Why does TA not work (for you)?

Quote from Xspurt:

Okay this is not what you should have done, but others might want to consider the validity of what I say.

You have a downward triangle favoring a break out to the upside and you get this. The target on this set up is the width of the wide end of the triangle and it not only fulfills this projection but gives a further 100%. This successful breakout and run is what you term a failure.

here's Babypips explaining this...

http://www.babypips.com/school/triangles.html

It is not good for PA to continue towards the point of a triangle as it tends to dissipate the energy so again this behaves as a trader would hope for. Having said that it is not a great quality triangle as per the previous example I gave in this thread.

Next you correctly note the false breakout and return. This is a traders dream as per the posts of RedTank and CornixForex. RedTank would say he doesn't trust an unbroken line. This type of event often happens at major reversals and this is one of those events.

Here's a Babypips example...

http://www.babypips.com/school/how-to-trade-fakeouts.html

This is like basic TA 101

Then we get a break of the lows with you your MA showing a strong trend in force and that failure of support is exactly what a trader wants from a major top formation.
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Great! So Babypips is a guru when it comes to trading markets in the past. Yeah, I'd of sold the high too! Who wouldn't?

The fact is, money moves the market. end of. Funny shapes on a chart do not. Do you really think some fund is going to drop >$50 million notional clips in to the market on the back of some funny shape or magic line? (Jack H may, but he's another story...)

I happen to know for a fact they do not. They may look at a chart from time to time, but only to get an idea of where levels are as a general reminder.

Take a look at the Bloomberg hedge fund data base (or any other such as Barclays, Eurekahedge etc). Look at the styles/categories of different funds. These basically tell you about the trading strategy/approach used by the funds. You will see categories such as Stat Arb, Equity long/short, Macro etc. NOWHERE WILL YOU SEE TECHNICAL ANALYSIS.

If the pro's arent using TA as a strategy, should you be? Why do you think they dont use TA? Remember some of these firms spend MILLIONS each year on data mining and other research. Geez - what a bunch of jokers! All they had to do was draw a magic line on a chart!....
 
Quote from BobbiDigital:

Xspurt, No Doji, TA'ers

Perhaps a discussion of why TA works would be an interesting topic - self fulfilling prophecies, big institutional players, zero sum supply/demand
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Big institutional players and self-fulfilling prophecies.

Quote from TheBlackHand:

Look at the styles/categories of different funds. These basically tell you about the trading strategy/approach used by the funds. You will see categories such as Stat Arb, Equity long/short, Macro etc. NOWHERE WILL YOU SEE TECHNICAL ANALYSIS.
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Why would institutional traders and professional money managers tell the world how they trade?

They don't give that away with words.

Like all large animals, they do, however, leave footprints quite visible to the naked eye.

Quote from TheBlackHand:

If the pro's arent using TA as a strategy, should you be? Why do you think they dont use TA? Remember some of these firms spend MILLIONS each year on data mining and other research.
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How many of those posting to this site are institutional traders or professional money managers who have to trade into and out of very large positions?

We're not the "pro's" you're referring to. We're the retail traders who learn to use the footprints of those large animals to identify where they're most likely headed in the next [insert your trading time frame here] and if that likely destination is attractive enough for us to follow along. We also learn what the footprints look like when the herd is spooked or decides to move to a different watering hole instead. That's called a stop loss, something us dumb amateurs use to prevent getting trampled when that happens.

Why do so many people posting here have this irrational belief that small retail trader has to trade like large institutional traders/investors? The big boys have to outsmart each other; they don't have to outsmart Joe and Jane Baby-Pips.
 
Quote from BSAM:

Brother X, personally I'm glad there's people who don't think TA works.
Really...Think about it...Aren't you?
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There's always going to be a group of non believers. Best thing is put them on ignore.

If aspiring traders don't wish to learn patterns with high probabilities of repeating, that's their loss.
 
Any type of analysis, in and of itself, will not work. I've watched many traders try to make it in the markets over several decades and the ones who succeed -- the very few -- have an innate ability to read the markets. The closest thing to the holy grail is the ability to read price action and develop the ability to "just know" where the market is heading. Call it a 6th sense, intuition, whatever word you want to use -- no need to get caught up on semantics. All winning traders I've met have this ability.

I'm not suggesting TA, or whatever type of analysis is of no use because TA is simply a tool of ones choice to help a trader navigate the markets. I use it daily, as do I use statistical analysis but I can tell you from intuitive knowledge the best intra-day pattern to buy is a head and shoulders top. Three bars below the neckline and it will reverse upward on cue -- not always, of course.

Find a way to "get yourself in the zone" and you will discover the missing link.
 
Quote from marketsurfer:

JP, you sound like an earnest guy so I'll be succinct and direct meaning no offense--

Our computers can test patterns and strategies in a day than can be tested in a lifetime of trading. There is no edge in multiple time analysis. It's simply confusing the issue. You trade in the here and now, not on a past timeline. TA folks believe the market is fractal -- if so, then why would multiple time lines of the past matter? It's all a fractal anyway.

The tests have been completed and pattern traditional TA has failed.

Surf
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Interesting........do you trade real money for your own account or a fund/trading firm?

Or do you just like to talk about others who do?
 
Bravo Surf! You have summed it up in as few words as possible. You are precisely on point!

Quote from marketsurfer:

...You trade in the here and now, not on a past timeline...

Surf
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Quote from marketsurfer:

JP, you sound like an earnest guy so I'll be succinct and direct meaning no offense--

Our computers can test patterns and strategies in a day than can be tested in a lifetime of trading. There is no edge in multiple time analysis. It's simply confusing the issue. You trade in the here and now, not on a past timeline. TA folks believe the market is fractal -- if so, then why would multiple time lines of the past matter? It's all a fractal anyway.

The tests have been completed and pattern traditional TA has failed.

Surf
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You are right surf......

"About half of Jones’s trading depends on
technical analysis using historical price charts to
predict market moves."


http://www.hedgefundsreview.com/global/hedgefundsreview/fund_profiles/T/04_Jul_-_Tudor_Inv_Corp.pdf





Want some more examples.....go read Market Wizards I through IV.....most if not all use some form of price action/TA......


Although I do know one guy who believes TA is rubbish......hint.....he blew up his fund twice...doing the same thing !!! :)
 
Quote from the1:

Any type of analysis, in and of itself, will not work. I've watched many traders try to make it in the markets over several decades and the ones who succeed -- the very few -- have an innate ability to read the markets. The closest thing to the holy grail is the ability to read price action and develop the ability to "just know" where the market is heading. Call it a 6th sense, intuition, whatever word you want to use -- no need to get caught up on semantics. All winning traders I've met have this ability.

I'm not suggesting TA, or whatever type of analysis is of no use because TA is simply a tool of ones choice to help a trader navigate the markets. I use it daily, as do I use statistical analysis but I can tell you from intuitive knowledge the best intra-day pattern to buy is a head and shoulders top. Three bars below the neckline and it will reverse upward on cue -- not always, of course.

Find a way to "get yourself in the zone" and you will discover the missing link.
More...

+1
 
Not a fan of conventional technical analysis.

However, I'm a huge follower of unconventional technical analysis.

Bottomline is you gotta do your homework.

I suppose this is why there are so many non believers.
 
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