Is T/A based on hope?

wayneL · 18 July 2006

Don't get me wrong, I'm a techie to the core; but I notice 2 things about T/A.

1/ There are always different interpretations on the *same* chart.

2/ People select the appropriate analysis to suit their "hopefulness"

...and a comment. The chart doesn't give a fat rat's about our T/A, it will ultimately do what it damn well pleases.

I bring this up because I see a lot of analysis based on what people *hope* will happen.

.... you know what? Come to think of it, I see F/A's do precisely the same thing.

Thoughts?

Porper · 18 July 2006

wayneL said:
Don't get me wrong, I'm a techie to the core; but I notice 2 things about T/A.

1/ There are always different interpretations on the *same* chart.

2/ People select the appropriate analysis to suit their "hopefulness"

...and a comment. The chart doesn't give a fat rat's about our T/A, it will ultimately do what it damn well pleases.

I bring this up because I see a lot of analysis based on what people *hope* will happen.

.... you know what? Come to think of it, I see F/A's do precisely the same thing.

Thoughts?

In my view, we as human beings need a reason to make a trading/investing decision.That is we need a reason to make a decision to buy or sell anything, whether it be stocks or a new car.

T/A is a valid definitive way to do this, and therefore we feel good when applying our "skills".

F/A is much the same, find an undervalued company with a low P.E.R and good growth prospects and we have our feel good reason to buy.

Let's take a look at the success rate of techies though, this ranges from high percentage winners maybe up to 70% to lows of around 20%.So I think the proof is in the pudding, using charts to predict (I know people say T/A isn't predicting) price action doesn't work particularly well.It does give us a valid reason to trade though.

Of course it isn't the buy or sell signals that make us profitable, it is the bit in between called money management.

wayneL · 18 July 2006

Porper said:
In my view, we as human beings need a reason to make a trading/investing decision.That is we need a reason to make a decision to buy or sell anything, whether it be stocks or a new car.

Indeed.

I use T/A simply to apply some sort of logic for buy and sell signals. When I enter, I'm in hope mode just like anyone. But there is a logical exit (stop) close by; (or metamorphosis trigger in the case of some option strategies) and I know that mathematics will make me a profit over the course of many trades.... risk/reward/MM blah blah

I just find some of the technical posts interesting from a psyche perspective.

Cheers

pharaoh · 18 July 2006

Guys, a mate and I are going to start studying TA tonight, over a webex meeting.

Can yo suggest a couple of really good sites we can read through to get started.

thanks

sails · 18 July 2006

pharaoh said:
Guys, a mate and I are going to start studying TA tonight, over a webex meeting.

Can yo suggest a couple of really good sites we can read through to get started.

thanks

Try this link to the ASX charting library. The articles are fairly short and to the point... http://www.asx.com.au/research/charting/library/index.htm

Milk Man · 18 July 2006

pharaoh said:
Guys, a mate and I are going to start studying TA tonight, over a webex meeting.

Can yo suggest a couple of really good sites we can read through to get started.

thanks

I dont think you can go past investopedia for sheer volume of information. That said, if you want answers for more practical questions, youre already here!

MichaelD · 18 July 2006

wayneL said:
I bring this up because I see a lot of analysis based on what people *hope* will happen.

.... you know what? Come to think of it, I see F/A's do precisely the same thing.

Simple human nature. The only part of a trade we have any control over whatsoever is the entry. Despite the fact that it is largely irrelevant, that's where most people will concentrate their efforts, simply because they *can*.

mit · 18 July 2006

wayneL said:
Don't get me wrong, I'm a techie to the core; but I notice 2 things about T/A.

1/ There are always different interpretations on the *same* chart.

2/ People select the appropriate analysis to suit their "hopefulness"

...and a comment. The chart doesn't give a fat rat's about our T/A, it will ultimately do what it damn well pleases.

I bring this up because I see a lot of analysis based on what people *hope* will happen.

.... you know what? Come to think of it, I see F/A's do precisely the same thing.

Thoughts?

There's hope around individual trades but there is an edge in T/A taking advantage of market inefficiencies so in the long run you make money. I think the mistake people make is that they think that money management is all you need but you do need that edge.

MIT

sails · 18 July 2006

wayneL said:
...I bring this up because I see a lot of analysis based on what people *hope* will happen.

.... you know what? Come to think of it, I see F/A's do precisely the same thing...

I don't think it's the fault of T/A or F/A - rather that we don't like to be wrong so the human tendency is to "hope" it will come good again rather than apply risk management. Both types of analysis gives rules and reasons to trade which should help provide consistency with entries and exits.

I've found one way around this is to work on the assumption that my T/A is no better than a coin flip which means risk management is vital for survival and exits are where the money is made or lost.

It's Snake Pliskin · 18 July 2006

By wayneL
Don't get me wrong, I'm a techie to the core; but I notice 2 things about T/A.

1/ There are always different interpretations on the *same* chart.

2/ People select the appropriate analysis to suit their "hopefulness"

Yes different interpretations because of the multitude of indicators applied to charts. There are those who believe in m/a`s, ew, etc.

...and a comment. The chart doesn't give a fat rat's about our T/A, it will ultimately do what it damn well pleases.

Which is why the markets cannot be an exact science. Past interpretation does not predict future action even if the numbers say so.

I bring this up because I see a lot of analysis based on what people *hope* will happen.

.... you know what? Come to think of it, I see F/A's do precisely the same thing.

Is it hope or belief? Or does belief represent hope? Interesting

It's Snake Pliskin · 18 July 2006

MichaelD said:
Simple human nature. The only part of a trade we have any control over whatsoever is the entry. Despite the fact that it is largely irrelevant, that's where most people will concentrate their efforts, simply because they *can*.

I believe we can control the whole trade, but not the price itself. We can determine entries, the holding time and exits - though discretionary in nature. We set stops so that is control even if we don`t touch the button at the time of stopping out.

happytrader · 18 July 2006

I am of the belief charts don't lie, people do. Ever tried telling someone the truth when they didn't want to hear it? The usual reaction observed is instant denial to avoid facing up to a distasteful or harsh reality. One may also find themselves at the receiving end of a fist. If this is a persons habitual behaviour in a these situations, why would it suddenly change when trading?

Cheers
Happytrader

carmo · 18 July 2006

Must admit I have just read the book "Trendlines and Tripwires", but since then a have noticed there seems to be defined angles for certain stocks! Viewing charts in hindsite, it appears to be easy, but there is also a large degree of hope.

It's Snake Pliskin · 18 July 2006

carmo said:
Must admit I have just read the book "Trendlines and Tripwires", but since then a have noticed there seems to be defined angles for certain stocks! Viewing charts in hindsite, it appears to be easy, but there is also a large degree of hope.

Yes reading the right side of the chart is very difficult.

Bobby · 18 July 2006

Snake Pliskin said:
Yes reading the right side of the chart is very difficult.

Yes Snake its not that easy, but have you tried Telepathy with someone in the future yet ? :

Have Fun
Bob.

MichaelD · 18 July 2006

Snake Pliskin said:
We set stops so that is control.

Not the way I see it - setting a stop most definitely does not protect you against slippage which can be nasty if you cop a black swan event. Setting stop losses does, however, give one a false sense of control over the exit in that we feel we have control over the price at which we will close a position.

Fortunately, most of the time the illusion is close enough to the reality to not matter.

(GSLOs excepted)

It's Snake Pliskin · 18 July 2006

MichaelD said:
Not the way I see it - setting a stop most definitely does not protect you against slippage which can be nasty if you cop a black swan event. Setting stop losses does, however, give one a false sense of control over the exit in that we feel we have control over the price at which we will close a position.

Fortunately, most of the time the illusion is close enough to the reality to not matter.

(GSLOs excepted)

A classic case of spin using quotes.

what about the part in red that stated "the action of price itself".

Yes a false sense of control over the market, but one is in control of the trade from a trading plan perspective - that is taking it step by step.

You are quite right.

It's Snake Pliskin · 18 July 2006

Bobby said:
Yes Snake its not that easy, but have you tried Telepathy with someone in the future yet ? :

Have Fun
Bob.

No Bob have you?

weird · 19 July 2006

Hope ? First look at two basic emotions, Greed and Fear.

yogi-in-oz · 19 July 2006

weird said:
Hope ? First look at two basic emotions, Greed and Fear.

Hi folks,

..... and, if you have any doubts about the value of the two emotions
above with relation to your trading, just read the classical tales in
" Extraordinary Popular Delusions and Madness of the Crowds"
by Charles Mackay .....

..... a must-read for every trader !~!

happy days

yogi

Is T/A based on hope?

wayneL

VIVA LA LIBERTAD, CARAJO!

Porper

Ralph Nelson Elliott

wayneL

VIVA LA LIBERTAD, CARAJO!

pharaoh

sails

Milk Man

MichaelD

Not fooled by randomness

mit

sails

It's Snake Pliskin

It's Snake Pliskin

happytrader

carmo

It's Snake Pliskin

Bobby

MichaelD

Not fooled by randomness

It's Snake Pliskin

It's Snake Pliskin

weird

yogi-in-oz

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