the basic flaws in TA

[Thunderdog]

Quote from darkhorse:

...On a page of key criteria, entries would probably come halfway or three quarters down the list. Not that they have zero importance -- there are just a lot of other things with far higher importance...

...In conducting even light research, the relative LACK of importance regarding entries -- in comparison to other things -- is one of the first things that comes to light. For you to not know this suggests you have skimped on your homework...

Wow. I must admit that I am rather surprised by this post. I have always considered entries to be of fairly critical importance. There are other essential elements in a good trading strategy, to be sure, but I would never have thought that entries would be relegated to the bottom half of the list.

As I see it, the quality of your entries largely determines the "cost" of your trading. The poorer the entries, the higher the cost, either in the required distance of stop placement or the frequency of stopouts. So in the same way that a manufacturing concern may choose to focus largely on marketing and consumer trends, it would be remiss to downplay the "cost of production," since it is a critical component in arriving at net profits in an income statement.

Personally, I would place entries in the top half of that list you referred to, however, that is only my opinion.

 

[marketsurfer]

Quote from Thunderdog:

Wow. I must admit that I am rather surprised by this post. I have always considered entries to be of fairly critical importance. There are other essential elements in a good trading strategy, to be sure, but I would never have thought that entries would be.....


Personally, I would place entries in the top half of that list you referred to, however, that is only my opinion.

wow!, we actually agree, thunderdog.



surfer

 

[Walther]

Quote from marketsurfer:

Hi,

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??



surfer

What is absolutely insane( ignorant ) is the way how you dismiss the whole field of dynamics( price or mass ) basing you opinion on your misunderstanding of practical existence and aplication of Newton's law.

 

[darkhorse]

Quote from Thunderdog:

Wow. I must admit that I am rather surprised by this post. I have always considered entries to be of fairly critical importance. There are other essential elements in a good trading strategy, to be sure, but I would never have thought that entries would be relegated to the bottom half of the list.

As I see it, the quality of your entries largely determines the "cost" of your trading. The poorer the entries, the higher the cost, either in the required distance of stop placement or the frequency of stopouts. So in the same way that a manufacturing concern may choose to focus largely on marketing and consumer trends, it would be remiss to downplay the "cost of production," since it is a critical component in arriving at net profits in an income statement.

Personally, I would place entries in the top half of that list you referred to, however, that is only my opinion.

A few quick points and then I really must take a breather.

-- To say that entries are not top priority is not to say they are unimportant. The markets are so competitive, and slippage / commish costs so onerous, that EVERYTHING is important. Similar to sports, you can't have any major holes in your game if you want to succeed on a professional level.

-- With that caveat, there are a number of things more important than entries. Think about value investors and venture capital investors. These guys have an intense focus on valuation and/or growth potential, but they don't have a laser-like focus on specific entry. A value investor has a range of criteria that determines whether an idea is investable or not, rather than a specific price point for entering a position. The same with a VC guy -- he may be willing to fund a project in the neighborhood of X million dollars for X percentage equity, and has flexibility within his established range. The bigger picture is more important than point specifics. Entry is almost an afterthought, coming into play as a qualifier -- i.e. is available entry 'acceptable' based on filtering criteria-- once the other pieces have fallen into place.

-- Most traders have a basic grasp of risk, volatility and money management, but they do not have a deep conceptual grasp of these things. If there are any 'secrets' to successful trading, apart from the quant stuff, they are embedded within the risk / volatility / mm triangle. A skillfully constructed portfolio is a wholly different animal than a handful of good looking trades. Making money from controlled volatility exposure is different than making money from 'soybeans' or 'IBM.' Playing for long-run expectation based on detailed analysis of statistical trials and/or a deep understanding of market mechanics is different than a focus on making money RIGHT NOW in THIS trade.

It's a different ballgame.

 

[BloodTrader]

Quote from sportmatt37:

I trade on only TA, i just started in september, up 10 percent...Thats success isnt it?

That is not a track record. Means nothing.

bt

 

[marketsurfer]

Quote from Walther:

What is absolutely insane( ignorant ) is the way how you dismiss the whole field of dynamics( price or mass ) basing you opinion on your misunderstanding of practical existence and aplication of Newton's law.

newton's law can be applied to supply and demand? is that what you are saying?

mass is the same thing as price?? please elaborate a little on the correlation of newton's or any concept of material physics on price.

thanks !

surfer

 

[darkhorse]

Quote from marketsurfer:

please elaborate a little on the correlation of newton's or any concept of material physics on price.

thanks !

surfer

FEED ME

 

[Thunderdog]

Quote from darkhorse:

A few quick points and then I really must take a breather.

-- To say that entries are not top priority is not to say they are unimportant. The markets are so competitive, and slippage / commish costs so onerous, that EVERYTHING is important. Similar to sports, you can't have any major holes in your game if you want to succeed on a professional level.

-- With that caveat, there are a number of things more important than entries. Think about value investors and venture capital investors. These guys have an intense focus on valuation and/or growth potential, but they don't have a laser-like focus on specific entry. A value investor has a range of criteria that determines whether an idea is investable or not, rather than a specific price point for entering a position. The same with a VC guy -- he may be willing to fund a project in the neighborhood of X million dollars for X percentage equity, and has flexibility within his established range. The bigger picture is more important than point specifics. Entry is almost an afterthought, coming into play as a qualifier -- i.e. is available entry 'acceptable' based on filtering criteria-- once the other pieces have fallen into place.

-- Most traders have a basic grasp of risk, volatility and money management, but they do not have a deep conceptual grasp of these things. If there are any 'secrets' to successful trading, apart from the quant stuff, they are embedded within the risk / volatility / mm triangle. A skillfully constructed portfolio is a wholly different animal than a handful of good looking trades. Making money from controlled volatility exposure is different than making money from 'soybeans' or 'IBM.' Playing for long-run expectation based on detailed analysis of statistical trials and/or a deep understanding of market mechanics is different than a focus on making money RIGHT NOW in THIS trade.

It's a different ballgame.

After reading this post, I will admit that we are speaking on different levels, with me on the decidedly more rudimentary one. It also seems that we may be drawing a distinction between trading and investment/portfolio management, as the terms are generally understood. (Assuming that a distinction can be made.) I suppose that it is a matter of perspective. Since I presently only trade ES intraday, much of what you refer to has limited application for me. However, your points are certainly valid and I appreciate your response.

 

[nononsense]

the basic flaws in TA

Hi guys,
I'll give you the definite answer so you can all go back to trading - (for most crap shooting & losing).

There are in fact many TA's. Each practitioner has its own. Only the biggest fools pretend openly to have a definite "Method" and hence attract impressive crowds of hungry followers (i.e. look up Jack's nutty threads).

As according to popular wisdom 95% lose - point apparently never seriously disputed - 95% of what goes around as TA is pure BS.

By that, I don't mean to say that a cogent approach to the profitability riddle wouldn't exist. Not at all. It is simply not floating around on websites or in bookies, however much some of these 'wise' authors are praised by that huge crowd of suckers.

Hope this helps,
nononsense

 

[marketsurfer]

Quote from nononsense:

the basic flaws in TA

Hi guys,
I'll give you the definite answer so you can all go back to trading - (for most crap shooting & losing).

There are in fact many TA's. Each practitioner has its own. Only the biggest fools pretend openly to have a definite "Method" and hence attract impressive crowds of hungry followers (i.e. look up Jack's nutty threads).

As according to popular wisdom 95% lose - point apparently never seriously disputed - 95% of what goes around as TA is pure BS.

By that, I don't mean to say that a cogent approach to the profitability riddle wouldn't exist. Not at all. It is simply not floating around on websites or in bookies, however much some of these 'wise' authors are praised by that huge crowd of suckers.

Hope this helps,
nononsense

yes, exactly. the huge crowds needs to exist so the market can feed itself. see darkhorse post above. LOL !

surfer