The market is not random, but TA does not work

[margo_trader]

In the time frame I operate in, TA does work. Actually, I consider nothing else, and I've been pretty successful. However, I do think it's useless if you're money management is poor.

T
http://actionpointsta.blogspot.com/

 

[hughb]

TA has been gaining wider and wider acceptance over the last few years. Back in the early 90's in the Money/Investing section of the WSJ there would be a simple bar chart of the Dow Industrials, the Transports and the Utilities. Fast forward to the mid-90's and they put a moving average on the charts. Fast forward again to today and they have a candlestick with two moving averages on it. They also have up, down and sideways arrows in the market data section next to the stocks in the Keeping Score section to indicate if the shorter term moving averages have crossed above or below the longer term moving averages.

This is not a good thing. The less people using TA, the better. A lot of the Market Wizards who were interviewed in the first book in the 80's that used TA have seen their systems perform much more poorly over time, and I think it's part of the TA information explosion. William Echardt even wrote about it and posted it on a website. I printed out the comments and I have them around here somewhere. If I can find them I'll post them here.

Myself, I've learned to stick to the fundamentals of TA. Price and volume. I still look at charts and I have an MACD in the window underneath it, but when I scan for situations, I'm only looking at price and volume now.

 

[kiwi_trader]

Quote from TraderZones:

Damn right.

90% of people use TA and 90% of people lose their $$$. Do the math.

Having an argument with a TA lover is like talking to a potted plant. No matter what you say, evidence you show, etc., they hear nothing. But they keep on believing it.

AVOID indicators, Elliot Wave, Gann, Fib, astrology, etc. Learn to read Price Action

Jeez, threads like this really bring out the worst in people.

Price action is TA.

 

[TraderZones]

Quote from kiwi_trader:

Jeez, threads like this really bring out the worst in people.

Price action is TA.

Price Action is NOT TA.

TA lovers keep trying to shoehorn it in, but they are quite different.

TA is a crutch people use, putting lines, squiggles, waves and other lagging slop on the chart, trying to make money by avoiding the hard work involved in understanding how price works. It is what the 90% of losing traders usually depend on.

Price action is a realtime understanding of the market, based on hundreds to thousands of hours, learning to understand market movements through experience. It is most likely what the other 5-10% use who actually profit from the market.

PA works. TA does not.

 

[TraderZones]

Quote from TraderZones:

Price Action is NOT TA.

TA lovers keep trying to shoehorn it in, but they are quite different.

TA is a crutch people use, putting lines, squiggles, waves and other lagging slop on the chart, trying to make money by avoiding the hard work involved in understanding how price works. It is what the 90% of losing traders usually depend on.

Price action is a realtime understanding of the market, based on hundreds to thousands of hours, learning to understand market movements through experience. It is most likely what the other 5-10% use who actually profit from the market.

One can usually discern a novice trader, by their adherence to classical TA. One can usually discern a successful trader, because they have discarded TA, and have invested a lot of screen time into PA.

Try following the arguments between PA and TA people on ET, and it is quite clear where the two camps are.

PA works. TA does not.

 

[BlackBison]

ok traderzones you basically agree with us. you and kiwi are engaging in a pointless semantic argument.

i said TA works for me but i use zero indicators and agree they are mostly garbage. i use price action as you say, but there is a blurred distinction between PA and TA.

in any case the OP said fundamentals are all that counts so he excludes your PA. and so he is wrong.

PS: stop using that big font you dildo.

 

[The Swordsman]

Price action IS a form of TA.

What is price action....fundamental analysis?? LOL

 

[bbqbbq]

price action is looking at previous charts to figure out what the future charts will do, so its a form of technical analysis.

 

[margo_trader]

I guess I'm in the 10% camp.

T
http://actionpointsta.blogspot.com/

"TA is a crutch people use, putting lines, squiggles, waves and other lagging slop on the chart, trying to make money by avoiding the hard work involved in understanding how price works. It is what the 90% of losing traders usually depend on."

 

[crgarcia]

Quote from TraderZones:

Damn right.

90% of people use TA and 90% of people lose their $$$. Do the math.

Great post, so true.

Quote from GGallin:

TA is illustrative not predictive

Great post too, it even rhymes.

Quote from shark:

However, when you look at it from a legitimate economic standpoint, there is absolutely no reason for technical analysis to work.

I can not begin to comprehend how someone can expect to make a profit without taking into consideration economic and political fluctuations.

People say that scalping is worthwhile because you are less exposed to large economic movements.

You want, actually you NEED to be exposed to those economic and political changes.

It's those changes that trigger price movements in the markets.
Without changes in the macroeconomic level, prices would remain flat for a long time.