Excellent Commentary All ........................................................................................ The real question here is that ....if TA is not valid...then how does one look at the mathmatics of trading...? If one thinks that it is not necessary to include trading mathmatics as part of how one views prices in buy/sell decisions....then just how does one view prices ....?
Yes, but the price can be increasing in a downtrend (=reaction) on which you would not want to buy. And with proper TA knowledge, you can avoid such costly mistakes.
WHAT SENSE DOES THIS THREAD MAKE? Really now... Is this really a debate? I don;t even understand what "WORKS" means!!!!! If the original poster, by "works" means, yields you money.... then NO. TA does not WORK. Why should it work? YOU have to WORK, and TA is just a tool you can use to identify opportunities. This thread is idiotic. Just like every other lame ass thread that states "MACD does not work" or "trendlines don't work" ... No wonder 95% lose their shirt! Be well!
First of all, to understand the between the lines statements by rcanfiel you need to know one key fact about him... He knows TA works and has gone on record here at EliteTrader.com to state that TA has value via using support/resistance analysis or trendline analysis. Yet, he didn't go into any supportive details to prove why he felt there was value in s/r analysis or trendline analysis. Knowing the above puts a different light upon his current thread. What is he really trying to say? * He is talking about indicators ONLY even though he prefers to just say Technical Analysis is Useless. * He is talking about the use of traditional indicators and not anything involving something that's been customized as a blackbox system. Reason why he doesn't discuss systems is that he's a system developer and has gone on record to state he has found value (it had an edge) in about 1% of the stuff he's tested. * He has excluded price action only TA methods and there's a reason to such exclusion. The most successful traders I have met in person that are profitable for many years and still are along with watching them trade in person on a few occasions... These are traders using price action only TA methods in combo with something else. These are the types of traders that causes a system developer without proven system that's profitable to question his/her own efforts about the route they have choosen when they see what the other guy/gal is doing that's profitable. That in itself (many price action only TA methods) makes it very difficult to blackbox or to verify other than viewing the trader's profit/loss statements. * There are many traders at ET posting their profit/loss statements showing consistent profits and they are using TA. So why ignore these traders or exclude them from the TA debates? I was scratching for answers about that myself. I concluded that rcanfiel and marketsurfer are looking for a simple method that can be coded for testing. Nothing more and nothing less. Yet, they know that the profitable traders using TA are using it in combo with something else to determine their entries and exits. They also know that most profitable traders using TA are not going to reveal the details of how they are combining TA with that something else. That's the problematic issue for guys like rcanfiel and marketsurfer. Traders are willing to show their statements that TA works but they are unwilling or don't care to show the details of their TA. Therefore, if a trader has questions about the merits of TA... You (rcanfiel and marketsurfer) really need to be very specific about your arguments instead of making generialistic statements. You should also not use proof of stuff that's been tested that doesn't reveal any information about the trade management of the TA signal. My point with the above... There's testing information with statistics available on the web for free in which is shown that there are particular TA methods that are not reliable even though we know nothing about the trade managment that was used. (Note: rcanfiel has often used these sources as references of proof.) There's also lots of traders that shows their profit/loss statements and they are profitably using TA even though we don't know the trade managment being used and in many cases don't know what type of TA is being used. Conclusion, whom are you willing to believe? I choose the traders with verifiable profit/loss statements especially if they are using TA methods involving s/r levels or trendlines that rcanfiel saids has value. I still think its very odd to see the usual type of exclusion talk or ignore tactics... * No price action only TA methods * No traders with verifiable statements. http://www.elitetrader.com/vb/showthread.php?s=&threadid=83837 There are other traders on the internet with verifiable statements going back many years that has been using the same TA (accordingly to them) after finding something that works in combo with something else. Analogy: Technical Analysis is like a track n field event. Just because you can't figure out how to do the long jump doesn't mean someone will not be able to figure out how to do the 100 meter dash. Geesh...I keep forgetting...what's the debate about again??? Well said. Mark (a.k.a. NihabaAshi) Japanese Candlestick term
I have not read these nine pages and nor do I intend to. TA involves the use of indicators ... this we all know. Indicators are merely a mathematical manipulation of up to eight inputs ... some people know this and mostpeople fail to grasp it. because ....... Peddlers and vendors (failed traders) have given Indicators a life and personality all of their own in order that the Peddler may profit from it. Indicators a merely highlights of price and volume action which you would understand if you watched the price chart instead of being distracted by the secondary windows. Take RSI divergence for example. If you cannot see what it is desperately trying to REFLECT on the price screen then you should be banned from RSI for as long as it takes to cure you of it's addictive powers and for you to return to reality ... assuming this is at all possible. And before you ask, the eight inputs that I am aware of are: H; L; O; C; OI; askvol; bidvol; time. Are highlights useful? Well they will be as useful as you care to make them. They are yours to do with as you will.
Only a total moron would conclude that effective use of TA does not increase probability of better entry/exit ---or that following a trend is not the way to trade. It's time to get real folks and become professional traders. Thank you for your time--
>alex.samant By 'work' I would hope they mean 'that the indications are depenable in the vast majority of the cases.' So are they dependable? I think that those who do all of these 'TA doesn't work tests' are usually testing those indicators that have come into fashion over the last 20 years or so. I don't doubt that they may find some of them less than rewarding. After all, so many of those indicators are so distant from the basics of TA that those expecting a high percentage of successful trades will surely be the first to say that TA doesn't work. But what about the true basics of TA, starting with The Dow Theory. Do these people understand and test this theory? Well many of us have been using it and the tools that have derived from it for many years. I for one have not found it necessary or desirable to drift away from the basics to use other forms of TA. Not to brag, but if the basics of TA were not dependable over 70%Â@of the time, I think that over the last 35 years of using TA, my Mensa I.Q. would have enabled me to see so. I've been away from English for 40 years so I can't write well what I truely believe. That being just that the 'basics' of TA can be proven to be dependable.
a question to ponder---- what percentage over 50/50 odds of each trade, scalable, combined with money management/pyramiding would enable one to gather huge amounts of capital to quickly become the wealthiest person on earth? thanks, surf