TA.. The lies that are told

The human mind is an amazing thing. We can see pattern and reason in almost anything if we seek it.

I remember attending my first Gann seminar and walking out 30 minutes into a 2hr presentation (I had paid for it as well) thinking what a load of garbage this is, and I knew very little about TA at the time. If you do some research into the history of W.D. Gann it might be revealing as to the efficacy of his method of prediction. Brilliant in hindsight though.

I am always amazed by the subjectivity and endless variation that can be applied to such things as waves, triangles and diagonal lines. I think if enough people believe something however it does become self fullfilling in a market; such measures inclube 'fib' levels and the like.

Does anybody have positive expectancy stats to post from subjective measures that could compare favourably to random entries combined with sound money management?

WaySolid said:

The human mind is an amazing thing. We can see pattern and reason in almost anything if we seek it.

I remember attending my first Gann seminar and walking out 30 minutes into a 2hr presentation (I had paid for it as well) thinking what a load of garbage this is, and I knew very little about TA at the time. If you do some research into the history of W.D. Gann is might be revealing as to the efficacy of his method of prediction. Brilliant in hindsight though.

I am always amazed by the subjectivity and endless variation that can be applied to such things as waves, triangles and diagonal lines. I think if enough people believe something however it does become self fullfilling in a market; such measures inclube 'fib' levels and the like.

Does anybody have positive expectancy stats to post from subjective measures that could compare favourably to random entries combined with sound money management?

Click to expand...

Solid

Glad you started this thread.
You actually have an ali in tech/a on this even though I use it and have studied many forms of T/A over 13 yrs.

I will comment at length---but off the the dentist now perhaps tonight.
Re Expectancy Nick Radge had quite a bit as does the Encyclopedia of Technical Chart Patterns----over VERY LONG periods all return to a normal distribution---around 50/50


But there is MUCH more than a simplistic veiw.

Agree 5000% re Gann---purely because you cant trade it.---other than swing trading.

Ok.

There are many types of technical analysis,many methods of analysis using these many methods.

The frustration of many students is as Way has mentioned the subjectivity-----plus the realisation that its not always right.Nor by the way is Fundamental Analysis.

But often the majority of the problem lies in the student---often his understanding of how analysis should be applied is far from copy book.
His understanding of what the analysis is actually telling him is often scewed in the direction of his preferences.

Let me clarify this.
If we take a group of patterns---lets say Ascending Triangles,Flags,and Breakouts.
EVERY time there is a pattern then we trade it.After 20000 trades we would find that about 50% succeeded and 50% failed.(There is the question of definition of failure---Im saying pattern breakdown).
Great point proven-----
Well no.
With all trades being taken even those trades that a competent technician wouldnt take are taken!

Let me give you an example which I can and have quantified and PROVEN.
Techtrader is simply a set of technical buy signals,stops,and exits.
Traded over 8 yrs and tested on 20000 portfolios the method has a return of 18-24% over the 20000 not one fails---.
However I have 2 eyeball "Filters" I use when ever taking a trade.
(1) The chart MUST be in clearly in a trend OR have broken a downtrend convincingly.
(2) The chatr must NOT be ranging between a support and resistance which has been in place for more than a year----unless the breakout alerted breaks this resistance.

Now I and 4 others I know all use these filters.ALL of our results are very similar over the last 3 yrs.Our results are above 100% P/A.

The analysis is being used IN THE DIRECTION of its intended use----its a long trading methodology and while many signals are given (And taken in the simulations) against the trend---when used in their correct environment the results improve DRAMATICALLY.

Lets go further.Stan Weinstein in his book Profiting in Bull and Bear Markets.

Makes one very clear point.
NEVER go long if the stock is trading BELOW its 150 day SMA (Smooth Moving Average) and NEVER short if its trading ABOVE.

I decided to test this with Techtrader.
I added the filter to the formula---results increased to 32% average.
I went one step further Trades no matter what were NOT taken if the INDEX was trading BELOW its 150day SMA.

The result---an astounding 130% average.


OK lets talk about NOW.

Im showing some technical trades on another thread.
They are VERY low Probability and while discretionary will be difficult to take a decient profit.(Stopped out of PSD today for a 1c/share loss---nice and tight!).These types of trades are sure to have 20-30% success rates.
Is technical analysis poor because of this??

Ive heard them all when the bull is at full stride----anyone can make a $$ in a bull market-------well they had better thats what the analysis is designed for!

Youll never hear an experienced practionioner in Technical analysis,Public Speaking,Options or Futures Trading, Fundamental Analysis,Property Developement,Chess,Business---negotiation--say its all a shame and a con or a lie---they can tell when it is---- and its ANYTHING but hard.

A little knowledge can be dangerous---sure can!!

Take the time to be an EXPERT(In whatever it is you choose to do in life!!)those who are will tell you its worth the effort.
(Yes Tree as much as it annoys the hell out of you,Ive made it a personal goal to be an expert in tech analysis.After my exams with the Security Institute in 95 it seems they agreed)!

In summary.
Correct use and correct knowledge.
Youll know when you have it as it wont be a mystery to you any more.

On Gann.
I have a standing $1000 bet for anyone who can show me 12 mths profitable trading using Gann techniques (Other Than Swing trading).Ive made this challenge to many Gann buffs---its never even been challenged---not once.
There are so many ways of predicting a GANN point that there are at anyone time upto 10 possiblities---every now and again one hits and the GANN CLAN go nuts.---try trading all 10 possibilities and making a profit!!

The human mind will never ever compare to a computer program, no program can ever regonise and actually "see" whats happening, they just can't identify things like we humans can.

It's just so amazing that all you need to do is look at a chart, the more you do it the better you get.

happy trading