Why does anyone take technical analysis seriously?

fullautotrading said:
As I see it, TA is just a specialized form of "descriptive statistics":
https://en.wikipedia.org/wiki/Descriptive_statistics

There is obviously nothing wrong in making such quantifications, just as it makes perfect sense to compute other descriptive statistics.

The issue arises when you wish to attribute inferential value to such observations, like for instance when you wish to interpret it as a "premonition" of a future occurrence:
https://en.wikipedia.org/wiki/Statistical_inference

It's mainly a conceptual issue. Imho, attributing previsive value is, first of all, a crackpot nonsense conceptually, and, second, not supported by any sound statistical evidence (clearly if we exclude pseudo scientific inventions by charlatans and people with no solid statistical background).

This does not mean anyway that it's "wrong" to use them to "decide" entries or other actions. In any case you entry is governed by price movement (and/or other observations) . So in case we model the price as a random process, the "entry" (say for instance, the pair [price, time] ) too is going to be a random variable, and basing the entry on some TA computation is simply a transformation of a random variable, resulting in another random variable. So there is nothing wrong in that, as essentially everybody is inevitably doing the same.

I would just argue that the terminology may be a bit misleading, especially for beginners. (Just as the term "stop loss" is misleading.) But these terminologies are typical of the field where there are so many entities trying to sell something and often do not mind to bend concepts and reason when it is convenient.
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I don't disagree with this. There is a "proper" and "scientific" way to approach TA-- I am not saying that this works-- or makes sense-- but at least it follow proper protocol--- unlike those on this site that claim to use probabilities , stats, and science but are really just looking at charts and guesing yet have self deluded themselves into believing differently. That's my primary issue with TA folks---

surf
 
Buy1Sell2 said:
This is evident by the fact that there is very little interest in the risk management forum here and that should be the most read.
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I don't agree. The first thing you need is a very good trading system.This system should keep you informed all the time so that you can get out if needed. The only reason why I need risk management is in case of an emergency. And that risk management is very simple and very effective: I put a stop at X points. That's all I need.
So most reading should be done about building a very good trading system. The better the system the less you will need risk management.
 
Mtrader said:
I don't agree. The first thing you need is a very good trading system.This system should keep you informed all the time so that you can get out if needed. The only reason why I need risk management is in case of an emergency. And that risk management is very simple and very effective: I put a stop at X points. That's all I need.
So most reading should be done about building a very good trading system. The better the system the less you will need risk management.
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It's not that simple. Your risk of ruin over a large time-span is partially determined based on your stop placement. Using X derived from the average true range is not good enough unless you have an edge sharper than any PA-trading teacher's. What do you use?
 
Q3D said:
It's not that simple. Your risk of ruin over a large time-span is partially determined based on your stop placement. Using X derived from the average true range is not good enough unless you have an edge sharper than any PA-trading teacher's. What do you use?
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Math. Last 10 years never a drawdown bigger than 30%. No losing months. Stops at 0.15% of entry. Don't use ATR.
 
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