This is plain honest and true. The problem IMO was not technical analysis but that the trading entries were not robust enough to deal with randomness, as you said. TA is a tool. What you get out of it depends on your level of understanding of it. By the way, there was a very good imo article in the price action lab blog yesterday about the use of trailing stops when developing systems and how they usually force random entries to look profitable in backtesting and paper trading but when market dynamics change those systems lose money. I think the message from that article is the following: do you know the minimum predictive capacity of your system under all conditions? If you do not, then do not trade it because sooner or later you will lose money with it.
It will never be possible for a study, any study, to possibly be able to test all that is considered TA to come to such a conclusion. TA is so vast, so diverse and, many times, very proprietary that any "garbage" study should be taken with a grain of salt.
Did you just use the word 'predictive' ?? I thought it was out of your dictionary as long as trading was concerned..
Doesn't make any difference if it is or not, it is used it that context to differentiate between random and robust signals. Do not confuse use of predictive in metaphysics with use of predictive in trading. The latter implies probability the former certainty.
@Laissez Faire, many different types of strategies were automatically constructed that when reviewed could be classified, by a human, as breakout, mean reverting, trend following etc. over a full range of market conditions as appeared in that data. @logic_man, I agree that 7 billion is only a small subset of the overall search space but I did use some very efficient search algorithms like PSO and DGP to ensure that the most interesting looking areas were searched. Obviously there is a limitless way in which constants, logic, arithmetic and probabilistic operators and existing TA functions can be combined to create a strategy but I consider this at least a reasonable attempt to find a solution. Also many solutions boil down to be very similar and the fact that they kept re-occurring suggests that you are finding the same artefacts in the data via different solutions. In fact I had to put code in to ensure that solutions were sufficiently different from each other otherwise I would have ended up with the same solutions many times over. Because of the sheer number of combinations and the fact that markets are constantly generating yet more random data, you'll never be able to say categorically that TA doesn't work. I just think that I made more effort than most to find useful TA strategies and failed. Conversely, nobody can ever prove that it works in any statistically significantly way. Taleb's book 'Fooled by Randomness' probably has much to teach us here.
Basic T.A. and the "art of interpreation" works! The B*S* you see in these Adverts and web sites is a crock of B*S*.
Do you have the ability to define what the statistically significant boundary is? If you saw some results, could you judge their significance. I'm sure that I am a nobody. On the otherhand, occasionally, taking the lesser travelled route can be a branch point in moving forward. In RDBMS the beginning point only has ten cases that fall into two very unbalanced classes. 24 tables are required to move through a trend to take the full offer of any trend. Most successful early TA systems only had indicators with six cases and again they fell into two classes. Later when the PC was invented, the markets only changed in a manner where there was less real time between events. Events, for sufficiency, fall into only five classes. Also, the way the Orders Of Events mingle is a very rigid invarient system of ranking. I read what you wrote. I was looking at how you prevented yourself from examining how markets work. I may be that finding this out first, then sets you up for working algorithmically with "in kind" HS's amd their PM's. Very basically, all markets will always have "granularity". This precludes anything but "finite sets" What turns out to be most rewarding, is understanding that there is NOT a one to one relationship among the variables. If there were, then markets could not "cycle". this thread is only a few years old and most of the comments have little worth. It is time to measure.
Did you read Aronson's book (Evidence-Based Technical Analysis)? What performance level would it take for the best system out of 7 billions to refute the null hypothesis? IMO, the problem isn't so much that randomly generated TA works or doesn't work ... it is to identify recurring market patterns with enough of an edge to make-up for fixed costs, commissions, bid-ask spread, slippage, all kind of technical & human failures, and then some. I have to agree that finding those market patterns mechanically would be nice, but is likely out of reach for (most) anyone. What seems to be a little more doable, is creating systems that do take advantage of recurring market patterns - once identified. But even that is extremely challenging.
Yes, it sounds as if your search was more exhaustive than even most of the academics who write on the topic, so your findings are definitely a cut above the typical writings on the subject.
does anyone know how to find the supp res areas in ta and look at 3,4,5 correlating markets and see what 3 do when 2 meet res supp,this is a useful way to use Ta,as a guage of supp/res and how it holds or doesn't against correlating markets, or how the correlating markets hold or dont when one meets res,supp,watch those correlations and you will find a stronger tradeable data,you first have to except that you are working in the dark, and you are meant to be fooled,it's profitable for the manipulators, the biggest players, the ones intentionally providing mixed signals to profit from,it is their footprints you are trying to track,not an inferior computer program limited to the rest of the markets blindside and a lot of mathematical proofs that is known by the best and designed to fail, the market runs on profit,the greater number of traders fooled the more profit,would someone try to make an index using the transports, dow,spx,eur/usd,nasdaq,russell,and oil with an occasional bank index or aapl or the stongest stock in each of those indexes and run one of your ta studies on it