Why a traditional tecnical analyst cannot trade

Discussion in 'Technical Analysis' started by harrytrader, Sep 8, 2003.

  1. Traditional technical analysis based on market's action is performed statically because all they know are supports and resistances. They don't know the DYNAMIC law. Only Elliotists take into account this dynamic but the rules are extremely complex and will give many combinatorial possibilities (so that at the end an elliotist must still heavily bases his judgement on his intuition). That's why some traders use indicators to compensate the lack of dynamic. Still indicators are fuzzy and many whipsaws will result of their use. So avoiding whipsawing is one of the main problem and in practice one must be very reactive that's why analyst has some difficulty to be a trader because they aren't trained to do so and market will evolve and make them doubt. So as market evolves you must be able to evaluate if what you have analysed is still true as stated here like in Chess:

    "The dynamic evaluation of a position, as concluded after the
    analysis of the best move, should match the static evaluation of the position performed before the analysis."

    Is it possible ? I say yes and I will show that with a true modelisation of market (by true I mean a causal economic model and not extrapolation and fuzzy explanation by psychology of crowd) it is possible to have a precise evaluation of a break zone for example. Here's an illustration:


    Secondly to understand the comments you must know the rules (which is copied from the homepage). As you can see they are very few contrary to Elliott rules:

    "There is only one single and simple law: a minimum or a maximum on projection line (interpreted as target line in green color) and their dual on base line (interpreted as consolidation line in blue color) are important turning points for the market for that scale and under. By rule extension points around the crossing of the two lines are also important.

    As complementary guidelines:
    - By experience each turning point / break should be confirmed on next period and next neighbour point.
    - When a target is passed without consolidation it is said to be forced and consolidation generally follows to retest that forcing zone (generally on globex or within 24h if it happens on hourly scale).
    - Market can fail to make a potential target and can then "retrace back in time and price" following a counterclock path. But after that retracement which can constitute an healthy consolidation it can resume the previous trend to tempt the target again.
    - Iinteraction between different scales follow a hierarchic logical framework.
    - Both spot and future charts are normally for spot only although future should follow fairly well the model with a few minutes in advance.
    - On globex future contract behaves like spot without the spread between spot and future during RTH (regular trading hour)."
  2. I have no idea why any of that means, however your charts look very impressive Harry.


  3. I agree wholeheartedly with Runningbear... although I can't understand much of what Harry writes, I gotta say that I love his charts...
  4. Ditto. :D
  5. maxpi


    What is meant by the "dual"?
  6. Interesting.... so if Jack Hershey had just posted some
    impressive looking charts along with what no one could understand,
    then he would have dodged all the flaming? :D


  7. cable


    my brain just exploded
  8. cable


    and now i am dead
  9. MRWSM


  10. Thanks for posting the url.

    I was heavily invested in stocks for the 87 period highlighted.

    Subsequent to that I really worked to keep abreast of leading indicators. I prefer, at this time, to use a micro indicator for my stocks regarding IT trends. I use the same thing for the cash indexes.

    I haven't caught the drift of this person as yet. Mostly because it seems like he is focused on the complexity of macro economics. My focus is being in cash at the right times and I have that down at this point.
    #10     Sep 8, 2003