Of course, TA is not working all the time, but it really helps. Especially, when you're a day, trader.
Why does anyone take technical analysis seriously?
- Thread starter Sotnis
- Start date
Super insightful--
thanks Debit. I missed this missive--- here is some more from the greatest living speculator
"I asked an eminent psychologist who has written many books on the market about it. And he said there is a feeling here that no pastime is good unless it causes pain. Most of the traders feel guilt about their childhood, and what horses asses they were and what evil thoughts they had. They wish to atone through trading where the pain of a loss is infinitely greater than the rare occasions that they make a comparable profit. I don't know enough about psychology to know if he's right, but as I suffer through the trading year, and take our small profits on every big move in my favor, but lose it all in the few big moves against, and the little woman says, "when are you going to learn to cut your positions by 90%", I think he may be on to something.""
There's a few studies that say there's different reasons. I'll edit/change your statement to reflect accurately what the studies revealed.
Most traders do not use TA and are not sophisticated at all; they do not understand the most basic concepts of risk management and diversification.
Also, if you change the above word traders to home base retail traders...most still do not understand risk management and diversification and it represents the largest reason for failure even amongst those that day trade.
TA was a reason amongst the list but down near the bottom. Simply, many other reasons that cause high % of failure...ranked above the TA reason. Thus, most retail traders do not treat their trading like a business. Instead, its more like a hobby to them.
Seriously, look at some of the newbie questions that past few years...very few to do with TA. In contrast, most to with get rich expectations, exchange rules, margin requirements, tick to dollar amount, exchange operation times and many other stuff...
Yet, its been a very long time since I've seen a newbie ask a question about risk management, diversification, business aspects of trading and so on. That stuff is just not on their radar just yet and the lack of knowledge has a devastating impact...most traders just do not recover and TA can not be a surrogate mother for the lack of knowledge in those critical aspects of a trading plan.
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Your historical percentage returns is the result of randomness? that sounds like an oxymoron.
being a skilled trader is the result of randomness?
when I think of randomness...I think of slot machine player, or a roulette player -- is that how you view your system?
How come Al Brooks doesn't address this is in his trading books? Nothing on risk of ruin, total USD required per contract, average cost of commissions and fees in relation to profits over a long-term statistical study, unique individual psychological hazards resulting from trading in highly-leveraged markets and from failed attempts to scale in to trades , etc.
Trading authors don't want to treat trading like a business when it comes to totally spelling out the dangers inherent in day trading, don't blame traders.
I actually think that nothing is useless because everything does work. Heck, sometimes selling into a plunge works very well, but clearly this isn't the best approach.
I think the correct way to think about TA is that everything works, but with a vastly different probability. I mean if you enter a trade anywhere, you're doing so because you have seen it work before, at least once. You maybe be unaware that in fact, doing this works only 2 out of 10 times, but it still doesn't mean it doesn't work. If something never worked, it would be easy to just do the opposite which would by definition work every time.
http://www.herts.ac.uk/courses/proprietary-trading
Q A Master's Degree by Way of the Trading Floor
http://www.nytimes.com/2012/10/25/w...-degree-by-way-of-the-trading-floor.html?_r=0
Tuition for the course is £16,000, or about $25,600. “There’s no difference in fees from any of our other master’s degree courses,” Dr. McKellar said. However, instead of traveling to the university’s campus in Hatfield, which is just north of London, students will “spend a lot of time on the trading floor, with actual traders,” he said.
Dr. McKellar, who was formerly the dean of the Royal Veterinary College in London, said that the University of Hertfordshire was increasingly seeking opportunities to offer what he called “corporate degrees,” partly as a response to cuts in government financing.
“We have a subsidiary company called Exemplas that began as a way of helping small- and medium-sized businesses,” Dr. McKellar said. “That work used to be funded by government, but funding for that sort of thing has dried up.”
UQ
Q A Master's Degree by Way of the Trading Floor
http://www.nytimes.com/2012/10/25/w...-degree-by-way-of-the-trading-floor.html?_r=0
Tuition for the course is £16,000, or about $25,600. “There’s no difference in fees from any of our other master’s degree courses,” Dr. McKellar said. However, instead of traveling to the university’s campus in Hatfield, which is just north of London, students will “spend a lot of time on the trading floor, with actual traders,” he said.
Dr. McKellar, who was formerly the dean of the Royal Veterinary College in London, said that the University of Hertfordshire was increasingly seeking opportunities to offer what he called “corporate degrees,” partly as a response to cuts in government financing.
“We have a subsidiary company called Exemplas that began as a way of helping small- and medium-sized businesses,” Dr. McKellar said. “That work used to be funded by government, but funding for that sort of thing has dried up.”
UQ
I do think you are absolutely right, but you have to be careful on here because some posters will jump on you saying that you are asking for everything to be spoon fed to you.
His books start with "Trading Price Action". This of course doesn't imply making money, it just implies trading. To actually make money means that you have to have all those other things you mention work in harmony.
NoDoji made a really good post a couple of weeks back to a new poster who said he was profitable every day in SIM, making at least $150 for a few months. She asked if this was with firms stops placed on each and every trade that were never moved. The implication is that with live trading, its easy to be right, and still lose money, and at the same time, its very easy to do something wrong, and get rewarded for it sometimes, which will completely teach you the wrong thing.
The fact of the matter is, those guys who come here to share an idea that works for them only works because of their vast knowledge of everything else. Often I find that they are even unaware of the fact that what they say they are doing isn't exactly how they are in fact doing it. As annoying as I find wrbtrader's posts to be sometimes, he is the first one to acknowledge that nobody is showing you everything. Even if you see a chart with clear entries and exits, you have no idea what other chart they are also watching, perhaps its other markets looking for divergence or whatever, and you also have no idea what is in their head with reference to how something looks that isn't drawn on the chart. (ie... you may see what looks like a clear rejection of a resistance level, and they see a support level forming just below this bounce)
TA will only work for the trader who knows what to do with it. Honestly, after reading up on so many of the guys here who are very good now, I would say 95% of them started out losing. You have to go down this same road because there is no way to take a shortcut and somehow implant someone else's experiences into your own brain. If you actually start out winning, you will only delay building a fundamental foundation. The best you can hope for is to be started on the right path, but its still a journey you have to walk yourself, and often alone.
Anyway, the point is that you're absolutely right that every single person out there who tries to help is leaving out critical info. There is no requirement of course that they disclose everything, but a struggling trader isn't helped by having to sift through scraps, even if they are scraps of gold. At the same time, even your own mother will probably not give you the honest truth about life when you are growing up, thinking that she can protect you from pain, so if you can't find honesty and transparency at home... good luck getting it anywhere else!
