Did Technical Analysis Exist back in the 1930's?

Discussion in 'Trading' started by GabbyJay, Dec 15, 2008.

  1. GabbyJay


    Just wondering if they knew about it back then. Any old old timers know?
  2. The very first TA was Charles Dow's 1/3 retrace and the Dow theory of transportations vs. industrials. The best before that was Livermore's "Buy when they cry and sell when they yell." The latter still being quite valid. An excellent book from 1932 is Schabacker's Technical Analysis and Stock Market Profits.
  3. auspiv


    TA really took off in the 1960s. before then it was widely discredited by most everyone.
  4. Jesse Livermore (July 26, 1877 — November 28, 1940), also known as Boy Plunger, was an early 20th century stock trader. He was famed for making and losing several multi-million dollar fortunes and short selling during the stock market crashes in 1907 and 1929.


    Jesse Livermore was one of the earliest proponents of Technical Analysis. As a lad, he worked in boiler rooms and learned a great deal about the basics of stock trading. He also had a special aptitude for numbers which he exploited in his later career. He believed in using margin and letting his bets ride.
  5. Tums


    Wells Wilder's formulas set the World off on a pursue of the Holy Grail.
  6. Dow was first to create averages for market monitoring and analysis. They are still in use, I hear.

    Granville and Dodd followed along with the P, V realtionship which tied the independnet variables together using time as the common variable.

    That gets you up to where you are asking.

    Later when data handling became easier (50's), the indicators were perfected. We use two basic kinds (absolute like MACD and relative like STOCH) and rarely are price and volume mixed (See ergonomics as an exception).

    From the 80's to mid 2006 an era of Quant's seemed to dominate in setting the inductive standard for data processing. The Black Swan result they have achieved and demonstrated has more or less stifled their era of contribution.

    As it turns out the minority control the markets. This is counterintuitive and befuddles most people who are not science or technically oriented.

    The technical analysis applied to those who trade has been done with about the same skills and approaches the financial industry did to enhance its sales and fees oriented profit making. The two major "effects" demonstrated by traders (sympatheric) who are CW oriented is the Bohr Effect and the Fight or Flight Response. Both are indicative of a "predicting" orientation. Prediction is not necessary and it turns out a NO NO for making money because of the human factors.

    In my expereince, since 1957, TA hasn't changed. It is the better way to be equipped to take the market's offer. It also has the benefit to the trader of being a parasympathetic orientation .
  7. mxjones


    Candlestick charts are said to have been developed in the 18th century by legendary Japanese rice trader Homma Munehisa. The charts gave Homma and others an overview of open, high, low, and close market prices over a certain period. This style of charting is very popular due to the level of ease in reading and understanding the graphs. Since the 17th century, there has been a lot of effort to relate chart patterns to the likely future behavior of a market. This method of charting prices proved to be particularly interesting, due to the ability to display five data points instead of one. The Japanese rice traders also found that the resulting charts would provide a fairly reliable tool to predict future demand.

    The method was picked up by Charles Dow around 1900 and remains in common use by today's traders of financial instruments.

  8. Oh, sure. You guys are trying to tell me Cramer didn't invent TA????

    Heretics. All of you.

    Go build yourself a library of Gann, Livermore, read Bernard Baruch's autobiography. All great reads and very interesting. And with NBC cutting back on sitcoms, what else do you have to do.

    I bought all mine original copies. A bit more expensive, but very rewarding.
  9. 1st historical reference... rice markets... Japan, 1600's.
    #10     Dec 15, 2008