks, rather, tell me, what patterns or TA tactics have you found that can be tested to show increase one's odds upon entry.
best,
surfer
Hi Surfer... I truly believe you are correct.. technical indicators are not IMO to be used to increase odds of having a positive outcome on any particular trade...IMO they should be used as a timing tool to help you stay consistent with entries and exits. They are consistency tools. One of the aspects of successful trading is being able to consistently apply your rules. Technicals help you achieve this. They do not increase your win/loss ratio. Besides, a winn/loss ratio isn't what makes you a profitable trader anyway...
Indicators and patterns can't predict the market anymore then a crystal ball can but to dismiss them as worthless is unwise.
I have been trading a purely technical model and have been doing well over the past 2 years. Not as well as I thought I would have done but then again we have been in a relatively flat market compared to years past.
I have also been tweaking things and have just set up 2 new ib accounts to trade an improved version of my model and a new one. Both are trendfollowing in nature and purely technical with some metrics in the mix( Highs lows, etc..)
The edge however is not in the "technical Model" ...For me, it's the following 5 things..... diversification .... It's what I buy and how much of each.....It's how I stay with the trend when correct and how I get out when wrong.
I look at it this way... Markets always seem to exaggerate things....when they rally they may keep going up past anyones expectations....likewise to the downside. My job is to stay alive and catch these exaggerated trends....
Nick
It's the starter of the journal that waste peoples time with their claims of success with TA. Could you post a link to good TA journal?
nice trading, sport!
however, there is a little something called "surviorship bias" which basically means we only hear from the winners. the trend following group continuiously ignores this fact when promoting their views on the subject, as do most TA people.
if its working for you, keep it up---that is really all that matters....
best,
surfer
hey nick,
really insightful view on TA's proper place. thanks for the post.
how many fricken times does a guy have to say he made excellent money for 5 years using techinical analysis. Wtth at least 300% returns each year.
I was buying pull backs in trends using the 20 ema and lines for support and resistance.
Why did it work. Because we were essentially arbing NYSE stocks back into short term alignment with the Spoos and alos anticipating bounces.
Much of what we were doing was sold by my ex business partner on trading markets.
It is complete and utter nonsense to say T/A did not work. It made me and guys in my office, combined, millions of dollars. I will produce the tax records for a few bucks. The edge is not a statistcal fluke because it proved out across thousands of trades.
But markets change so now you need new edges.
I was buying pull backs in trends using the 20 ema and lines for support and resistance.
Why did it work. Because we were essentially arbing NYSE stocks back into short term alignment with the Spoos and alos anticipating bounces.
Much of what we were doing was sold by my ex business partner on trading markets.
It is complete and utter nonsense to say T/A did not work. It made me and guys in my office, combined, millions of dollars. I will produce the tax records for a few bucks. The edge is not a statistcal fluke because it proved out across thousands of trades.
But markets change so now you need new edges.
great point
Can you prove this claim with a live trading journal for easy verification?