You can tell the fools and their egos are out to play when they start to quote themselves with highlights.
Some even fit Mr Cooks definition of moron Steve.
Some even fit Mr Cooks definition of moron Steve.
The market is not random, but TA does not work
- Thread starter shark
- Start date
Will TA be hold up to the rigors of scientific testing?
Extremely glad people like you exist out there in the trading world!
TA has been thoroughly tested, by many institutions. It does not work.
So people continue to try and push PA into TA, because it makes them feel better.
But ET still has a number of believers in it, as you see above.
That is an easy demarcation between people who know how to trade (PA), and people who are still in the books, paper trading, and major losses phase (TA).
Traderzones, if price action is NOT TA like you claim, then what is it??
Most (not all) TA bashers do not believe price action, s/r levels, trendlines or anything else on a chart et cetera as being under the umbrella of Technical Analysis.
TA bashers typically view indicators as the only source of TA when in fact most of TA involves just price on a chart and nothing else.
I'll explain later in this message about why indicators are so darn popular.
In fact, any time someone looks at a chart to form an analysis about the price action, use a chart to help determine a trade entry or uses a chart to just develop a simple opinion...
They are using TA.
Here's another issue that is constantly ignored by those that don't believe TA works along with confusing many TA bashers that meets a profitable trader that uses TA.
Profitable traders using TA are not using TA all by itself.
In fact, TA is just a part of their trade methodology.
Thus, to challenge those types of profitable traders via scientific testing requests while ignoring all the other things involved in a profitable trader's trade methodology is just silly or poor research skills.
Simply, a researcher needs to make a choice...
* Test TA all by itself while ignoring all the other inputs in a profitable trader's method or to use the classic price action exclusion tactic to concentrate only on those that use indicators.
* Test TA as it is actually used in real trading conditions with all those other inputs (e.g. trade management, discipline, proper capitalization, money management, position size management, market experience et cetera).
Both of the above can be tested but one obviously will be much easier or simpler while the other sometimes called voodoo or art.
Doesn't matter to a profitable trader if TA is science or art. The issue to them is how to make it a useful part of their trade methodolgy puzzle.
Thus, it's not difficult to understand which of the above will be researched by a TA basher or by someone that doesn't believe TA works.
Another problem is that there are too many profitable traders giving a false impression that profitable trading involves only entry signals.
That simplicity is what also attracts new traders...many of whom will call it quits on TA not because TA failed but because they never learned how important those other inputs are that I've mentioned above.
Thus, don't fool yourself into thinking 90% or whatever that fails is due to TA failing...
It's due to the fact that traders spent too much time on TA all by itself while forgetting that TA was designed or intended to be used as a confirmation tool to visualize something they already knew.
Therefore, my opinion is that those other inputs are more important than TA.
Why are indicators so popular in comparison to other types of TA???
Marketing, marketing and more marketing and it's an excellent way to lure in new clients for charting program vendors...
I'm sure you've all seen it among the lower tier data providers while most of the more expensive data providers concentrate their marketing efforts on the integrity of the data itself.
P.S. I don't like indicators and I'm a price action only trader that uses TA.
TA works well when everything else is in place.
Mark
TA bashers typically view indicators as the only source of TA when in fact most of TA involves just price on a chart and nothing else.
I'll explain later in this message about why indicators are so darn popular.
In fact, any time someone looks at a chart to form an analysis about the price action, use a chart to help determine a trade entry or uses a chart to just develop a simple opinion...
They are using TA.
Here's another issue that is constantly ignored by those that don't believe TA works along with confusing many TA bashers that meets a profitable trader that uses TA.
Profitable traders using TA are not using TA all by itself.
In fact, TA is just a part of their trade methodology.
Thus, to challenge those types of profitable traders via scientific testing requests while ignoring all the other things involved in a profitable trader's trade methodology is just silly or poor research skills.
Simply, a researcher needs to make a choice...
* Test TA all by itself while ignoring all the other inputs in a profitable trader's method or to use the classic price action exclusion tactic to concentrate only on those that use indicators.
* Test TA as it is actually used in real trading conditions with all those other inputs (e.g. trade management, discipline, proper capitalization, money management, position size management, market experience et cetera).
Both of the above can be tested but one obviously will be much easier or simpler while the other sometimes called voodoo or art.
Doesn't matter to a profitable trader if TA is science or art. The issue to them is how to make it a useful part of their trade methodolgy puzzle.
Thus, it's not difficult to understand which of the above will be researched by a TA basher or by someone that doesn't believe TA works.
Another problem is that there are too many profitable traders giving a false impression that profitable trading involves only entry signals.
That simplicity is what also attracts new traders...many of whom will call it quits on TA not because TA failed but because they never learned how important those other inputs are that I've mentioned above.
Thus, don't fool yourself into thinking 90% or whatever that fails is due to TA failing...
It's due to the fact that traders spent too much time on TA all by itself while forgetting that TA was designed or intended to be used as a confirmation tool to visualize something they already knew.
Therefore, my opinion is that those other inputs are more important than TA.
Why are indicators so popular in comparison to other types of TA???
Marketing, marketing and more marketing and it's an excellent way to lure in new clients for charting program vendors...
I'm sure you've all seen it among the lower tier data providers while most of the more expensive data providers concentrate their marketing efforts on the integrity of the data itself.
P.S. I don't like indicators and I'm a price action only trader that uses TA.
TA works well when everything else is in place.
Mark
In order to determine if TA 'works' or not, one must first define and then differentiate Technical Analysis and Fundamental Analysis. Those who include Price and Volume under the umbrella of Technical Analysis might feel TA 'works' for them. Whereas, those traders who only feel indicators (and not Price and Volume) fall under the TA umbrella, might see things a bit differently.
Since this really boils down to an academic discussion over definitions, one might ask the question, 'Who cares?" If you can make money using tidal patterns or chicken entrails, more power to you.
- Spydertrader
Since this really boils down to an academic discussion over definitions, one might ask the question, 'Who cares?" If you can make money using tidal patterns or chicken entrails, more power to you.
- Spydertrader
Quote from shark:
Hey. I have been deeply interested in technical analysis for a while, and have spent countless hours trying to find the right combination of indicators to predict the future.
TA does not predict the future. This is plain wrong. Do not even try it.
TA is a tool that can provide probabilities of future price direction based on past prices. The probability is high only during rare occasions. In most cases, a correct application of TA will give you a probability close to 50% for prices moving up or down.
The problem is that many people look only at the direction they hope price will move towards and apply TA with a bias.
However, every experienced trader knows that TA can provide high probability signals if correctly applied. But not too often.
Surprisingly enough, these are the times that 90% of technical traders decide TA is useless.
Try to figure that out.
It is always interesting to see the difference between the opinions of those who joined et this year and those who've survived the trading and et experiences.
Good post Mark.
And to anyone else who understands that the technical in ta describes the use of price or price and volume (with or without indicators, cycles, patterns etc) to generate trading ideas.
For me, a trading idea includes a probabilistic prediction that price will move x in direction before it moves y in another direction. The combination of the probability and the size of x (target) and y (stop) give you the statistics of an individual trade setup (and lets not get into "setup vs ...").
Make no mistake though. When I enter I do predict. I predict that there is a 65% chance that it will reach my target or other profitable exit conditions before it falls back to my stop or other unprofitable exit conditions. I predict ... every time ... but I am not attached to the outcomes because I am confident that I don't know if this trade will make or take money. Its just one of todays opportunities to place the bet.
On indicators I think its a little more than marketing. Having been thru most things (as most who've graduated to long term self-taught trader have been) I conclude that most indicators were generated with honest intent. Some were then slightly modified to give a proprietary and thus expensive item for sale. But the basic intents are good.
For example:
- an ma (be it e s w vol weighted) etc attempts to represented a smoothed path of value. it is then used or abused. personally i still have one ma because in some circumstances a return to that ma creates a high expectancy trade
- the stoch (which I have never used) is actually just a smoothed visual representation of where price is in its X bar horizontal range (said range trails along with the stoch). the smoothing makes it clearer but also contributes to the way divergence is formed.
And so on and so forth. But what most of us ultimately conclude is that we can see what an indicator would tell us more clearly and in a more timely fashion by observing some simpler representation of price. I like ohlc bars and get a little kicker from volume. You like candlesticks. Others like the raw price stream (but probably have shorter timeframes). We each find our own way of analyzing the markets technically for our own brand of success.
Good post Mark.
And to anyone else who understands that the technical in ta describes the use of price or price and volume (with or without indicators, cycles, patterns etc) to generate trading ideas.
For me, a trading idea includes a probabilistic prediction that price will move x in direction before it moves y in another direction. The combination of the probability and the size of x (target) and y (stop) give you the statistics of an individual trade setup (and lets not get into "setup vs ...").
Make no mistake though. When I enter I do predict. I predict that there is a 65% chance that it will reach my target or other profitable exit conditions before it falls back to my stop or other unprofitable exit conditions. I predict ... every time ... but I am not attached to the outcomes because I am confident that I don't know if this trade will make or take money. Its just one of todays opportunities to place the bet.
On indicators I think its a little more than marketing. Having been thru most things (as most who've graduated to long term self-taught trader have been) I conclude that most indicators were generated with honest intent. Some were then slightly modified to give a proprietary and thus expensive item for sale. But the basic intents are good.
For example:
- an ma (be it e s w vol weighted) etc attempts to represented a smoothed path of value. it is then used or abused. personally i still have one ma because in some circumstances a return to that ma creates a high expectancy trade
- the stoch (which I have never used) is actually just a smoothed visual representation of where price is in its X bar horizontal range (said range trails along with the stoch). the smoothing makes it clearer but also contributes to the way divergence is formed.
And so on and so forth. But what most of us ultimately conclude is that we can see what an indicator would tell us more clearly and in a more timely fashion by observing some simpler representation of price. I like ohlc bars and get a little kicker from volume. You like candlesticks. Others like the raw price stream (but probably have shorter timeframes). We each find our own way of analyzing the markets technically for our own brand of success.
I'm saying it doesn't matter if TA is subjective or objective nor does it matter if TA is science or art.
If someone is profitable while using TA...
Let others wrestle with philosophical discussions because the conclusions by others will not have any impact on the profit level of profitable traders.
Best to aim those types of discussions towards newbie traders that think its all about the entry signal or TA all by itself.
However, as I mentioned earlier that TA is just part of the puzzle...
Something in that puzzle (trading plan) must be objective (defined via a set of rules) for a trader to maintain the integrity or strength of the puzzle regardless if such occurs in TA or within one of those other inputs.
Mark