If you want to fail as a trader, study TA

[Prawnsandwich]

I like the idea of minimum time in the market and mostly, because of the fund my friend works for, I have decided to stop swing stocks as it seems my presumptions about how much you can make day trading were not correct.

.............

Now - I'll be honest, the day trading isn't quite right yet. I have the Time in Market down but I am not capturing large enough moves. Partly this is because I am still honing my technique and partly because I am not yet trading something that has become obvious to me.

Can I offer a suggestion of using intraday charts with some EMAs and Support Resistance from higher time frames.....this would allow you to "see" how the market / stock is moving, allow you to place stops and perhaps capture a larger move......

 

[The Expert]

That's as simple as it really is if one can free oneself from old beliefs and convictions if they don't mesh with available facts, open ones mind and is able to identify what really counts while ignoring the irrelevant rest.

It ain't rocket science that's for sure.

Understanding how to trade net profitably has nothing to do with predicting.

It's about no more than skewing the odds in your favor by identifying a method with an edge that you clearly have when trading pullbacks in trends or reversals in ranges, accepting that you'll be wrong and have losing streaks, not letting that deter you from trading your plan, keeping a tight control on losses while accepting in profits what the market will give you and hey bingo you're set.

And then one can leave it to the naysayers to post idiotic threads like this about stuff they don't get and can't get to work even though there are abundant examples of people who made fortunes through some of the simplest systems you can imagine that TA has to offer.

Or isn't a billion enough that John Henry made lol through simple trend following.

Best part is people posting this negative, entirely uninformed nonsense with absolutely no connection to reality can't even offer any alternatives lol, just like nine predicted, this thread has now run almost 30 pages with absolutely nothing of any alternative substance whatsoever on offer.

Not even close.

Those who can get on with it and do, those who can't pose around posting nothing but smoke and mirrors trying to at least look clever to the entirely gullible desperate for a holy grail.



Or do you or anyone else want to bet we'll ever hear anything concrete from the OP or any of the other naysayers as an alternative to TA for trading, not long term investing where fundamentals may well have their justification for those so inclined.

BSD, not only are your posts long, they are also long winded.

You continue to mention this fellow and that fellow, which, no one here clearly gives a damn about, but you are so blinded by all your textbook reading that you can't even see how silly you really sound.

As for you textbook talk, well, that is all it is, for everyone knows all about trends, stops, etc, etc, etc, and so on and so forth.

What people want, is not more of the same old stuff, but an alternative to what the majority say and do, and The Expert is an expert at just that.

A hint for you and your buddies, keep your posts short and sweet and straight to the point, that way you will keep people interested and they might learn something.

I only ever read the first 2 lines of your posts!

 

[MrGecko]

Yes this basically says that markets are entirely random but that it doesn't matter or maybe he is really Derren Brown


Paul

LOL.

BSD, some of the things you say are spot on (getting the bias in your favour, etc), but you don't really present a good case for "regular technical analysis" - your argument seems to be:

1) Look at all these people who it has worked for!

Well, Survivorship Bias - for every example of profitable trader you cite using "RTA", there is an example of an unprofitable one. Some people pick their lottery numbers based on what Mystic Meg says ffs, just 'cos a few of them win doesn't mean anything. However unlikely it may seem to you, this is the case.

2) You can use TA to trade a random series of 0's and 1's

This is just bull****. You can trade 0's and 1's, by making a market in various instruments, not by drawing trendlines. The notion of random 0's and 1's is totally at odds with the philosophy behind using qualitative information in your trading decisions. Anyone citing one to support an argument for another illustrates a deficiency of joined-up-thinking.


So, while in essence I agree with much of what you have said, your case for RTA doesn't really hold any water.

 

[The Expert]

Before I pass swiftly over the chaff, I will add to where we left off, and try and make it a bit more clearer, but I will not hand out any free dishes on a plate, as that is insulting your intelligence as human beings.

Grey1, form results we have seen posted here by one that knew his approach fairly well, was achieving mediocre returns for the size of the account and the amount of trades taken.

Time is money when trading, and an opportunity lost is money lost.

If we go back and look at my questions about which was best, say 6 trades for $2k or 1 trade for $2K, the obvious answer is 1 trade providing you can do it each and every day.

If not, then 2 trades should be next, and so on until you achieve your objective.

Many traders seem to waddle around and not see what they need to see, and, most of that is because they are looking at RTA, as opposed to looking at what they should be looking at.

 

[temporarilylight]

BSD, not only are your posts long, they are also long winded.


A hint for you and your buddies, keep your posts short and sweet and straight to the point

The fact that this is coming from you, this is possibly one of the funniest posts ive seen in my years here. Permission to put it in my post signature....?.....

 

[MrGecko]

Keep your eyes out for the Chaff calendar roll guys...

 

[Jason101]

I have had a few merlots tonight and this is one of the most common sense posts I have read.


BSD - this post will still make perfect sense and be as truthful in the morning :cheesy:

Charlton

Charlton, I am (unusually) sober and can assure you this post will also still make perfect sense for the next 100 years of trading too.

BSD seems to be the only sane one on T2W at the moment.

Jason

 

[The Expert]

The fact that this is coming from you, this is possibly one of the funniest posts ive seen in my years here. Permission to put it in my post signature....?.....

Joke if you will, but some are here to learn, and they should not let anyone interfere with their learning.

You all accuse me of not being straight to the point, but, from day 1 here I have repeatedly said I am only willing to help those who help themselves, and others.

Can you people not understand plain English?

 

[The Expert]

I'd agree with this. Not that I can do it though.

DT, You will be surprised at what you CAN do once you know what to look out for

 

[The Expert]

A change is as good as a rest. I think this thread needs to cool down a bit. Sometimes, in the heat of argument, we challenge things without really considering them. Later, on reflection, we mellow out and consider all sides.

Perhaps a return to the US stocks would be in order after which we could enjoy more debate on RTA.

If you are sure, then so be it.

 

[DionysusToast]

Much more of the same, so not much to say.

On the random chart video - it's a very cute trick BUT - he does have the benefit of the right hand side of the chart in making his analysis of what a TA trader would have done.

I have a friend who's a magician and he has taught me a number of tricks. The art of misdirection is a wonderful thing.

 

[montmorencyt2w]

Excellent post cloud, spot on !!!



Yeah that's exactly what comes across from his interview right.

Mr Paul Tudor Jones:

“When it comes to trading macro, you cannot rely solely on fundamentals; you have to be a tape reader, which is something of a lost art form. The inability to read a tape and spot trends is also why so many in the relative-value space who rely solely on fundamentals have been annihilated in the past decade. Markets have consistently experienced ‘100-year events’ every five years. While I spend a significant amount of my time on analytics and collecting fundamental information, at the end of the day, I am a slave to the tape and proud of it.

[I come] from that period of crazy volatility [in] the late ’70s and early ’80s, when the amount of fundamental information available on assets was so limited and the volatility so extreme that one had to be a technician … When I got into the business, there was so little information on fundamentals, and what little information one could get was largely imperfect. We learned just to go with the chart."

http://www.marketfolly.com/2008/07/hedge-fund-manager-interviews.html

What all do some people need, signposts telling you exactly where to hop on and where to hop off ??

Good Lord, charts go up, down or sideways, what on earth is so incomprehensible about that that apparently a majority can see what we see and yet never find a way to make money from trends or ranges, that's all a market does, trend, or range.

It's really beyond me why people insist on overcomplicating what is so simple from a success relevance point of view.

People really need to get open minds and develop mental flexibility if they want to have a chance to compete.

I mean what's the next claim going to be, that arch technicians Richard Dennis or billionaire trend follower John Henry who both relied on fully mechanical systems are also closet fundamentalists ?



The difference between me and the naysayers is that I have zero problems accepting that there are people who made money investing long term off of fundamentals.

But I also have zero problems with the more than obvious facts that there are plenty people who made fortunes beyond belief with short term trading off of technicals alone, why on earth car eabout funnymentals when all you need is available from price, just as I have zero problems accepting that great traders can look at a chart without knowing what it is, even if it's artificial and computer generated, and still make money from that alone.

I didn't and don't want to go head to head with you on quotes from that interview, but if you read the full interview here:

http://chinese-school.netfirms.com/Paul-Tudor-Jones-interview.html

it gives a somewhat different idea of his attitude towards fundamentals than the one you are trying to convey to us in your quotes above. I think that in order to prove the point you seem to be trying to prove, then Paul Tudor Jones is not a particularly good example. He's a technical trader who knows the fundamentals of the markets inside out and backwards, whereas there are people on T2W who appear to claim that you can trade on TA (or PA/TA or just PA) without any knowledge of the market(s); it is this latter viewpoint in particular that I would challenge. It doesn't do oldies (who have survived) any harm, but I believe it does newbies a great deal of harm.

I could of course have red-emphasised the bits in your own quote where he talks about fundamentals, but I refrained, on grounds of taste

And if you will insist on keeping on about Richard Dennis, perhaps readers who don't know should be aware that two funds he was looking after blew up (or were closed before they blew up). It's more complicated than that, but basically, he was incredibly successful until one day he wasn't.

 

[DionysusToast]

He's a technical trader who knows the fundamentals of the markets inside out and backwards, whereas there are people on T2W who appear to claim that you can trade on TA (or PA/TA or just PA) without any knowledge of the market(s); it is this latter viewpoint in particular that I would challenge.

I totally agree.

Do you really think these supposed Gods of technical trading and their multi-billion dollar accounts would get their pants pulled down by an FOMC announcement, then scratch their heads when their trades went against them ?

It is a ludicrous position to take. Do you think anyone with zero market knowledge would be given ANY money to manage if they had the level of market knowledge of your average T2Wer who thinks TA is all they need to know and all other knowledge is superfluous ?

The problem here seems to be that people have reading difficulties. They see some criticism of TA and then go into rant/cut&paste mode.

The nuance of the argument appears to be lost on many. My suspicion is that many of these people don't trade and have therefore not experienced what happens when predictable fundamental events occur.

 

[BSD]

I have had a few merlots tonight and this is one of the most common sense posts I have read.

Tonight I may be a little drunk, but in the words of Lady Astor:

"Winston, you are drunk." To which Churchill responded, "and you, madam, are ugly. In the morning, I shall be sober,"

BSD - this post will still make perfect sense and be as truthful in the morning :cheesy:

Charlton

I agree, Charlton, BSD's excellent post sums it up pretty well.
Richard

The motive behind a lot of the posting here probably really is as simple as that.......poster's massive ego cant or refuses to reconcile their own failure to effectively use TA therefore the problem must be with all TA......it still amazes me to see the continued denial of what is clearly reality....

Thank you very much guys, appreciate that.

I have honestly never understood naysayers and whiners.

If you start a company most will fail.

So according to the purely negative stance being taken by those who fail at TA it's also impossible to make money becoming an entrepreneur ???

If they can't do it no else can either ?

How messed up must one be mentally to honestly be able to delude one self so ???



As I said earlier all that must sure come as one heck of a surprise to these guys here:

One must be in denial if one honestly believes TA can't make you a fortune what with shining benchmarks available freely for inspiration like Richard Dennis who turned 400 bucks into hundreds of millions, or Marty Schwartz with his moving averages, oscillators and bands who averaged out at 33% per month, or fellow market wizard Linda Raaschke with her indicators and TA, or Ed Seykota with his moving averages who made - normalized for withdrawals, several million percent profit from 72 - 88, or Michael Marcus who multiplied his account 2500 fold over 10 years despite being charged 30% profits from his firm every year, or newer examples like Marc Sperling who started out as a prop trader at Broadway and was featured in "Electronic Daytraders Secrets" from ten years ago and is still going strong with a new trading firm and who also uses moving averages as trend filters to buy pullbacks in their direction and makes millions per year, or Dan Zanger who turned 42K into 40 million using old fashioned patterns and TA, or Paul Rotter who is a classic tape reader and has made €50 - 60 million per year scalping the Bund for a decade , and the list could go on and on.

So now we gotta add Bill Gates and Richard Branson on to that list too what according to our resident negative believers just because they couldn't do it and conventional wisdom states most fail haha.

What incredible non-logic.

Heck our very own Pozzy here is posting great trades from his prop house live with zilch else driving them than TA and the naysayers are still in denial lol !!!

http://www.trade2win.com/boards/trading-journals/88320-my-journal-prop-house.html

The Turtles made their billions with their Donchian channel 20-day Hi-Lo breakouts.

Just reminded me about Linda Bradford Raschke (cue angelic music in the background), and in her Street Smarts book, they had a system called "Turtle Soup", where they faded the breakouts that Turtles would have taken. Can't remember if it was profitable or not.

I think the point (that rathcoole_exile has made so often) is that you could take any line as entry. Its the management of the trade afterwards that determines your profit.

I absolutely couldn't agree more mate !!!

As for Richard Dennis who closed two funds, well, wouldn't call severe drawdowns a blow up.

But honestly, so what in any case ?

Does any one here honestly believe you coould run 400 bucks into hundreds of millions without volatile returns ?

The only relevant point really is that clients do not appreciate such volatility, and beyond that, if one blows up that seldom has anything much to do with the method, cause is usually more lack of discipline or depression as with eg Livermore.

Besides, the abundance of trend following CTA's who have been around for decades all not doing anything much different than Dennis clearly proves it ain't the method, as on top of that John Henrys Billions amply provide evidence for.

Here is yet another example of how incredibly simple net profitable trading off of nothing else than charts can be, guy was where Paul Tudor Jones learned his craft as well, a scalper on an exchange floor, in the following guys case an exchange member at the cbot and cme for decades:

S&P Trader William Greenspan

Basically buying swing lo / hi breakouts.

Some relevant excerpts from that interview, basically fits in with what a lot of us are doing here, morning range breakout, then trend trades, either breakouts like Bill from the link or Rob, or pullbacks like trendie or Split or Terrie or me:

Scalping and beyond

Greenspan's approach is the essence of simplicity, honed over roughly a two-year period of daily trading in the S&Ps.

"In the beginning, I didn't really know what I was doing," he says. "I was scalping, just trying to get in and out. And then I began making trades off the opening range, making directional trades off the previous day's high low and close, or trades that went off the current day's high or low."

A typical trade is to play a breakout of the opening range in the S&P

The kind of trade Greenspan is referring to is to go long or short on a breakout of the S&P's opening range, the trading band defined in the first 90 seconds of the session. These are usually his first trades of the day. After that, he typically trades breakouts (in either direction) through the previous day's close, high and low, as well as intra-day highs and lows. (See Figure 1 for an illustration of these kinds of trades.) Also, like a true scalper, he reverses position when stopped out--that is, if long one contract, he will sell two contracts at his stop level, establishing a short position.

He freely admits to being something of a risk hawk, favoring stops that may be too tight rather than too loose. His basic approach may seem straightforward, but the fact that he has prospered for such a long period is a testament to its effectiveness.

Mark Etzkorn: Do you do any other kind of analysis to prepare you for the trading day?

Bill Greenspan: I don't really need it now. What I do now is check the Globex high and low, and the previous day's high, low and close. I make my first trade off the breakout of the opening range--I take the directional trade--then I just try to scalp and see if I can make $1500 to $4000.
I just try to trade the breakouts. With the market the way it is, you can make five, six, seven points on the momentum trades off these breakouts.

Mark Etzkorn: Given your experience as a short-term trader, what advice would you give those who might want to day trade the S&Ps, or stocks for that matter?


Bill Greenspan: ...You have to be willing to make a lot of trades. You're going to be a better trader by making more trades. So, guys that want to make one, two, three trades per day, are going to get chewed up and burned out because they can't be that right about the market.

Mark Etzkorn: Do you still go through periods when things aren't working? What do you do to try to turns things around?


Bill Greenspan: That does happen. Particularly with a longtime trader like me, you get burned out, and you suddenly notice you're a step off, you're late hitting orders, or you're day dreaming in the pit--you just need to take some time off.


http://www.gayticker.de/trading/$_Interviews/S+P%20Trader%20William%20Greenspan.htm

Somebody sure as heck should hurry over and tell him that some negative whiners are having a good old communal whinge here and have decided to let their own failure in trading from TA form the basis of one fits all judgement and that therefore what he and all the others are doing can't actually be done.


And saddest of all:

Still 0-ZERO-0 alternative from any of the naysayers lol, but that comes with the
territory, those who think they can't can't, and never offer anything constructive, while those who think they can, can, and just get on with it.

Same everywhere in life really.

Just reading about a Dutch entrepreneur yesterday who blew up dozens of times losing 55 million euros...

BUT with the companies he founded that succeeded he made FOUR times that amount...

Bert Twaalhofven...

I'd back him over any of the whiners in society who only ever decide what can't work ANY time !

 

[elitejets]

I totally agree.

Do you really think these supposed Gods of technical trading and their multi-billion dollar accounts would get their pants pulled down by an FOMC announcement, then scratch their heads when their trades went against them ?

It is a ludicrous position to take. Do you think anyone with zero market knowledge would be given ANY money to manage if they had the level of market knowledge of your average T2Wer who thinks TA is all they need to know and all other knowledge is superfluous ?

The problem here seems to be that people have reading difficulties. They see some criticism of TA and then go into rant/cut&paste mode.

The nuance of the argument appears to be lost on many. My suspicion is that many of these people don't trade and have therefore not experienced what happens when predictable fundamental events occur.

I agree with you DT
By the same token, any fundamental trader trading stocks or futures who doesn't put a 200 day moving average on his chart, just so he's looking at the same thing that the rest of the market is looking at (even if he doesn't trade off it) isn't doing himself any favours either.

Just like religion, extremism is ... well stupid.

 

[BSD]

Charlton, I am (unusually) sober and can assure you this post will also still make perfect sense for the next 100 years of trading too.

BSD seems to be the only sane one on T2W at the moment.

Jason

Thanks

The fact that this is coming from you, this is possibly one of the funniest posts ive seen in my years here. Permission to put it in my post signature....?.....

Yeah that was hilarious haha

Anyway, I completely and totally ignore any funnymentals in my trading.

When I scalp I watch out for what the news is is coming out, but swing trading longer term I in absolutely no way let that interfere with my positions, and thats the exact same what longer term trend following CTA's do to, anyone trading off of anything higher than say an hourly chart can safely ignore anything that comes out.

LTCM is another example - they went bust, but because of psoition sizing, not anything else - of an algo fund that ignores news / funnymenmtals and only trades price relationships, aka just another form of TA.

Or is anybody here seriously deluded enough to believe that todays high frequency trading algos stop and check for fundamentals when putting on thousands of trades per day ?

 

[episteme]

Before I pass swiftly over the chaff, I will add to where we left off, and try and make it a bit more clearer, but I will not hand out any free dishes on a plate, as that is insulting your intelligence as human beings.

Grey1, form results we have seen posted here by one that knew his approach fairly well, was achieving mediocre returns for the size of the account and the amount of trades taken.

Time is money when trading, and an opportunity lost is money lost.

If we go back and look at my questions about which was best, say 6 trades for $2k or 1 trade for $2K, the obvious answer is 1 trade providing you can do it each and every day.

If not, then 2 trades should be next, and so on until you achieve your objective.

Many traders seem to waddle around and not see what they need to see, and, most of that is because they are looking at RTA, as opposed to looking at what they should be looking at.

Let me get this straight. The best way to trade is to make 1 winning trade a day, every day at 2k a time. That would be 10k a week or 40k a month.

Brilliant - the scales have fallen from my eyes - this is my new reality.


wait a minute ... how do I do that ... what if I make loss on one of the days ... or two days in a row ... or three ... or ... don't take a loss at all and blow up my account.

 

[Vorbis]

That's as simple as it really is if one can free oneself from old beliefs and convictions if they don't mesh with available facts, open ones mind and is able to identify what really counts while ignoring the irrelevant rest.

It ain't rocket science that's for sure.

Understanding how to trade net profitably has nothing to do with predicting.

It's about no more than skewing the odds in your favor by identifying a method with an edge that you clearly have when trading pullbacks in trends or reversals in ranges, accepting that you'll be wrong and have losing streaks, not letting that deter you from trading your plan, keeping a tight control on losses while accepting in profits what the market will give you and hey bingo you're set.

There is a fascinating series of posts on this theme here for those who may be interested :

http://www.humblemoney.com/?p=91

 

[DionysusToast]

Thanks

Yeah that was hilarious haha

Anyway, I completely and totally ignore any funnymentals in my trading.

When I scalp I watch out for what the news is is coming out, but swing trading longer term I in absolutely no way let that interfere with my positions, and thats the exact same what longer term trend following CTA's do to, anyone trading off of anything higher than say an hourly chart can safely ignore anything that comes out.

LTCM is another example - they went bust, but because of psoition sizing, not anything else - of an algo fund that ignores news / funnymenmtals and only trades price relationships, aka just another form of TA.

Or is anybody here seriously deluded enough to believe that todays high frequency trading algos stop and check for fundamentals when putting on thousands of trades per day ?

I presume you weren't in the debating team at school. I will point out some flaws in your overly verbose posts.

1 - You have totally and completely missed the point being made. You are arguing against the point you presume is being made.

2 - You haven't presented a clear case for RTA, all you have done is cut & paste from google and used examples of people that have made money without proving they don't use factors outside of RTA.

3 - Arguments about things like HFT trades are total strawmen. How is an HFT using the kind of TA that we are referring to ? I missed the bit in "Come into my trading room" where it discussed co-locating your PC at the exchange.

4 - As has been pointed out - using people like Livermore to argue that the RTA works is like using Richard Branson to prove selling CDs makes you rich. It misses most of the skills the guy had.

Quantity over quality, BSD. I do look forward to your next Google-dump though.

 

[DionysusToast]

Here's a Question....

Let's go back a few weeks. Let's say you brought shares in Toyota (TM) on January 8th when it broke out to new highs. Say you got in at $85.70.

Then - you are sitting at home watching TV and you see that their cars are killing people.

Do you ignore this information and stay in the trade ?