Again, you are just trading one type of uncertainty for another. The book, as it exists at t=0, is not what will actually be executed in the future, as bids and offers are pulled or added, so making a decision based on what the book looks like at t=0 STILL RELIES ON THE PAST BECAUSE YOU HAVE TO SEND YOUR ORDER IN AT SOME POINT AND BY THE TIME IT IS EXECUTED THE BOOK IS DIFFERENT. Your order reaches the exchange at t=1, so you are NO DIFFERENT FROM THE GUY USING A CHART. Both are examples of using data from the past to make a decision in the present. No matter how many times you say they are different, they aren't. In fact, you could argue that the "actual past" represented by a chart, is superior to the "potential future" represented by the book, because the actual cost of executing a trade is greater than the cost of putting an order in the book, thus implying that the trader has made a greater commitment by taking a trade and putting capital at-risk than simply putting an order on to potentially make a trade, where risk is minimal. Is that really that difficult? For a guy who seems to think he's got it all figured out with some differentiation between past and future, you miss the obvious way in which what you think is the future actually isn't. Everyone else, sorry for the caps, but this alleged distinction that isn't actually a distinction is getting on my nerves, especially since it's presented as if it's coming down from Mount Sinai. None of this implies that using charts is a good way to trade, just that this stupid false dichotomy of "charts vs. the book" as if one is good and the other is bad doesn't make any sense.
There is one very big conceptual problem with charts. Since I've not seen it discussed here and I'm not sure how many people are aware of it, I'm not going to say what I think it is. What it is not is the idea that "charts represent the past". The people are pushing that as the main critique of the use of charts shows me that they are superficial thinkers. This other conceptual problem is a million times more important. In fact, this same conceptual problem applies to the tape as well.
Computers can read the book. Computers don't read the chart. Obviously there is edge to teaching a computer to read the book( pre execution) . Clearly, you are always dealing with uncertainty. Yes, the conceptual problem lays in the tape but not the book because you are dealing with pre existing conditions that can be acted upon. Not the past that can't be changed as you Do with the tape. This is what edge is. Edge is proactive not reactive.
Since one of the main things that keeps this debate going is the fact that there are so many definitions perceived by so many different people. I will start with how I perceive that definition. "In finance, technical analysis is a form of analysis of probabilities[1] relied on studies of the direction of prices through the analysis of past market data (primarily price and volume)." "past data" is already past data by the time we can comprehend it, so anything you are thinking about right now is already past data. including orderbook, volume, realtime qoutes , news, insider info. Why is TA "fatally flawed" for directionally based entries? Putting too much importance solely on entry in proportion to the rest of your plan is the mistake IMO.
The order book is not past data--in relation to an executed trade--one is pre the other is post. Pre can be acted on and upon to gain an edge. Post can not be.
The second I see a 500 bid on CL dom, it becomes past data on a timeline of events in my brain collecting "market data". We right now are making our own definitions again, you are comparing past data in realation to Time and sales based events. I am comparing past data to my brain processing information from the market.
I`m laughing when i read ''IMO'',"I think","Probably'',etc sort of things...It is an Exact Science!Only certainty counts in the game. Where is baba 'Merciless' Hershey,btw?
But strictly and technically speaking, is there a key difference between what T&S shows and what chart shows?
I happen to track a lot of data for each of my trades and one of the datapoints is what was the high or low of the swing during which I entered. On average, it's ~9 points from where I enter, either above or below. By your theory of "pre-existing conditions" vs. "the past", my average trade should not be a winning trade because I've already "given up" the opportunity to make 9 points by identifying the high or low in advance from the "pre-existing conditions". Yet, my average ES trade, when all the conditions line up, is a 4.5 point winner. Again, none of this is to say that charts are usable because I don't use them, but these other ideas you have about "the book" vs. "past data" are just based on a limited view of what "past data" actually can accomplish when analyzed within an appropriate framework. There are definitely "reactive" edges, because, as I posted yesterday, the market does not process all relevant information immediately. The whole "reactive" vs. "proactive" is another false dichotomy, by the way. Relative to anyone who gets in 9 points before me, I'm "reactive". Relative to the person I sell to or buy from in taking my 4.5 point profit, I'm "proactive". Thinking in terms of rigid, yet false, dichotomies like you do is pretty much useless.