The Science of Technical Analysis

marketsurfer · Nov 8, 2008

Quote from jem:

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).

there is no difference between stat arb and pairs trading---same thing different names. it may still work in some third tier asian economies (shhh) but its pretty wornout in the major markets.

surf

ammo · Nov 9, 2008

i tried driving my car with my eyes closed and couldnt find the road,lesson learned, much easier to drive with eyes open, Trading without charts is like driving blind,it doesnt need a scientific explanation

marketsurfer · Nov 9, 2008

Quote from ammo:

i tried driving my car with my eyes closed and couldnt find the road,lesson learned, much easier to drive with eyes open, Trading without charts is like driving blind,it doesnt need a scientific explanation

trading with charts only is like driving by looking in the rear view mirror

IShopAtPublix · Nov 9, 2008

Quote from marketsurfer:

trading with charts only is like driving by looking in the rear view mirror

Over short periods of time, fundamentals are essentially constant and can be ignored. So if you trade on timeframes of less than a month the company is highly unlikely to change in profound ways during that time.

ProfLogic · Nov 9, 2008

Quote from marketsurfer:

trading with charts only is like driving by looking in the rear view mirror

And trading using old tired TA and fundimentals only is like driving on the Autobahn with horse blinders on.

ammo · Nov 9, 2008

when the spu's start selling off from 1000 and your short,you need a target for a bounce , a reversal, or a test,unless your clairvoyant,you wont know what those are without a chart,t and when you chart 2 or 3 corresponding instuments that move together and you know their supp and res you have an advantage,if you know of a way to find that info without charts,please teach me

TraderSystem · Dec 2, 2008

Quote from TraderSystem:

What is the position of TA in present economic situation; could it have helped to predict the same or not?

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.

Quote from killthesunshine:

TA works when there is nothing else more important going on..

we are all bored and gaming off each other..

TA works.. till WHAM !

Quote from 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.

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"

Thanks to you all for the replies.

Quote from 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.

An interesting post, athlonmank8, thanks!

fearless9 · Dec 2, 2008

Quote from Westward:

Technical Analysis is a self-fulfilling prophecy. If you get enough people trading off of the same indicator, there lies the truth.

You will probably want to think this one through again .......this time more carefully

regards
f9

TraderSystem · Dec 8, 2008

Quote from fearless9:

You will probably want to think this one through again .......this time more carefully

regards
f9

Gee thanks, fearless9, I did think it over. But, please explain the same so that we can understand it better. Thanks,