the basic flaws in TA
- Thread starter marketsurfer
- Start date
Jack's P,V story is in fact a rehash of a gimmick out of the P/V newsletter dating from the late 1960's.
This letter featured a socalled P-V diagram showing the succession of daily PV vectors.
The P/V creed kind of stated that things could spin clockwise or counterclockwise indicating bullish or bearish market conditions.
Completely crazy and useless.
Long forgotten since if it were not for Jack keeping to make dough out of it.
As I look over the trading opportunities, I have not found Forex nor options to be something that I can handle. What seems to be the matter as I regard them is that the data available doesn't work for me.
So its is a personal thing and I am unable to provide any good input.
I do occasionally go to that part of ET and read but I have never been able to work through a plan for participating.
If I did draw a superficial conclusion about them it is that they are "outside" the focus of what I believe to be the basic timing issue for making money. Forex cycles are too brief and options are too long. Its like people have a range of capability ; one one hand quickness of reasoning is a limit and on the other hand the length of attention span to handle the reasoning process is a limit (distortion plays a role here, too).
Quote from marketsurfer:
jack,
are you certain little stevie from greenwich uses TA??
surfer
It is a matter of record that most high money velocity performers use both FA and TA. In Stevie's case I would say that the hustle ethic prevails above all.
Good information generally becomes excellent information when a tight and comprehensive link between FA and TA exists and is very deep.
I did "white papers" in the early 60's for the NY financial crowd; field interviews were often a part of it. In the sectors I covered it was a dynamic time.
I deeply felt that the way to best make money was to add timing to the FA provided. This may sound off the mark in some ways, but there is a strong connection to the timing of technological change and security values. Most significant is the potential for technological glitches that can stall transitions.
Adding TA content to white papers was not usual in the late 50's and early 60's. But it did impact their acceptability for decision making.
Rolling over capital applications effectively makes a lot of difference to the bottom line. It is in part a TA issue.
If you look at the Warren Buffet modus with OPM, you can see that glitches (under valuations being a temporary consequence) play well. Too bad, that sometimes the hold strategy almost looks like a permanent weld or marriage.
Its a tough big money game to always have a set of options on the table to handle the enforcement of exits when an opportunity has expired.
It looks like Stevie is well focused on freeing up capital for the latest opportuniy on the top of his pile (the hustle to deal it).
The TA stuff get things to tops of piles.
Grob,
Are you trying to say that you like to buy stocks within the IBD100 universe using your method? Good for you, that should help. However, you are wrong in your belief that TA is most efficient when applied to those stocks only. One can trade extremely effectively, or as efficiently outside of IBD's universe of high eps power stocks, assuming a given threshold of liquidity. It is liquidity which makes TA in its unadulterated form 'work'.
By unadulterated, I mean the concept of trend and support/ resistance. Gann and Wyckoff are two who had a lot to say about those two pillars of TA.
Perhaps you should tell that to Sydertrader, who doubled his account and whose trades, stock selection, price and volume figures were completely transparent.
Nononsense, the burden of proof is entirely upon you, as there is a large document on this site that completely refutes your claims.
I have never used the IBD100 for anything.
There is a great contrast between IBD strategies and using the fractal and associtated TA that I recommend for making money.
If one sentence was ever written for the benefit of ET, it is your sentence: "It is liquidity which makes TA in its unadulterated form 'work'."
TA is most efficient when it is applied to specific universe that is specifically chosen for the most efficient trading fractal.
TA is the opposite of an art. It appears that the whole range of successful "working" applications of TA go from the strictly mechanical (11.1% every 6.6 days, using C language) to discretionary trading(8 to 10 times the rolling average of the annual indexes).
IBD has chosen to work on a fractal periodicity that is an outgrowth of adding timing to the traditional FA approach to balancing portfolios. The assertion of "investing in quality" goes far to correct the rebalancing "change when the pain is great enough" financial planning mantra". This easement into greater ROI did have to face the "churning" and "fee for time spent" optimizing problem as compared to cycle gains.
So your see the "power" that IBD presents is in the context of the Intermediate Term periodicity which makes money on one hand and does not detract pointedly from the time spent fees and commissions. IBD's support system a while back was 44k a year. Having to cost this out over the crew using it is a factor.
I had a beta test chance to use it before it hit the streets BUT it was too big for my operating appraoch, feeds and equipment.
TA has powerful applications throughout the fractal spectrum. All persons who do trading and investing go through a set of transitions, like steps, as their capitalization makes demands.
IBD as you stated its case above is not one of though stopping off points, however. The basis for not stopping there is because of how the decisions one makes to optimize the use of time and money do not come to that orbit.
Partnering with the market to make money required the recognition of the roles. A trader brings TA to the table and your perfect sentence prevails when it is examined deeply. Likewise the market is, in fact, a dictator.
My trading is not IBD's IT term trading, et al. The market dictates to me. I use the "natural cycle" of price whose frequency is half the volume frequency associated with the natural cycle of price. In turn the third indepenent variable of the market is at four times the price natural cycle.
So to make the natural cycle yield its potential in high velocity cash flow, I have to bring TA to bear to "work" to this potential.
The universe of tradable stocks is determine with this in mind to set the criteria. Liquidity is extremely important and I, here, let it stand as the determinant that defines the beta chosen for the universe.
Combining the periodicity and its respective beta means that you can see a distribution for all the possible periodicites and how a beta can emerge for each fractal. This shows the merits of long term, intermediate term and short term plus four other levels of trading.
The natural cycle emerges majorly in this comparison.
From this, it turns out that QA (quality assurance fills in the rest of the universe picture. Repeatability with all upper case letters drives QA. Thus universes may be sorted in 5 seconds and they are excellent.
TA works on a level of pulling 500% a year using half the beta as the repeatability of the universe comes to the fore like clockwork.
A person commented from his vantage point on "art" and TA. Working with TA is the opposite of art. He also injected two misconceptions into the picture that were unrelated. TA will never "work" for him because he thinks that my comments are crap as does nononsense. They can elect out as they wish, no matter to me or anyone else.
To beging to use the natural cycle and TA in concert as shown by a journal in ET and in the first year rack up 100% on capital is something worth doing for 50 years. Doing 10% a month and learning from scratch was my personal point of departure. So I have spent the last 50 years or so doing just what I please with whatever capital has been needed to do it. I have had my million dollar plus best single day as well. And I do reach my goal of 3x H-L in ES as a practice.
TA is not going to work for most people as shown by the above comments. Getting rich is an easy process but a person has to not kid himself in the process and get into a nicjed place where an assortment of misconceptions are in the space.
The 70 primary misconceptions brought up on the three tiers I mentioned are sufficient to screw up almost anyone right off. I asterisked the three common groups in the top tier and, again, these are sufficient to screw a person's chances completely.
Calling them stupid facts as I did doesn't do them justice and, as usual, the "shoot the messenger" is unpleasant to feel that it is necessary and a priority to do. You can see that this thread has been very evocative and there have been observations on my style under variaous conditions.
The chairman, ES335, above has certainly hit the nail on the head in a very brief comment. since I am full of crap my extreme support of his views will probably damn them a little.
During some staff support training recently one person suggested that we punch up a list for him of things not to do..... A don't do list is always what is to be kept off the table. See it sliding to the floor.....
To make TA work a person goes through a process for gaining knowledge, skills and experience. Doing a 100% a year in trading equities using the natural cycle is a good beginning learning process. It is also a great motivator when you compound it for ten years.
My approach is an open book up through intermediate at this point. I expect that in about 6 months we will have the intraday stuff at an expert level. I've interviewed and hired a support person to get out three books in that period. The trading stuff is # 3. It will be a give away(multimedia) it looks like.
Medicare is my numero uno. I am happy to say I am now at a Deputy Commissioner level at SSA (Programs director) and at CMS I am connected to the staff and contractor team that is straightening out the present Medicare D stuff. Our local paper has hit the 20 mistakes level on Medicare D and I am shooting for a correction a day from here on out. I also get to start a cardiology remediation program this week--getting a little leaky on both sides....LOL...
Better print this thread and make sure you have hi-lited all the misconceptions and know what the replacements are.
Don't be a Pogo type person. (We have contacted the enemy and he is us).