Yes I believe it can. The trader in your instance is fooling himself the success was down to TA. The big issue with trading is what psychologists call 'addiction to random rewards'. You're a clever chap, so I know the meaning needs no further explanation. So when the new trader loses, he may put it down to the fact hes still learning and the magic line was in the wrong place. When he wins, he puts it down to the fact he had the trendline in the right place. He must be progressing. Then the next series of losses make him go back to the drawing board, relearn how to draw magic lines, use someone elses magic lines (Gann, Fib, Elliot etc). The line isnt the issue. The issue is that by chance he managed to get in on order flow, the other time order flow failed to materialise where his magic line said it would. Given the big money order flow cares not for where some retail traders draw their lines, whats the point? Sit next to a swap dealer for a few days and see if hes looking at magic lines. He may have a chart up, but there will be no magic lines. Sure his objectives/function are a world apart from a day traders, but when he comes in, he comes in with size. Youd better be watching out for that, because it wont come at a magic line - unless by coincidence - back to the random rewards thing.
If you see the ballerina spin both ways then your left - right balance is excellent. For others there are books on how to develop both sides of the brain for trading. How does rule based trading relate to flowing with the market movement?I can only speak from my own experience and that of those I have worked with. It has to start with basic textbook perfect examples that provide a visual frame of reference so we can begin to recognize them, but these patterns can also become the mental block for most traders who think real world movement and set ups should look like the textbook examples. Because of that error they stop at BabyPips level. In the real world we have to make the mental and visual adjustment from this perfect model so we have a wider yet more accurate ability to recognize the evolving set ups and in real time. A lot of traders don't understand that requirement and can't make the jump to real world TA. Visual cues can help like moving averages and indicators. After that level has been reached it comes down to thousands of visual repetitions to develop the gut feeling for what is likely to happen next. That starts when the traders misses the trade and says, I knew that was going to happen. In an instant the brain recognizes a high probability set up while we are using the other side of the brain to try and figure out why we feel that way. I don't know anyone who has developed a good feel for the market without 1) thousands of hours of study 2) that was built on clear repetitive rules 3) with a good understanding of multiple time frame trading. It's like learning an instrument: how do you learn to ad lib a solo? The very best sounded awful in their early attempts and that was after learning all the rules and practicing for a long time. Then slowly the feel for the connections develop. There are others who have PM'd me about using "the feel" but I don't know what their path was. I know one of the biggest volume traders with a quiet presence in my other (derailed) thread uses the feel based on TA. Feel free to chip in.
Thank You Sir I'll chip in if/ where I can, otherwise I'll just keep my big mouth shut But me; open always btw; I can confirm - it does take work - and boy howdy a lot of it RN
So TA offer no edge? Using the ITP.to chart I posted before, let the naysayers go short for the next 20 trading days and I'll go long. ( I already am ) I am willing to post chart after chart after chart using a trend as my sole edge. I will go with the trend and all the naysayers go against the trend for 20 days. Lets conduct our own real life proof. Since you are sure it's 50/50, I will pick the trending charts. Do you agree to to the challenge? Should I bother with the effort of posing the charts? Will this work for you? It should be 50/50 after 20 days. Is 5 charts good? I believe I will be show a profit on 5/5, at least 4/5. Oilfx, and others who claim no edge, what do you say. Let's make this fun. ( of course you are going to use some excuse like we need more than 5 charts. I say bullshit! You can't flip a coin five times and get a 4/5 heads )
Well... I'm MA in psychology, but thanks for explanation anyway, it may be useful for others too. You're right, addiction to random rewards indeed happens in trading, but this is one of general mental traps of this business I would say, not TA. As for the matter of fooling himself... I would argue for two reasons: 1) I watch markets for 7 years already and generally don't tend to believe anything but my own eyes. I would unlikely believe in TA if I didn't see myself how amazingly often (too often for a random event) price reacts in a certain way to obvious TA points (the key is them to be as obvious for as much of market participants as possible). You would probably say I am fooling myself too, but I tend to check my theories with hard and heartless statistics... which proves my observations. 2) Some elements of TA (such as indicators) probably do not have predictive value of self-fulfilling prophecy indeed, but they certainly act as perception filters in a way, which makes one who practices this kind of analysis to see typical behaviour patterns of market participants quite effectively. Again, it could be called "fooling oneself" if only results were much the same as in the case of random entries, but random entries can't explain say 65% win rate with R/R close to 1:1... I have seen others doing it, I have done it myself... It simply doesn't fit in random entry logic... That's great about trading: it is absolutely ruthless to self-delusion. One can deceive himself for some time, but P&L statement slaps in his face pretty soon. Either you make profits overall or losses, no other options (with exception of lucky gambling maybe, but even that becomes obvious if one looks at his/her statements objectively enough). P. S. Nobody still replied to my question about Vic Sperandeo, who claims to attribute significant role in his trading success (proven and documented profit of millions of dollars, not too bad at all back in 70's-80's, when he traded actively) to TA (among other tools).
In reality, this is one of the best kept secrets that is funny enough, one of the worst kept secrets( if you catch my drift).
So TA offer no edge? useless!? Using the ITP.to chart I posted before, let the naysayers go short for the next 20 trading days and I'll go long. ( I already am ) I am willing to post chart after chart after chart using a trend as my sole edge. I will go with the trend and all the naysayers go against the trend for 20 days. Lets conduct our own real life proof. Since you are sure it's 50/50, I will pick the trending charts. Do you agree to to the challenge? Should I bother with the effort of posing the charts? Will this work for you? It should be 50/50 after 20 days. Is 5 charts good? I believe I will be show a profit on 5/5, at least 4/5. Oilfx, blackhand and others who claim no edge, what do you say. Let's make this fun and revealing. ( of course you are going to use some excuse like we need more than 5 charts. I say bullshit! You can't flip a coin five times and get a 4/5 heads If your life depended on it so stop with excuses before you start)
Luciano, don't let OFX get under your skin, s/he's either not a trader at all or is a pure troll looking to boost the action on ET. Quite a while back I offered on two occasions to teach OFX my PA/TA day trading methods in an ego-driven attempt to prove that TA works. I have very explicit rules, so there's no wishy-washy, ooey-gooey, woo-woo mojo involved. OFX ignored both offers. As you know, TA works, and it works fantastically for those who learn how to use it (and those are capable of seeing it, which isn't everyone). And "the 80% of trends fail" is indeed one of the silliest things I've ever heard. If it's identifiable as a trend in a time frame, it has already succeeded. Therefore 100% of trends have succeeded. About failed breakouts... When a breakout fails, it's a technical price action setup. You can exit a FBO for minimal loss and more often than not (that's the definition for "exploitable edge", by the way) it's a signal to make a nice chunk of change the other direction. Even when my technical price action trading plan was in its infancy and I hadn't yet got to the point that I trusted and traded it fully, I knew how to handle a FBO: http://www.elitetrader.com/vb/showthread.php?s=&postid=2964924#post2964924 I took a small loss on an unconfirmed counter-trend trade (I never do those anymore), then placed a buy stop 1 tick above the high of the day to exit the CT trade and reverse long in the direction of the prevailing trend and I bought the high tick. This is where the "most breakouts fail and TA doesn't work" camp throw their keyboards against the wall and log into ET to post how TA sucks. It took this noob just 2 trades and 20 minutes to turn the net loss into a decent profit. But, you know, my ring finger is longer than my index finger and that ballerina swings both ways