It won't work without the foundation of a minimum amount of winning entries and trading in a market appropriate to the money management style or system. It is key however. Trading is still hard because GREAT money management is not easy. It needs discipline, good psychology, understanding and managing risk, and knowing how to maximise returns which means great ability to figure out what the market will do next (which I don't have) or some serious data/statistical analysis to underpin decisions, which is my preferred route. I've worked with a large number of people in my lifetime, from line supervisors to CEOs. Let me assure you the average Joe at any level is not great with numbers, sucks at logic, and makes too many decisions clouded by emotion. Honestly, how many people do you know with the capability to figure out what the market will do next?
Quite right here. I'm lucky I truly enjoy working with numbers. I can bury myself in Excel for hours, in contrast sitting and watching a live chart gets old after a while.
You have a point here. Indeed trading is not much different from other highly scalable professions in this sense. To become a great trader is no harder or easier than a great neurosurgeon, great lawyer, great singer, athlete etc. Ask any truly successful person about their way to success and the answers will be much the same as answers of successful traders. As for money management, I have detailed stats for my trades. Guess what? Results are different, but edge remains within the very wide range of money management tactics from scalping to huge R:R swing trading. At the same time money management alone with random entries is unlikely to provide any edge, otherwise anyone could create an algo which is basically a money machine, because money management has usually not many inputs.
Someone tried: http://www.elitetrader.com/vb/showthread.php?threadid=23498 Not sure anyone actually traded that idea with a proof of success over time.
I'll admit, I am sceptical TA can do the job. 1 or 2 years ok, but then markets change and you back to drawing table and excel. that was my experience at least. cornix, can you please disclose win rate you are averaging normalised to 1:1 risk reward? This would be expected win rate you are trying to demonstrate in other thread.
Around 55-60% in the long-term normalized to 1:1 risk/reward I think. Raw win rate is probably closer to 50%, but risk/reward is positive. All figures net with commissions included. As for TA, I don't notice that any patterns "stopped" working. Volatility changes, yes. Some markets become dull and other become active depending on fundamentals. Consequently some TA patterns and elements of tactics, which require overall higher or lower volatility tend to work better or worse. But market structure doesn't change at least to the extent of my personal experience. When you're in the markets every day you adapt as volatility changes and it's not that dramatic.
My problem isn't with TA necessarily, but rather the grossly inaccurate portrayals of what is possible with it that abound on the internet. I do not doubt there are profitable traders that use some form of TA. Just don't talk to me about turning 10k into 80k year after year after year.... LOL!
For me it is like driving a car. In driving you "know that you know" because you have knowledge and skills and a reliable auto and all drivers follow the same defensive practices on the roads.