Why does TA not work (for you)?

Quote from marketsurfer:



I am negative on objective fixed TA systems--- they simply don't work regardless of the rhetoric. If they did, you would all be wise trade green light red light millionaires.

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By saying this, you assume that the trader who first discovered a valid objective fixed TA system would put it in the public domain. Why would a trader give away an objective fixed TA system that was valid? What market would there even be for such a system? If the person who developed it was convinced it was valid, the selling price would be far above what anyone who had not traded the system would pay, so there would never be a transaction in that "market".

So, that valid objective fixed system would never become a "green light red light" public system because the person who discovered it could never get a price equivalent to its value for it.

The implication of that fact is that there could be dozens, hundreds or even thousands of "objective fixed TA systems" in the world and, unless you were the original developer, you'd never know it.
 
The attached performance summary covers 9 years for 6E / CL / ES & 4 years for the other markets.

Same parameters for all, I pick the roundest figures for these.

This is trend following, always in the market (long or short), all entries/exit at market on open next 30min bar assuming 1-tick slippage.


Does this "prove" anything?
 

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Quote from marketsurfer:

I am negative on objective fixed TA systems--- they simply don't work regardless of the rhetoric. If they did, you would all be wise trade green light red light millionaires.
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They work very well but the vast majority of aspiring traders don't do the work necessary for using TA successfully, or they do the work but cannot cultivate a trader's mindset or code their system to trade automatically.

Why do people undergo heart bypass surgery when it was proven in several long-running studies that at least 85% of heart bypass prospects can avoid the surgery and actually reverse their heart disease without medication or invasive medical procedures? Why would anyone choose to have their chest sawed open, expose their brain to small strokes that impair cognitive function, and undergo a procedure that doesn't stop or reverse the progression of their underlying disease, nor extend longevity? Because the non-invasive method requires a complete shift in what one has been programmed to believe and this requires some effort.

I use technical price action methods with fixed objective rules and they work and they've been working for the two years since I implemented them and I've seen several people who fully understand them and know the rules find themselves unable to trade this way because they can't overcome their beliefs about trading. But every one of these people will agree that they work when applied.

I've yet to see a chart from any time in charting history where following commonly known TA rules fails to produce a profitable edge.

Quote from marketsurfer:

How much evidence does it take to show objective TA is BS? Is the attraction really that powerful?
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Xspurt started this thread to encourage proof that TA doesn't work. This thread is seriously lacking in illustrations of TA failure. What would be nice is if those for whom TA resulted in failure could present a description of the TA-based trading rules they tried out that failed (maybe accompanied by a chart), so those of us who are successful with our fixed objective plans can at least let you know what was missing from your plan.

My favorite TA failure story I hear on ET is "Most breakouts fail". But these people aren't applying any kind of contextual filtering. I agree that 99% of breakouts fail in a wide range. You'd be nuts to trade the initial break out of a wide range.

Quote from marketsurfer:

Ps. The market holds the greatest attraction to those least suited for it.
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Amen, Brother Surf! On this we can agree :cool:
 
Quote from NoDoji:

They work very well but the vast majority of aspiring traders don't do the work necessary for using TA successfully, or they do the work but cannot cultivate a trader's mindset or code their system to trade automatically.

Why do people undergo heart bypass surgery when it was proven in several long-running studies that at least 85% of heart bypass prospects can avoid the surgery and actually reverse their heart disease without medication or invasive medical procedures? Why would anyone choose to have their chest sawed open, expose their brain to small strokes that impair cognitive function, and undergo a procedure that doesn't stop or reverse the progression of their underlying disease, nor extend longevity? Because the non-invasive method requires a complete shift in what one has been programmed to believe and this requires some effort.

I use technical price action methods with fixed objective rules and they work and they've been working for the two years since I implemented them and I've seen several people who fully understand them and know the rules find themselves unable to trade this way because they can't overcome their beliefs about trading. But every one of these people will agree that they work when applied.

I've yet to see a chart from any time in charting history where following commonly known TA rules fails to produce a profitable edge.



Xspurt started this thread to encourage proof that TA doesn't work. This thread is seriously lacking in illustrations of TA failure. What would be nice is if those for whom TA resulted in failure could present a description of the TA-based trading rules they tried out that failed (maybe accompanied by a chart), so those of us who are successful with our fixed objective plans can at least let you know what was missing from your plan.

My favorite TA failure story I hear on ET is "Most breakouts fail". But these people aren't applying any kind of contextual filtering. I agree that 99% of breakouts fail in a wide range. You'd be nuts to trade the initial break out of a wide range.



Amen, Brother Surf! On this we can agree :cool:
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surf does this periodically. He will charge in a say that TA does not work and basically ask for a working TA system.
 
i believe that!.. theres alot of TA that would work if you had the discipline to follow it.. and not get distracted with the billions of indicators out there.. find something for volume analysis, use some options data, bollinger bands.. sure some support and resistance.. i personally like volatility trading with options.. i'm always thinking of which inidcators i could use to facilitate my strategy..
 
One more word on intuition... Many say this term like it's an indulgence to complete subjectivity...

In reality, though, intuition is one of normal cognitive processes, just another form of knowledge in other words.

It's not based on something mystical, traders intuition for example will always be based on actual experience of observing and trading the market.

What does it mean? That be it a conscious, rule based knowledge or intuitive stage of trading, it's still some objective information from the market giving us evidence that odds of the market doing X are higher than odds of doing Y.

What can we conclude? That when Surf admits there can be "intuitive" trading, he also admits that it IS possible to gauge odds of markets doing X or Y by watching charts aka TA. :)

I have yet to see a purely intuitive and at the same time consistently profitable trader, though, who does not use any rules at all. Which is no surprise, this is a game of information after all, and the better quality information and the better focus on the most important information about the given market we have, the more successful we are.
 
Quote from NoDoji:


My favorite TA failure story I hear on ET is "Most breakouts fail". But these people aren't applying any kind of contextual filtering. I agree that 99% of breakouts fail in a wide range. You'd be nuts to trade the initial break out of a wide range.
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LOL, I love this one too... uh oh, most breakouts fail... SO WHAT? :D

I will not even touch the fact that there are many forms of breakouts and some of them are probably the highest probability trades I have ever met...

But seriously, are we trading to make money or to whine about the existence of losing trades... If most breakouts fail, but those which don't make more profit than all losses which are brought by failures combined, that's a GREAT BET!

Somehow people find it OK to buy lotto tickets or play casino knowing odds are way not in their favour, but find it absolutely unacceptable to ever, ever have a losing trade in the markets, even if the system has obviously positive expectation...

What a great game for psychologists to observe interesting phenomenons. :)
 
Quote from cdcaveman:

i agree with you.... what are you typical parameters for a good breakout.. this is perfect for vol trading
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If speak shortly in TA terms, flags in strong trends are probably the best breakouts and maybe the easiest trades of all TA trades in existence.

I wish strong intraday trends happened more often, though. :)
 
Quote from marketsurfer:

What? I am not negative toward intuitive market reading. In fact, I believe it's the only way TA even has the potential of working. Yes, I agree about hit rate, so my random entry theory makes sense to you? Random entries with solid management and skills will produce similar results thn TA based entries.

I am negative on objective fixed TA systems--- they simply don't work regardless of the rhetoric. If they did, you would all be wise trade green light red light millionaires.

Even TA priests like WRB get this, when he says he never met a successful TA trader without many other factors at play. I argue that these same folks would be successful without TA. But with the other factors.

How much evidence does it take to show objective TA is BS? Is the attraction really that powerful?

Surf

Ps. The market holds the greatest attraction to those least suited for it.
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Funny, you go fishing, come back and forget everything that was talked about. Might want to check yourself for Alzheimer's.
Not everyone has large sums at their disposal, so no, not all become millionaires overnight. Before you implied better than random is enough to prove that objective TA works, now the minimum is "green light red light millionaires", which is it?
 
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