Why does TA not work (for you)?

[marketsurfer]

Quote from NoDoji:

I think I finally understand what you're arguing and you are correct! Charts are absolutely not predictive. Nothing is predictive. No chart pattern or indicator or combination of patterns/indicators or news release or massive depth/height to which price has dropped/risen can predict with certainty what price will do next.

What you're missing, Surf, is that experienced, profitable TA traders DO NOT believe they can increase the odds on any individual entry.


So I agree with you that charts are not predictive and I believe that you are right to alert any trader who believes s/he can increase the odds on an entry that this a very dangerous belief in trading.

Odds are based on X number of trades, not on any individual entry. A common complaint on ET is traders who have losing trades then skip the next appearance of their setup, and of course it's the good one. Picking and choosing trades from a basket of valid setups destroys any edge.

Thank you, NoDoji--- Finally, a sensible approach and understanding of TA. You have a deep understanding of what is being talked about,its great to see a TA person brave enough to admit these things.

With that said, may I suggest the book "Evidence Based Technical Analysis" by my friend David Aronson. If one is going to use TA, it might as well be used in a scientific manner as described in this book.

Regardless, I still contend that random entries with money management will provide the same results over time as "non predictive" chart based entries. I really don't understand the difference.

regards,

surf

 

[R. Raskolnikov]

You probably will never understand or be able to view and trade the mkts the way I do (and others do). It doesn't matter, your way may turn out to be great too. Only time will tell I guess.

Quote from marketsurfer:


Regardless, I still contend that random entries with money management will provide the same results over time as "non predictive" chart based entries. I really don't understand the difference.

 

[marketsurfer]

Quote from R. Raskolnikov:

You probably will never understand or be able to view and trade the mkts the way I do (and others do). It doesn't matter, your way may turn out to be great too. Only time will tell I guess.

All the matters is that it works for you. If you are making money, I can't argue with what you are doing.

surf

 

[cornix]

Quote from marketsurfer:



Regardless, I still contend that random entries with money management will provide the same results over time as "non predictive" chart based entries. I really don't understand the difference.

regards,

surf

Do you believe random entries with money management make profits or losses on average in the long run?

 

[marketsurfer]

Quote from cornixforex:

Do you believe random entries with money management make profits or losses on average in the long run?

It's not a matter of belief. the tests I have seen, including the one published in Van Tharp's book seem to indicate a distribution between profit and losses just like you see when TA is tested... in other words, some will profit with the random entry, some will lose just like TA trading...

 

[SteveH]

Picking and choosing trades from a basket of valid setups destroys any edge.

--NoDoji

Donna,

If you randomly pick trades from the population of valid trade setups from a positive expectancy system, it will not alter the long-term outcome of success. The only way it would be possible to do so (with negative results) is if the person has the subconscious ability (i.e., intuition) to consistently choose a greater majority of bad outcomes which, of course, is not random. The converse would hold as well: another person having the intuitive ability to non-randomly pick more of the winners than losers, exceeding the experienced results of someone taking all of the setups in the same time periods.

For example, no matter how hard anyone tries, s/he cannot pick and choose coin flips (from a fair coin) and alter the long-term probabilities of the experienced distribution results. The randomness has no reliance on the participant's timing of when to decide to choose a side. It is "built-in" to the fair coin itself.

So, there are two ways to neutrilize a person's intuition in taking trades from a positive expectancy system which could negatively impact the results: either take all of the trades OR flip a coin, you take the trade if it's heads, pass it it's tails (or vice verse). Then, you're assured of taking random entries from a winning system and your long-term expectancy results WILL mirror those of someone who took all of the trades.

 

[Fah Q]

Quote from marketsurfer:

It's not a matter of belief. the tests I have seen, including the one published in Van Tharp's book seem to indicate a distribution between profit and losses just like you see when TA is tested... in other words, some will profit with the random entry, some will lose just like TA trading...

you cant test all ta, the combinations of what a trader can put together; the overlap of certain concepts and studies, are nearly infinite. testing can only be done on some of these.

 

[cornix]

Quote from marketsurfer:

It's not a matter of belief. the tests I have seen, including the one published in Van Tharp's book seem to indicate a distribution between profit and losses just like you see when TA is tested... in other words, some will profit with the random entry, some will lose just like TA trading...

OK, but overall as you state TA entries are actually random, with money management applied is it a profitable activity or unprofitable?

 

[cornix]

Quote from SteveH:

Donna,

If you randomly pick trades from the population of valid trade setups from a positive expectancy system, it will not alter the long-term outcome of success. The only way it would be possible to do so (with negative results) is if the person has the subconscious ability (i.e., intuition) to consistently choose a greater majority of bad outcomes which, of course, is not random. The converse would hold as well: another person having the intuitive ability to non-randomly pick more of the winners than losers, exceeding the experienced results of someone taking all of the setups in the same time periods.

For example, no matter how hard anyone tries, s/he cannot pick and choose coin flips (from a fair coin) and alter the long-term probabilities of the experienced distribution results. The randomness has no reliance on the participant's timing of when to decide to choose a side. It is "built-in" to the fair coin itself.

So, there are two ways to neutrilize a person's intuition in taking trades from a positive expectancy system which could negatively impact the results: either take all of the trades OR flip a coin, you take the trade if it's heads, pass it it's tails (or vice verse). Then, you're assured of taking random entries from a winning system and your long-term expectancy results WILL mirror those of someone who took all of the trades.

This is an important matter you touched. Indeed in the case of discretionary (to some degree at least) trading intuition plays certain role and a person with inner beliefs that successful trading is "impossible" will repeat minor mistakes when choosing and managing trades, so that s/he effectively turns even a great signal into a losing strategy. Trading is a tiny edge game and even a few minor mistakes easily make one swing from profit to a loss.

Many people underestimate the importance of that, some people will say it's all BS, because you can't quantify this effect. Yes, you can't, just like you can't quantify the exact set of qualities which make a great musician or athlete... But that's life, it consists far not only of things which are able to be quantified.

 

[hoodooman]

ROSKOLNIKOF:You probably will never understand or be able to view and trade the mkts the way I do (and others do). It doesn't matter, your way may turn out to be great too. Only time will tell I guess.



Quote from marketsurfer:


Regardless, I still contend that random entries with money management will provide the same results over time as "non predictive" chart based entries. I really don't understand the difference.

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It is my understanding that surf uses a dart board and a chimpanzee.