Why do traders talk about TA as if it is physics ?

[KCalhoun]

TA is valuable, risk management is essential. Use a driving analogy, driving at night: TA = headlights, risk/trade management = gas pedal and brakes. Both are important.

 

[SimpleMeLike]

Renaissance also bases it's signals off of "repeatable patterns" on the 5 minute charts. That's right, Renaissance and Jim Simons made their billions by day trading patterns off 5 minute charts. Of course there are many on ET who are smarter and more successful than Simons and his team

Thanks speedo for sharing this knowledge. I never knew this team of great traders use the same timeframe I use.

I see why I keep losing now. lol

 

[TimMykes]

Thanks speedo for sharing this knowledge. I never knew this team of great traders use the same timeframe I use.

I see why I keep losing now. lol

How do you know it not just a cover story for something else ?
you don't

and even if not, it might be a pattern that no one here in 10 million years would figure out

 

[BlueWaterSailor]

Well if millions of other traders are trading based off of TA then TA has relevance.

Since there are billions of possible combinations of indicators, levels, definitions of supply/demand/resistance/support, and every other type of voodoo, those "millions" are all trading different things. So, no, TA does not have any kind of relevance - at least not via this tired argument.

 

[themickey]

Since there are billions of possible combinations of indicators, levels, definitions of supply/demand/resistance/support, and every other type of voodoo, those "millions" are all trading different things. So, no, TA does not have any kind of relevance - at least not via this tired argument.

The more there become 'intelligent / informed / savvy' traders, the more mkts become efficient which means it gets more difficult to maintain an edge, which agreed, means LESS relevance TA becomes.

 

[BlueWaterSailor]

Renaissance also bases it's signals off of "repeatable patterns" on the 5 minute charts. That's right, Renaissance and Jim Simons made their billions by day trading patterns off 5 minute charts.

That was in the past, before everyone and their uncle had analytics that were millions of times more powerful than anything Renaissance had back then. Given enough assets, any actual repeatable pattern can be detected and then trivially arbitraged into non-existence.

 

[Sprout]

Trying to bring the scientific method and scientific rigor into finance and TA in particular is a good thing. However, anything from the world of physics that is applied to finance is generally a misapplication of the physics.

I dunno, black hole seems to describe a lot of beginners experience with intraday trading the markets. You can kinda tell via the projected anger and frustration that radiates from them (absence of light)

 

[themickey]

There will always be an over abundance of fresh meat in the mkts.
The more TA loyalists the better.
The mkts are skewed toward the uneducated due to the difficulty of getting good mentorship.
So the reality, mkts will always be inefficient and offer opportunities.

 

[KCalhoun]

It's useful to know TA so at a minimum you know basic patterns the peanut gallery is using, so that you can trade ahead of, or arb the crowd.

eg cups, s/r levels, whole numbers, 50/100/200 SMAs etc

Trading using basic common technical analysis = epic fail and false breakouts.

As I've said for 20 years presenting at Moneyshow events....

"The MATH is a lot more important than the chart patterns."

 

[speedo]

ET lol