"Why Technical Analysis is Nonsense"; Views?
- Thread starter Trend Following
- Start date
Ed Seykota, Paul Tudor Jones, the list goes on, all have done extremely well using TA. The "prince" is misinformed.
I've always been confused by the people who wont predict anything. I mean I take things one day at a time, but as you correctly pointed out the very act of entering a trade is predicting something - even if that prediction is based upon solid evidence. Also, there is a book some of you might be interested in, I cant recall the auther, but its title is something like Fact Based T/A, which tries to quantify any number of T/A patterns and indicators.
Brandon
It seems to me that the problem is terminology --- and the richness of the english language.
All TA is based on a prediction -- that the pattern being reacted to has a positive expectancy. Substitute trend/trendchange/statistical aberration/ etc etc ... but there is a prediction of positive expectancy over repeated trades. If one didn't predict that following their plan/system/intuition was going to result in a profit then why would anyone be doing it?
BUT one of the worst habits of people trading is to be attached to a position and "predicting" results in attachment and a higher likelihood of mistakes like holding on when it doesn't go where you predict it should even though your rules say --- no, shout --- exit now!!!
So, I don't predict what will happen after I react and take my entry ... lose or win I try to have equal lack of concern. But I do predict that repeatedly doing the same thing will result in profit. I just never know which trades will and which won't.
Its a little like propositioning women.
Ahh, life is so simple when your knowledge rests within the pages of some out of date text book and experience is something that you could only dream about.
I wish i had the opportunity to grasp the finer points of hedge funds and wall st from a couple of summers getting coffee from some office boffin.
And as far as i am concerned there is a lot of TA that is chock full of wank.
HOWEVER, I have to confess that I am a technical trader. I believe that technical analysis and money management provide the foundations for "statistical trading".
If you see the same thing happen repeatedly you can profit from it: by quantifying it and assessing its risk. Then you hedge your bet with aggressive money management and in the end you turn a profit. Trend following is statistical trading, swing trading is statistical. Sharpe ratios and expectancy are statistical models.
There is no prediction of the future just a keen eye and knowing how to manage risk. Some use their own intuition and see patterns, I use some computer code but we are all doing the some thing.
I wish i had the opportunity to grasp the finer points of hedge funds and wall st from a couple of summers getting coffee from some office boffin.
And as far as i am concerned there is a lot of TA that is chock full of wank.
HOWEVER, I have to confess that I am a technical trader. I believe that technical analysis and money management provide the foundations for "statistical trading".
If you see the same thing happen repeatedly you can profit from it: by quantifying it and assessing its risk. Then you hedge your bet with aggressive money management and in the end you turn a profit. Trend following is statistical trading, swing trading is statistical. Sharpe ratios and expectancy are statistical models.
There is no prediction of the future just a keen eye and knowing how to manage risk. Some use their own intuition and see patterns, I use some computer code but we are all doing the some thing.
No on the contrary Michael, you could care less, this was just bait. You're not truly interested in our opinions or beliefs, only our dollars.
After all, you don't really trade, do you? You are a salesman, standing on the shoulders of broken men and myths.
Your belief in trends and technical analysis are mute points because you have no points to make. Your only concern is taking dollars from the gullible and the lazy.
You're running out of time I believe. The market topped and interest will be waning from the new blood within a year. Your previous notoriety is fading faster than your stamina and soon no one will remember or even care.
What will you do to survive then? Trade maybe
Don't look now but the trend has changed.
Goodbye Mr. Covel
I was beginning to think I was the only one who noticed!
Pick an emotive, controversial subject, trawl the forums, collect bucks! It's a great business plan and it seems to be working
Trend Following
Sponsor
Let me change away from the TA jargon just for a moment... I know you have respect for Crabel, a shorter-term, systematic trader. But what do you think of the likes of Harding (Winton) and his trend trading/systematic peers? Harding has a great document from a few years ago that I have in hard copy called the "Winton Papers". Will see if I can find the individual PDFs that make it up. Very nicely written.
<i>"I was beginning to think I was the only one who noticed!
Pick an emotive, controversial subject, trawl the forums, collect bucks! It's a great business plan and it seems to be working"</i>
Heck, that's the basic human behavior premise which drives ET website itself.
How many times are the same tired topics rehashed by either perennial losers or (worse yet) people who don't even trade at all? Seriously now, a trading forum of Elite participants allows self-professed non traders to introduce topics as if it were doctrine?
*
There are three and only three basis of determination for trade entry decisions. For the umpteenth time, they are:
#1) Wild-a** guesswork = throwing darts
#2) Fundamental analysis
#3) Technical analysis
The first category should be self-explanatory.
The second category involves & includes all manner of supply / demand research.
How many barrels of oil are being produced versus refined?
How much soybean oil and meal are being crushed versus whole beans used?
What is the acreage of winter wheat planted across North America, what types of wheat are planted, how is the winter effects (too much snow, too little snow, too wet, etc)?
How much copper is being mined / recovered from the waste metal refinery stream versus demand from production plants?
How much stock in a company is under accumulation or distribution from big funds? Company insiders?
What is the overall economic outlook? What are the micro economic views, aka employment, GDP, inflation reports, consumer sentiment, etc?
All that and legions more just like it fall into fundamental analysis aspect of arriving at trade entry decisions.
**
The third category includes everything NOT INCLUDED in the first two above. To be more clearly defined, everything and anything derived from pure price action and/or a chart without regard to fundamental supply/demand.
Technical analysis fully encompasses and includes: pure price action. Anything visible on a price chart. Anything derived from price action past or present. Anything derived from a derivative of price action past or present.
That is the definition of Technical Analysis. If you arrive at a conclusion for trade entry action based on ANYTHING gleaned from a price chart at its core, you are trading technical analysis. Welcome to our club. Some of our many member can be found in this thread: http://www.elitetrader.com/vb/showthread.php?s=&threadid=113193
It's the one and only (with zero exceptions) place on this entire forum where you won't see perennial losers and non-traders polluting the truth in some way or another.
***
I've been berated before when saying this forum is geared for entertainment but it's a poor place for pure education. Why? Because too many threads just like this confound, confuse and derail aspiring traders from evolution to success. ANY EFFORT promoted that knowingly or otherwise steers someone astray from the long road toward success as a trader = hindrance to education.
Right or right?
http://www.elitetrader.com/vb/showthread.php?s=&threadid=113193 is where you can measure the merits of technical analysis with real math as the judge. In the end, math is our only black & white balance of judgement... all innocuous studies and blog blather or nothing more than mere noise.
Pick an emotive, controversial subject, trawl the forums, collect bucks! It's a great business plan and it seems to be working"</i>
Heck, that's the basic human behavior premise which drives ET website itself.
How many times are the same tired topics rehashed by either perennial losers or (worse yet) people who don't even trade at all? Seriously now, a trading forum of Elite participants allows self-professed non traders to introduce topics as if it were doctrine?
*
There are three and only three basis of determination for trade entry decisions. For the umpteenth time, they are:
#1) Wild-a** guesswork = throwing darts
#2) Fundamental analysis
#3) Technical analysis
The first category should be self-explanatory.
The second category involves & includes all manner of supply / demand research.
How many barrels of oil are being produced versus refined?
How much soybean oil and meal are being crushed versus whole beans used?
What is the acreage of winter wheat planted across North America, what types of wheat are planted, how is the winter effects (too much snow, too little snow, too wet, etc)?
How much copper is being mined / recovered from the waste metal refinery stream versus demand from production plants?
How much stock in a company is under accumulation or distribution from big funds? Company insiders?
What is the overall economic outlook? What are the micro economic views, aka employment, GDP, inflation reports, consumer sentiment, etc?
All that and legions more just like it fall into fundamental analysis aspect of arriving at trade entry decisions.
**
The third category includes everything NOT INCLUDED in the first two above. To be more clearly defined, everything and anything derived from pure price action and/or a chart without regard to fundamental supply/demand.
Technical analysis fully encompasses and includes: pure price action. Anything visible on a price chart. Anything derived from price action past or present. Anything derived from a derivative of price action past or present.
That is the definition of Technical Analysis. If you arrive at a conclusion for trade entry action based on ANYTHING gleaned from a price chart at its core, you are trading technical analysis. Welcome to our club. Some of our many member can be found in this thread: http://www.elitetrader.com/vb/showthread.php?s=&threadid=113193
It's the one and only (with zero exceptions) place on this entire forum where you won't see perennial losers and non-traders polluting the truth in some way or another.
***
I've been berated before when saying this forum is geared for entertainment but it's a poor place for pure education. Why? Because too many threads just like this confound, confuse and derail aspiring traders from evolution to success. ANY EFFORT promoted that knowingly or otherwise steers someone astray from the long road toward success as a trader = hindrance to education.
Right or right?
http://www.elitetrader.com/vb/showthread.php?s=&threadid=113193 is where you can measure the merits of technical analysis with real math as the judge. In the end, math is our only black & white balance of judgement... all innocuous studies and blog blather or nothing more than mere noise.