Why does TA not work (for you)?

[RCG Trader]

Quote from wrbtrader:

The problem in this thread as it is in most of the other past TA debate threads is that there are too many replies by traders that do not mention anything else in their trading plan that they're using with TA. Therefore, anyone dropping in on the debate would think the person is saying he/she only uses TA and nothing else. That provides fuel for the debate by guys like marketsurfer and many others like him.

This is why threads about TA are extremely popular. In contrast, go visit other threads involving those other critical elements (e.g. money management) of a profitable traders trading plan and you'll only see a few replies or few pages.

Simply, its just a fact that most don't want to talk about nor indicate the importance of variables like money management, proper position size management, proper capitalization, proper trading environment, proper equipment, discipline, trading experience, collaboration as being just as important or arguably more important than their use of TA.

Maybe those are just boring topics for a TA user.

Think about this carefully, most beginner traders or struggling traders will concentrate on making changes to their TA whenever market conditions changes, drawdowns occurs or blowups happen.

In contrast, most profitable traders that are are veteran traders will concentrate on making changes in their money management, position size, capitalization, collaboration, discipline whenever market conditions changes, drawdowns occurs while leaving their TA not touch (no changes).

Its just sad for profitable traders using TA to give no indication about those other tools in their trading plan. Maybe its done intentional for debating purposes only.

Anyways, the next time you see a newbie trader that seems confused about his TA poor performance in live trading with real money after backtesting profitably...don't waste your time & energy analyzing the TA. Instead, take a closer look at all those other variables I've mention that's part of the trading plan to find the culprit causing the problem.

You gave away the grail, let's see who picks it up.

 

[logic_man]

Quote from R. Raskolnikov:

Can you stop being so logical?

Heh, force of habit.

No, I do think that part of the divide in this discussion is the idea of "private information" in markets and how that private information can be used, if it exists.

The University of Chicago school of markets says that there is no such thing as private information. I disagree (as do many others) and I think that anyone with the ability to create a working trading system that relies on rules is also smart enough to know how to hide it from others, thus making it private information.

So, the idea that simply because such systems exist, they must therefore be put in the public domain to create "red light green light millionaires" is begging the question because, simply put, no one with such a system could ever be compensated "in advance" for the system's full lifetime value, since trading systems are "experience goods" and those are notoriously hard to price.

 

[marketsurfer]

Chicago School of markets--- Really?

 

[wrbtrader]

Quote from logic_man:

For my part, I sort of assume that those items are in place for people...

They are not in place for most traders and most traders will go live with real money without those variables in place. Their assumption or reasoning is that in time they will be in place. Rarely does such happen as witness in the countless of trade journals here at ET and at many other trader forums that gives us a look into their trading beyond the TA along with the countless of individual message posts by traders asking for help with their "trading plan" even though they are already live trading with real money.

 

[logic_man]

Quote from marketsurfer:

Hmmm, if you have an objective fixed system why not program it thus removing the human element completely? Computers have no problem with discipline etc.

Unless, horrors, your system is subjective.

There is a fundamental illogical premise to the above post. Funny it would come from someone named "logic". LOL!


Surf

Well, I was speaking generally about the impact of those factors.

In my specific case, yes, it could be automated, but that would require, I think, about a year of work by an expert coder. I used to do coding back in the early 2000's, so I have some ideas on what it would take to work it out in Java or C++. Since I can manage it without that, that's the route I'm taking at this point. This is basically an intraday/overnight system, so it's not as if I have to be able to react in sub-millisecond time.

As for discipline, yes, I track what my lack of discipline costs me. The fact that breaking my rules actually costs me more than it makes me is just further validation of the rules, though. If the rules were random or poorly-constructed, breaking them would make me money (or, at least lose me less).

 

[R. Raskolnikov]

Again, I must warn you. All this logical talk is not wanted here.

Quote from logic_man:

Heh, force of habit.

No, I do think that part of the divide in this discussion is the idea of "private information" in markets and how that private information can be used, if it exists.

The University of Chicago school of markets says that there is no such thing as private information. I disagree (as do many others) and I think that anyone with the ability to create a working trading system that relies on rules is also smart enough to know how to hide it from others, thus making it private information.

So, the idea that simply because such systems exist, they must therefore be put in the public domain to create "red light green light millionaires" is begging the question because, simply put, no one with such a system could ever be compensated "in advance" for the system's full lifetime value, since trading systems are "experience goods" and those are notoriously hard to price.

 

[logic_man]

Quote from marketsurfer:

Chicago School of markets--- Really?

Not sure what your question is.

I mean the school of economic analysis that's typically associated with the University of Chicago, and more specifically, the analysis associated with their view of financial markets.

If you look, as part of the overall framework of the EMH, they assume there is no such thing as "private information".

 

[R. Raskolnikov]

Technically, all the components of my method are freely out there, it's the combination and the rules created around that combination that is private. But, that's not to say someone else hasn't or doesn't use the same strat I do. I'm just not aware of whether anyone is.

Quote from logic_man:



If you look, as part of the overall framework of the EMH, they assume there is no such thing as "private information".

 

[NoDoji]

Quote from cornixforex:

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.

Similar phenomenon: Traders who hold a loser to the full stop out, but as soon as a trade runs a few ticks in their favor, they move the stop to break even because "there's no way to lose if you do that".

:eek: :eek:

Quote from cornixforex:

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.

Agreed, these trades are ATM machines.

 

[logic_man]

Quote from wrbtrader:

They are not in place for most traders and most traders will go live without those variables in place. The assumption is that in time they will be in place. Rarely does such happen as witness in the countless of trade journals here at ET and at many other trader forums that gives us a look into their trading beyond the TA.

Right, I don't mean that everyone will have them in place (heck, I know I didn't), but that once they are in place, more advanced topics can be discussed or considered, but that before they are in place, one should probably focus on them, rather than a back-and-forth about TA (or any other A) in general.