whoa, man. this is a good thread, no haters here yet, just strong opinions. i left the large corporate world in 1994/95--- good luck to you, JJ. surf
I'm in the middle of this book at the moment: http://www.amazon.com/Demon-Our-Own...8448867?ie=UTF8&s=books&qid=1189982781&sr=8-1 TA aside, have a look at what else doesn't necessarily work as intended.
<i>"whoa, man. this is a good thread, no haters here yet, just strong opinions."</i> Excellent point, surf. Everyone here has exchanged differing opinions in mature, respectful manner. The direction of topic may have veered, but is still material to the subject of thread. * There are three and only three ways to make trade - investment decisions: wild-a** guesswork, fundamental analysis or technical analysis. That's it... just three choices to determine trade entry, exit and management decisions. Let's explore each one in opposite order, using chicken egg futures as the example subject. #1: Wild-a** guesswork. This is where someone learns the current price of eggs, emotionally decides it is too high or low based on that with no other comparison and buys or sells. Need we say more about that as a viable approach to profitable trading? #2: Fundamental analysis. This is where academics and engineer types gravitate toward. Give them numbers, stats and reports to assimilate. How many layer chickens have recently been sent to packing plants? How many new chicks are being hatched & shipped? What is the price of feed? Is feed consumption rising or falling? Is feed composition changing due to price pressures from one grain (source) to another? Fundies will exhaust themselves searching out and sifting thru inane data they feel gives them an edge. I'm sure somewhere out there, some academic type is measuring the moisture content of chicken manure with a refractometer to see if the birds are constipated or not. After all, constipated birds eat less but then again lay eggs less frequently, too. Would that info be bullish or bearish the egg market? Oh well, needn't worry about those details. Stats & data are all that matter, regardless of relevance. #3: Technical analysis. The definition of TA is ANY use of a price chart for trade decisions. If you take one glance at a chart for trade decisions, that is technical analysis. Fundies scoff at charts as irreverent data in efficient market theory. Ya with me this far? Secondly, there is no such thing as "pure price action" on a chart. All those little candles, bars or lines are derivatives of pure price action. The very moment we segment a chart into time, tick or volume measure, we create an indicator. That indicator tells us what price action has done thru blended, measurable data each x-minutes, y-ticks or z-volume settings. Keep in mind the market is (ostensibly) oblivious to these imposed measures. Does the market care about 3min, 4mi, 5min or 15min segments of price action? Not one iota more than it cares about price indicators. So, price charts (being undeniably part of TA study) of any timelength artificially segmented by assigned values to measure are a derivative of pure price action. A derivative of this derivative would be price oscillators: volume, MA values, MACD, CCI and all others. A separate class of derivatives from price study would be sentiment indicators such as tick, ticki, trin, vix, adv/dec, etc. Chart tools such as these measure price action segmented on a chart. It is the act of manipulating price action from pure unadulterated to segmented which allows oscillators to exist. Oscillators visually measure the movement of segmented price action, that which we assign values of time, tick or volume to create measurable bars of relevance. The statement that TA doesn't work and/or cannot be proven to work in academia is an incomplete statement. Based on the burden of proof criteria needed to satisfy rcanfield by his request, it cannot be done any more than one can prove fundamental analysis works. For every example that FA works, we can list ten where it failed to work. Right or right? That said, making trade decisions from ANY TYPE of price action on a chart, that which is artificially segmented (derived) from pure price action (between opening and closing bells in unbroken sequence) is based squarely on TA. So, my sincere accolades to rcanfield for realizing +36pts ES in 75min using pure Technical Analysis study and tools. Well done, and Bravo! Which of course sure beats the heck out of sticking refractometers inside composted piles of chicken manure (or worse, the live chicken) to detemine the relative value of egg-futures pricing. Have a great day signed off
Does it really matter if TA works or not? Trading is all about staying with the trade when it works and getting the hell out when it doesn't.
I give this all the credence deserving to a 2-post alias, especially when you repeat a drive-by, boilerplate denunciation identically in 2 places. It is called "ignore"