The Science of Technical Analysis

[IShopAtPublix]

Charts are important. Drawing a trillion trendlines and connecting periods that have nothing to do with each other is stupid.

I never believed for one second that stock trading could be random. Some charts are more "crisp" than others but they are not random.

I am currently reading "the intelligent investor" and according to Benjamin Graham, I should be content with 7% a year. If I accepted that premise I would quit trading altogether.

Oscillators look really good in retrospect.


I personally only use price on a candlestick chart with arithmetic scale.

 

[IndexSwing]

Quote from IndexSwing:

The top of the market was on Oct 11, 2007. But the nasty drop did not really begin until Sep 22, 2008. Any trend following methodology would have had you out of the market or short the market by that time.

And therin lies the value of TA in my opinion. Large price moves don't happen overnight. It's a process and one that can be followed a la "trend following"

 

[marketsurfer]

Quote from IndexSwing:

And therin lies the value of TA in my opinion. Large price moves don't happen overnight. It's a process and one that can be followed a la "trend following"

however, as unfortunate as it may be, the oscillations within the run will wipe all but the most deep pocketed or tiny positioned sized and highly disciplined players-- who perhaps will be able to get back to even once in a while.

choose or be choosen

regards,

surf

 

[marketsurfer]

Quote from cd23:

What you have posted above is what you conclude.


Science does back up and actually provide the foundation for creating very successful TA systems for use in the financial industry. It some cases they are way to one side of the fat tails ordinarily used for the standard.

no, this is absolutely false.....

the ever changing nature of the market, makes all static systems soon obsolete since those who capitalize upon true edge eventually eat themselves and change the playing field.

if only it was sooo easy!

surf

 

[marketsurfer]

Quote from IndexSwing:

There are two forms of TA, Predictive and trend following. Predictive methods try to predict what will happen in the future, for example "there is support at 1600 we should get a bounce up" Predictive TA does not hold up, in my opinion. The future is unknown. There is another form which is trend following. For example "this market has been and is continuing to move up, I will buy and when it stops moving up I will sell. I could be buying at the top, I don't know but my risk is limited because as soon as the market begins to move down I will sell. My profit is unlimited because as long as the market continues to move up I will continue to hold and the probability is in my favor because the market is already in motion."

The trend following method has proven to be successful by traders who have consistently made high returns using the method.

you will get chopped to bits trading exactly in that manner.

regardless of what "camp" one falls into---one is still predicting the future prior to entering any directional trade. if you flip a coin 20 times and get 20 heads, are you in a heads trend?

do you really think newtonian physics is applicable to price changes?

 

[jem]

surf who was anti t/a and for years moderates his stance. Finally getting closer to the truth?

spoken with some the large hedge funds who use t/a surf?

 

[marketsurfer]

Quote from jem:

surf who was anti t/a and for years moderates his stance. Finally getting closer to the truth?

spoken with some the large hedge funds who use t/a surf?

Ha, how did you get that idea? i always believed there is value in subjective TA as an analysis tool. it is the objective, scientific crap that really doesn't make sense.

no, i have not ever spoken to any real hedgie who uses TA.

i try to stick to those who have a real edge that they can articulated clearly. no black boxes for me!

surf

 

[marketsurfer]

Quote from ProfLogic:

Maybe you should study the charts more and read less. It really helps one's real-time perspective.

let's just say mr. gann has a little experience with the larger players in the marketplace.... its most wise to pay attention to what he has to say...

surf

 

[jem]

Quote from marketsurfer:

no, this is absolutely false.....

the ever changing nature of the market, makes all static systems soon obsolete since those who capitalize upon true edge eventually eat themselves and change the playing field.

if only it was sooo easy!

surf

I thought perhaps you finally got it. Your quote is pretty consistent with what a guy at famous fund.

But, what I find interesting is that you seem to put down t/a but support statistical analysis.

Can't most statistical relationships be graphed.

For instance is stat arb really that much different than pairs trading with bollinger bands.

Does not the profits of stat arb - prove that t/a can be scientific.

Eventually you are going to draw some things out of me that I am not supposed to talk about it - but I just know you have to screwing around. You must know damn well at least some funds use t/a. (dynamically).

 

[athlonmank8]

I use charting and thus TA for my trading. By itself, it's quite worthless, but with money mangement, gut feeling, common sense, and fundamental knowledge it is BY FAR the best way to trade markets.

I've registered a triple digit gain using it for the past 2 months. I will NEVER EVER bash TA.

As Paul Tudor Jones said, it's 50/50 TA and Fundamentals.