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Why technical analysis is less effective intraday
- Thread starter crgarcia
- Start date
TA works intraday and interday.
But perhaps the reason it is easier to design something for interday is because we all know markets that possess large trends (or chop). That internally biases our design process.
Ie its easy to design an interday system on goog, aapl, etc -- just buy with a tight enough stop ...and catch one trend to pay for the rest. Of course, if everyone agrees on a price for AAPL going forward and AAPL never trends from here on out, a trend system will be a big loser.
Same for the short side... Intraday is hard additionally because intraday price action doesn't necessarily coincide with an overall trend or market type. (ie choppy interday markets may be very smoothly trending intraday, or vice versa)
But perhaps the reason it is easier to design something for interday is because we all know markets that possess large trends (or chop). That internally biases our design process.
Ie its easy to design an interday system on goog, aapl, etc -- just buy with a tight enough stop ...and catch one trend to pay for the rest. Of course, if everyone agrees on a price for AAPL going forward and AAPL never trends from here on out, a trend system will be a big loser.
Same for the short side... Intraday is hard additionally because intraday price action doesn't necessarily coincide with an overall trend or market type. (ie choppy interday markets may be very smoothly trending intraday, or vice versa)
Quote from gnome:
Trading on "price" works on all time frames equally well.
If you're trying to trade off of "moving this" or "derivative that" in a volatile market, you'll be lagging frequently.
What is your definition of "trading on price" gnome?
Market Profile, chart patterns, tape reading, trend lines, etc?
My two cents:
Technical Analysis works on multiple timeframes - short term, long term whatever....
but
when you use technical indicators such as MACD, RSI, EMA's etc. you will get more signals on the shorter time frame and these signals will be less reliable - on a longer term time frame you will get fewer signals, but they will be more reliable...
Technical Analysis works on multiple timeframes - short term, long term whatever....
but
when you use technical indicators such as MACD, RSI, EMA's etc. you will get more signals on the shorter time frame and these signals will be less reliable - on a longer term time frame you will get fewer signals, but they will be more reliable...
I think technical analysis works well if you use it over longer time periods. For example, if you use moving averages I'd know where they are on daily and weekly charts as well as 120 min charts. I find that regardless of what underlying you trade, these longer term averages are more reliable for pivots or reversals than shorter term. Of course nothing is golden and keep your stops where you are comfortable, but I find the longer term data more reliable. You won't make tons of daily trades in a few products, but will cut down commissions and in my opinion place a higher conviction bet. Some traders do great getting in and out all day. I prefer to pick bigger spots in handful of instruments.