Why does TA not work (for you)?

[BSAM]

Quote from marketsurfer:

...I agree, price action is TA, as well as charts. However, price drivers like the book happen PRIOR to price action therefore can be used and manipulated to gain an actual edge.

Seems like we are making progress here.
The book isn't necessarily a price driver.
But, it can be.
Nothing is happening in the book until an execution.
And, the book is full of liars.
You don't know who is real until an execution occurs.

Try to bear in mind this key item: The only truth in the market is price.

 

[Laissez Faire]

Quote from marketsurfer:

Yes, it has been proven time and time again that it is impossible to predict price based on past price/volume movements. These factors are irrelevant to the future. If they were not irrelevant you would be able to answer the question-- how many moves in one direction, or series of moves increase the odds that the next move or series will be in the same or opposite direction.

You can use price drivers that are evident prior to price moving and you can use the book (just like HFT does ) for an edge.

If there was/is an edge in past price it would have been exploited to extinction a long time ago. You think the rooms full of quants just sit around and read the paper? Every pattern has been tested adinfiium every TA tool, and there is NOTHING but delusion of the faithful;;;;

Questions:

1) What exactly is a price driver? A buyer bidding price higher? A seller offering price lower?

2) Is HFT the only way to profit in today`s market? HFT sure have changed the micro structure of today`s electronic markets and squeezed out human scalpers, but the market still offers profitable daily swings on a higher time frame? And what about higher time frames than the intraday time frame? Surely, the impact of HFT diminishes the further you zoom out, save a flash crash once in a blue moon. I don`t understand your argument and my question is really a rhetorical one, but feel free to answer.

3) HFT is only a subset of algorithmic trading. Far from all algorithms trade on an ultra-short time frame and yes, they use price history as input. What else would they use?

Your argument against how every pattern would be exploited to extinction is not a new one, but a rather poor one still. You can`t buy a $10 dollar book and find a pattern that works all the time for the rest of history. But yes, there are patterns that can be exploited during certain points of time during certain market conditions. A prior poster mentioned volatility analysis and keeping track of current conditions. Patterns come, patterns disappear and some come back. A good trader adapts.

Making a winning system based on technical analysis is not easy, but I certainly believe (know) that it is possible. Money management is obviously key, since it is a matter of gauging probabilities.

Sincerely and in anticipation,

Laissez Faire

 

[marketsurfer]

Quote from BSAM:

Seems like we are making progress here.
The book isn't necessarily a price driver.
But, it can be.
Nothing is happening in the book until an execution.
And, the book is full of liars.
You don't know who is real until an execution occurs.

Try to bear in mind this key item: The only truth in the market is price.

No, the book can be read/manipulated to gain an edge when combined with price drivers. Its how HFT works-- the most succesful trading tactic of all time...

 

[BSAM]

Quote from marketsurfer:

No, the book can be read/manipulated to gain an edge when combined with price drivers....

I think I can pretty much agree with this statement.
But, it appears that you believe that there is only one way to execute very good trades.
This is not correct.

 

[marketsurfer]

Quote from BSAM:

I think I can pretty much agree with this statement.
But, it appears that you believe that there is only one way to execute very good trades.
This is not correct.

thanks, I knew we were close to agreeing on something.

No, there are many ways-- but only a few have a real edge. Just because a trade wins, does not mean it has an edge. Just like a gambler on a winning streak-- he has no edge, but wins and wins again. You can win by looking at charts or price action-- but there is no QUANTIFIABLE edge there.

There may even be traders who use TA and intuition to trade that are succesful-- but then again, its not quantifiable therefore not of interest to me. Make sense?

 

[BSAM]

In other words, I like to physically see the "truth" of the market before I place my bet, because I don't know who is telling the "truth" in the book.

There's nothing at all wrong with hopping aboard the train for a nice ride, if the conductor (the market) is screaming "all aboard".

 

[Redneck]

Quote from BSAM:

Could be both, or one or the other.

If I may brother BSAM….

A succinct definition;


It is the tick by tick moves price makes

Which

Can be read/ deciphered individually, (tick basis)… or combined in any combination up through decades – then read/ deciphered


In addition, PA also includes;

How each tick / tick combination was made…, and when it was made

===============================

T/A = anything found on – and/ or – based off – a chart


Just sayin

RN

 

[marketsurfer]

Quote from BSAM:

In other words, I like to physically see the "truth" of the market before I place my bet, because I don't know who is telling the "truth" in the book.

There's nothing at all wrong with hopping aboard the train for a nice ride, if the conductor (the market) is screaming "all aboard".

No doubt, but you need to admit that you don;t know when the ride will end, it may end immediately. Whereas, with real edge, you KNOW the odds are in your favor. Now we are back to money management being critical-- random entries with money management even....

 

[BSAM]

Quote from marketsurfer:

thanks, I knew we were close to agreeing on something.

No, there are many ways-- but only a few have a real edge. Just because a trade wins, does not mean it has an edge. Just like a gambler on a winning streak-- he has no edge, but wins and wins again.

This is where experience and understanding probabilities come into play. And once one gets experience and an understanding of probabilities, then he begins to utilize money management and push the odds in his favor.

 

[marketsurfer]

Quote from BSAM:

This is where experience and understanding probabilities come into play. And once one gets experience and an understanding of probabilities, then he begins to utilize money management and push the odds in his favor.

Ok, but you can't quantify this experience. Its intuitive.... I have nothing against intuitive TA and believe it may work for some traders-- even though I never saw any evidence. What I say does not work is systematic, objective TA without the intuitive addition.

The human intuitive brain is truly amazing, I don't doubt its capabilities-- although I know that can't be quantified.