the basic flaws in TA

TA is an all encompassing title.

When I draw a trendline on my screen, price neither cares nor acknowledges the fact that this line exist, it is created by a program and show in my computer screen. So when I draw this imaginary line on a chart, why does price respect it? Bounce off it or break and retest it?

Newtonian physics, Euclidean geometry, Dow/Elliott theory, Chaos theory Fractal mathematics the list goes on…… imho, boil it all down, there are certain natural laws or tendencies that repeat themselves in virtually all aspects of existence.

The charts, or price, are nothing more that the psychological cycles of fear and greed being played out by the participants of the markets. Moreover these cycles show themselves to be respective of the natural laws or tendencies mentioned above. Also mankind’s emotional patterns also tend to repeat themselves.

These repetitive cycles and or patterns present us with an opportunity to predict the future direction or levels of price, thus defining a tradable edge on the markets.

In a nutshell, people rarely learn from their mistakes and repeat them over and over again. Our job is to see the herd, in advance, lining up to make the mistakes and positioning ourselves to profit from it.

In the markets, being right or being wrong is immaterial, it’s all about making profit.

 

You have certainly covered all the bases.

 

kiwi

Good to see you posting again its been awhile since I saw your last.

Dave Goodboy aka surfer is a co owner in this site I believe!

http://www.realworldtrading.com/cfforum/viewtopics.cfm?Forum=54&RWTcat=34

Dave I really don't know what your motives are but I still like you and you have always been fair with me so I'm not making any assumptions.

 

exactly.

end of argument.

 

well, it can be argued that these people do exist--- arch craf*rd comes to mind--an astrologer with the top record of all financial newsletter writers for the longest period.


money managers are too small of a group to make your statement about, speaking of being obtuse.

and finally, you are assuming that we know about everyone in the multi decade success club and that these people are telling the truth about how they trade......

best,

surfer

 

You are REALLY reaching now brother -- Kareem Abdul Jabbar would be impressed.

First of all, the performance of a newsletter writer can never, ever be compared to the performance of a real money manager handling real money. (And I do not say that as a disparagement to newsletter writers at all. Giving investment advice, a legitimate enterprise in its own right, is simply a different business than actual trading.)

Second of all, we are not talking about subjective opinions in regards to 'too big' or 'too small.' We are talking about statistical relevance. When you have a ten to twenty year time frame and more than a dozen guys doing the same thing with great success -- on a scale of hundreds of millions to billions, with many lesser known smaller players to boot -- you can no longer pooh pooh the results. (Also balanced against the coin flip argument is the mountain of commission and slippage costs that every large-scale trader must climb. Why don't random walkers ever talk about this?)

As to secrecy and mystery and arcane methods, that flies in the face of observable evidence too. Trend following methods have been documented out the wazoo, and many successful trend followers are extremely open about what they do and how they do it. The same is true for the value investing subset. These guys are managing gigantic sums -- making it all the harder for them to be 'lucky' for years and years -- and they know their bread and butter methods have been out in plain sight for a long time now. You think they need to hide anything? There are proprietary adjustments at the margins, sure -- but the core principles are exactly the same.

Here is just one example.

http://www.abrahamtrading.com/perform2.htm

These guys, Abraham Trading, are having a terrible year this year. But prior to this year, they had a 24.7% compounded return over a 17 year span, with only two losing years in that time. And they are willing to let anyone who feels like it download their real dollar performance data, going back to 1988, in excel spreadsheet format (see bottom of page).

All methodologies have drawbacks, some of them serious, and there are real criticisms to be made. But here you are mostly engaging in hand-waving and folk science. Why?

 

nitro--

that has been my 'theory' for a long time now- you just catching on?? :eek:

nothing wrong with it IMHO- just that sometimes discusion become repetitive.


best,

Ice

 

If I may hazard a guess, I would say that there are two reasons why marketsurfer does what he does here in this thread and others like it:

1) Because Victor Neiderhoffer says so; and,
2) To attract attention.

Come clean, surf, and admit it. The truth will set you free.

 

yo bro,

you know better than pointing at a succesful fund and extrapolating that the method makes sense for everyday traders. without knowing the entry criteria, and its been shown statisically over and over, that the commonly understood trend following method of buying new highs, or selling new lows is an inferior trading method----( see "how markets really work--connors, for a nice demonstration of this rule) trend following is nothing but BUY and HOLD or SELL and HOLD. this is demonstrated by the large drawdown the fund you listed and many other trend funds are experiencing now--obviously, they are on the wrong side of the supposed trend and are holding.

best,

surfer

 

http://catb.org/~esr/jargon/html/S/Sturgeons-Law.html