Why I Don't Believe in TA
- Thread starter marketsurfer
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Ask yourself why do you believe in TA despite all the evidence to the contrary-- other than anonymous claims on message boards. You really shouldn't believe them---- Rather than asking what others do. Asking yourself could be a good first step to long term profits. thank me later, surf
Why do you keep ignoring questions from others but expect us to answer yours? Weird.
My main point: why not present the >1000-trades backtest results for Price Drivers? Once you've posted them, you can just link to them in this thread or any future anti-TA thread you post to. Easy, peasy ... unless there's something about PD you don't want us to find out.
They will not allow me to link to my site, so here is cut and paste article on why i don't believe in TA
Why I Donât Believe In Technical Analysis
November 2, 2011 â 9:04 pm
Like most new traders, I got my start in the markets via technical analysis. Technical analysis as defined by the study of past price movements and chart patterns. It all seemed to make perfect sense on the chart, however, when applied in real time, things did not appear as clear as the various TA proponents proclaim. Buying break outs above the 200 day simple moving average, selling touches of the upper Bollinger Band and the other easily understood TA tenants simply failed to produce the profits promised by the gurus. Surely, I must be interpreting the data wrong, right? After many years of trading and market study, I have reached the conclusion that TA makes no sense to follow and it the prime reason new traders fail at this game. Here are 4 practical reasons this is the case:
1. Hindsight bias.
Charts are notorious for tricking the human brain into hindsight biases. It all looks very clear on a chart. However, what happens next has nothing to do with what has happened previously regarding price. Think about it. If you flip a coin 10 times and it comes up heads 10 times in a row, have the odds increased that the 11th flip will be heads?
2. Price is not the reflection of the herd.
A prime tenant of technical analysis is that price is the reflection of the herd, the mass of investors, so to speak. This doesnât make any sense. Price is the reflection of the money movement at any one time into and out of a security. This money mass can be controlled by one person, fund or several. The masses of investors donât control price anymore than the masses at a baseball game determine the victor. One hedge fund manager, who makes a decision on a whim, can completely change the direction of a security regardless of the herdâs positioning. He who has the capital is who controls price. The same argument can be made against behavioral finance.
3.There is no evidence of technical analysis working.
aside from a few inconclusive papers by Andrew Lo of MIT, there is no evidence of TA being effective enough to increase ones odds of a winning trade upon entry anymore than random chance.
4.Prop Firms and Banks donât use it.
While TA may be used to explain concepts at these institutions, it isnât taught as a trading method. Ever wonder why the various Forex bucket shops, which make money when the trader loses, heavily push technical analysis? However, prop firms and banks who share in the traders profits donât teach TA as a trading tool. The answer is quite clear.
Those are the 4 prime reasons I donât believe in technical analysis as a real time trading tool. For market analysis and explaining concepts, nothing beats it. However, for making trading decisions, it falls way short of the mark.
The TA Brigade Training Class
Surf,
Are sure props don't use TA, because I recall watching that trading promo movie, a few years back about the guys trading from Gibraltar I believe, and all of them had price charts with S/R, volume, and some other basics TA stuff on their screens. I guess we need to define what is TA and what is not?
Are sure props don't use TA, because I recall watching that trading promo movie, a few years back about the guys trading from Gibraltar I believe, and all of them had price charts with S/R, volume, and some other basics TA stuff on their screens. I guess we need to define what is TA and what is not?
My experience has been that props use TA to illusitrate points, just like I do. Very few if any use it as a real time trading tool based on my experience. If I am wrong, I would be happy to see evidence that any firm that relies on your profits advises to use TA. thanks!
Sarcasm instead of a straight answer, surf?Quote from marketsurfer:
The TA Brigade Training Class
Please explain why we can't see your PD backtest results when you insist on seeing TA performance results before you'll accept TA as valid. I'm not asking for your secret sauce, just the initial conditions and the output performance of PD. What's so wrong with that?
Maestro:
Baron has been working on ET.
As a consequence ET no longer has posting continuity. There is an information gap (about 9 days).
You began a thread on the "new" version of ET. The new version died when Baron dropped the new version and returned to the most recent part of the "old" version.
You can review the gap by looking at your posts. you will see the gap.
If you wish to have a record of your posts, you have to save them in files and put the files in a folder.
If you are an OP, then it is good to make periodic files of the whole thread. When you do you then have the posts that you responded to. You can delete from the saved material any detractor stuff.
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