the basic flaws in TA

Discussion in 'Technical Analysis' started by marketsurfer, Nov 18, 2005.

  1. Thats a good post regarding the "physical" properties of the markets. And I largely agree with it at that level. But to some extent it ignores the "psychological" properties of the markets - that they are basically made up of large numbers of people interacting about their instantaneous perceptions of value.

    That interaction and the fact that many use a mix of tools like trendlines, channels, and moving averages to build those perceptions mean that these "flawed" tools can be used to build effective technical trading systems. In my case, those tools add to the techniques you suggest to give a clearer perception of the likelihood of support, the likely direction of the next move and how I would detect that the probability had changed for the better or worse (from my perception if I had a trade on).
     
    #231     Nov 26, 2005
  2. Cheese

    Cheese

    You may not appreciate what a good analogy the weather is for market conditions.

    The importance of the near term prospectus has been flagged up by a few at ET. And if you move prediction from 3 days to 1 day ahead then powerful accuracy can really be harnessed by the player.

    That said, for a predictive trading model you have to do an awful lot of homework, study and problem-solving before you even have a chance to discover much or most of the framework solutions that finalize such a model.
    :)
     
    #232     Nov 26, 2005
  3. how convenient. you use the media well.

     
    #233     Nov 26, 2005
  4. The basic flaws in TA?

    Perhaps the basic flaws in TA would be probably we don't know what are the basic flaws in TA, if any. :D
     
    #234     Nov 26, 2005
  5. cnms2

    cnms2

    We have to be careful with analogies. For markets it may not be true that you can always predict better smaller time frames, because the signal / noise ratio is poorer. On the other hand 3 years from now it will still be November (God willing ... :)), so you kind of know the weather range. This is not the case with the markets.
     
    #235     Nov 26, 2005
  6. Cheese

    Cheese

    Weather seasonality was not the analogy. It was the act of predicting weather, short term compared to longer term.

    Curiously and as no doubt others have noticed there is seasonality in price behavior. Where I have compiled a given market such as in an index futures market the effect makes itself noticed. I exclude crop or such futures which are expected to have seasonality influences. Sometimes it is strikingly consistent if first one or two other filters are applied. However I have not modelled or studied it sufficiently and offer no tested expertise on seasonality patterns as an accurate predictor.
    :)
     
    #236     Nov 27, 2005
  7. Right Cheese.
    Let me add, only "discretionary artists" can make money without it.
    :cool:
     
    #237     Nov 27, 2005
  8. Thanks for telling us the truth, finally! :)
     
    #238     Nov 27, 2005
  9. Cheese

    Cheese

    Are you being odd Oddtrader? I have never set out to make a study of seasonality!!

    But you can tell this thread what your views are on the role, if any, of seasonality in price behavior.
    :)
     
    #239     Nov 27, 2005
  10. Perhaps we should keep studying about it, then one day hopefully we could start testing some "truly tradable and profitable" signals and systems, before quitting trading completely. My 2 cents.:confused:
     
    #240     Nov 27, 2005