Why I Don't Believe in TA

[cornix]

Quote from MAESTRO:

My Thread "Intuition Amplifiers" has been completely removed. Anybody knows why?

MAESTRO

Can't express how sorry I am about it. Was one of the best threads in months if not years...

 

[cornix]

Quote from marketsurfer:

Its the reasons price moves rather than price itself--- price is the effect not the cause, TA studies the effect-- this makes no sense when you can study the cause of price movement--- fundamental factors, the book, money flows, new, etc are all price drivers. The Price Driver system quantifies these factors and then assigns a bullish or bearish bias to the market prior to the price moving. It predicts unlike TA that reacts after the fact. Hope this makes sense. surf

Fundamentals are a long-term instrument... the book in futures is... is it any readable by humans at all nowadays?

 

[cornix]

Quote from marketsurfer:

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!

I do use TA as main tool and confirm it with real-time calls.

 

[Eyez]

Quote from kut2k2:

Sarcasm instead of a straight answer, surf?

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?

There is nothing wrong because it doesn't work.


When marketsurfer says PD's detect movement in real-time; simply ask:

1). So why do you average down?

"lame excuse"

2). But why do you need to average down if directional movement is detected in real-time and objectively?

 

[d08]

Deja vu, this topic was discussed to exhaustion last year. It's classic case of "I tried what the manual recommended, didn't work, it's all nonsense". You have to be innovative, if this was as easy as testing a few MA crossovers, where would the losing traders come from?

Remember, this is a guy who posts articles about himself because frankly, no-one else cares.

 

[cornix]

Quote from d08:

Deja vu, this topic was discussed to exhaustion last year. It's classic case of "I tried what the manual recommended, didn't work, it's all nonsense". You have to be innovative, if this was as easy as testing a few MA crossovers, where would the losing traders come from?

Remember, this is a guy who posts articles about himself because frankly, no-one else cares.

Not even crossovers, can be simpler than that and still very profitable. But requires more than just brief testing.

I spent whole weekend optimizing stats just for my entry/exit orders. Whole weekend in a spreadsheet application. After 8 years of full time trading. And that's just a tip of an iceberg. Too much work for most people in exchange for such a scalable profession, they'd rather work somewhere for a fixed salary.

 

[TheMagican]

Quote from Eyez:

There is nothing wrong because it doesn't work.


When marketsurfer says PD's detect movement in real-time; simply ask:

1). So why do you average down?

"lame excuse"

2). But why do you need to average down if directional movement is detected in real-time and objectively?

You have no clue on how the markets WORK,don`t you?

 

[Eyez]

Quote from TheMagican:

You have no clue on how the markets WORK,don`t you?

You double negative implies that you think I do.

 

[ammo]

Quote from marketsurfer:

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 Don’t Believe In Technical Analysis
November 2, 2011 – 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 doesn’t 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 don’t 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 herd’s 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 don’t use it.

While TA may be used to explain concepts at these institutions, it isn’t 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 don’t teach TA as a trading tool. The answer is quite clear.
Those are the 4 prime reasons I don’t 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.

you said close to nothing in here about price drivers,and the rest is all anti TA,so the gist of this post is more of the same,anti TA crusade

 

[Mtrader]

Quote from cornix:

Not even crossovers, can be simpler than that and still very profitable. But requires more than just brief testing.

I spent whole weekend optimizing stats just for my entry/exit orders. Whole weekend in a spreadsheet application. After 8 years of full time trading. And that's just a tip of an iceberg. Too much work for most people in exchange for such a scalable profession, they'd rather work somewhere for a fixed salary.

You can compare TA with using an excel preadsheet. Some people can do magic things with excel, others have no clue what it is used for.
Track records are the only thing that matters, because they show objective what works and what doesn't work.