Nice way you described in the second paragraph, I like it. The problem what makes people get hooked to TA is that it initially works because the market sometimes exhibits trends and they think it was their indicator that made them jump on the train. However, the trend could not care less about any TA or indicators. One time the trend will be broken and no TA in the world will predict this, and this is part of the randomness in the market. On the other side some TA followers claim that their analysis guides them in trendless markets longing when support holds and shorting when resistance holds. Well, they make small bucks each way but once support/resistance breaks they lose big time. This is where risk management comes in. Those who now immediately cut the position will do well but at the same time its their admission that TA DID NOT work. TA can guide in some very limited way but I get the impression as soon as I hear people talking about Elliott waves, gann, fibonacci and all this stuff they go over the top and make it religion. This is absolute nonsense.
Lol, this paper has been refuted by 3 other papers stating that one cannot make money consistantly by trading off round figures. Let's not quote some individual papers because each one has been countered by others. If the case was so clear I would not waste my time and hoped you dont waste yours by discussing this here...;-)
Heresy!! The idiosyncratic behavior of humans (hint: market memory) has no bearing whatsoever on random markets!!!
TA is paradigm. Not a system. TA practioners make money all the time when S/R are broken. Its just a matter of reading the market at key levels based on the paradigm provided. Based on your admission, its obvious you don't have a firm understanding of what TA is all about.
Random markets has everything to do with the idiosyncratic behavior of humans, and also is the cause of why they are not perfectly Gaussian.
1) TA practitioners guaranteed DONT make money all the time S/R are broken. Otherwise I would just trade each time S/R is broken and would make money no matter what. This is in direct contradiction with empirical evidence. 2) I dont need a firm understanding of TA because I position trade based on fundamentals and am very confident with my approach to trading based on the P&L it produces.
Yes, fat tails etc. But there are far more examples of predictable market events based on humam intervention. The markets aren't as random as you think.
Thats not what I meant. 'all the time' used in a colloquial sense (as in a lot) - not literal (absolute). Congrats on producing good returns with fundamentals. Whatever works..
There are no predictable market events. If this was true as you suggest then how come that market professionals at, for instance, options market making desks, rarely if ever trade delta? I do trade options professionally (meaning as sell-side trader, my above mentioned position trades are my personal trades) and I can tell you that I rarely hear of any other market maker taking exposure to the underlying no matter how strong our belief in some event is. Also, trading skew is far from being a sure money maker no matter how much experience one has. No matter which product you trade it comes all down to simple risk vs. reward, there is no sure fire method (unless you posess insider information). I could tell you tons of stories such as where some trader traded gamma big size, made a bunch, and in the second half of the year gave all back and then some. Those are not novices but seasoned market professionals. So, not sure whom you try to convince but dont tell me there are any predictable market events, it just does not exist. There is a reason why good maket makers are very well renumerated and one being the ability to generate good P&L with a low risk profile. This is only accomplished because of the non-exposure to delta and by NOT betting on some UNPREDICTABLE future event. I gave this example because I think it relates to the theme of TA. Technical analysis seems to suggest that one can find positive expectation trades simply by looking at past prices (and TA is just that, the synthesis of past prices). I beg to differ!!!