If you want to fail as a trader, study TA

[DionysusToast]

Agreed, but I never said, "they all work." That's not what I intended it to mean, what I meant was, if it works for you and suits your style & personality. if you read my post in context that's what it says. You then became insistent that I had said something that I hadn't, which is why I got the hump.

Also, I'm not repeating stuff parrot fashion, I've put a great deal of thought & testing into these concepts.

Anyway, let's move on...

Actually - you said that they all had a statistical edge. This is not the case, most are statistically insignificant in that there is no relationship between the TA and the price action that follows. It is very important for newbies to understand this.

Thought and testing means very little. It is only trading that really matters. Concepts that appear fine in a review of historical charts have a strange way of working differently when you don't have the benefit of the right hand side of the chart.

I spent hundreds, if not thousand of hours reading books & forums, I spent money on courses and I put in a lot of programming time. The programming in particular was most enlightening in terms of what TA proponents claim and what it achieves statistically. In fact, it was most disheartening to learn how many of those 'hot' mainstream pure TA setups were actually total hogwash.

I know what newbs go through because I went through it. In the end - it took someone roughly 6 hours to teach me to day trade profitably. 6 hours... can you believe it ? I still shake my head over that. 6 bloody hours learning the right stuff. That is all it takes if you of course understand the basics, I am sure a complete newbie would take longer. Still - it's not long at all is it - so how much is there really to know ? After the 6 hours though - well - there's more than a few hours of practice required.

Of course, you can retort that I just failed at TA but it's the programming and backtesting I did that gave me the confidence to say that most of it is crap. That plus the fact that all of the traders I know in real life that are making real money - they just don't use this stuff that the industry feeds us.

This is today:

Like I say, I am not making millions, but I have left the unprofitable/seeking stage and am now improving each week. Of course, if you can show todays live trades made purely on the basis of traditional TA, I will take my hat off to you.

Disclaimer
I will say that I do use TA to find swing trade opportunities as oscillators are great when used in scanners to find stocks pulling back, that along with a few other technical bits and bobs help to narrow down the amount of stocks to look at for long swing trades.

 

[rathcoole_exile]

err hum, looking at the timestamps on those trades, weren't you supposed to be working mate ? :whistling

 

[rpuk]

I have found that it is good to be aware of the TA stuff just because so many people follow it....I always think that if you are in tune with the markets then you can make money by almost understanding the 'thinking' of the majority out there and the TA is partially ingrained in this because so many buy/sell at certain technical levels regardless of whether they actually understand why the market is at a certain level.

That or perhaps I am just a lone mad voice

 

[DionysusToast]

err hum, looking at the timestamps on those trades, weren't you supposed to be working mate ? :whistling

Well - a man of leisure like you wouldn't know it's Chakri day today anyway...

I wish I could trade US stocks from the office - but the markets tend to be closed at the times I am there.

My PC is set to Eastern US Time, same as the markets - it makes things easier with the trading platforms.

Do you not do the same with Tradestation yerself ?

 

[temporarilylight]

Did you pay them to teach you to trade in 6 hours DT?
Do you think you could trade Currencies for example using the same principles you were taught?

 

[DionysusToast]

Did you pay them to teach you to trade in 6 hours DT?
Do you think you could trade Currencies for example useing the same principles you were taught?

I did indeed pay for it. We did get through the material quickly as there was a lot of the basics I already knew, so we skipped that. It would work for US stocks only in my opinion as it relies on the dynamics of that marketplace and specific information available on it.

 

[DionysusToast]

Precisely right, Toastie :clap::clap::clap:

For a second there, I thought you'd called me Tootsie.

 

[Mr. Charts]

For a second there, I thought you'd called me Tootsie.

 

[jon1971]

Actually - you said that they all had a statistical edge. This is not the case, most are statistically insignificant in that there is no relationship between the TA and the price action that follows. It is very important for newbies to understand this.

Thought and testing means very little. It is only trading that really matters. Concepts that appear fine in a review of historical charts have a strange way of working differently when you don't have the benefit of the right hand side of the chart.

I spent hundreds, if not thousand of hours reading books & forums, I spent money on courses and I put in a lot of programming time. The programming in particular was most enlightening in terms of what TA proponents claim and what it achieves statistically. In fact, it was most disheartening to learn how many of those 'hot' mainstream pure TA setups were actually total hogwash.

I know what newbs go through because I went through it. In the end - it took someone roughly 6 hours to teach me to day trade profitably. 6 hours... can you believe it ? I still shake my head over that. 6 bloody hours learning the right stuff. That is all it takes if you of course understand the basics, I am sure a complete newbie would take longer. Still - it's not long at all is it - so how much is there really to know ? After the 6 hours though - well - there's more than a few hours of practice required.

Of course, you can retort that I just failed at TA but it's the programming and backtesting I did that gave me the confidence to say that most of it is crap. That plus the fact that all of the traders I know in real life that are making real money - they just don't use this stuff that the industry feeds us.

This is today:

Like I say, I am not making millions, but I have left the unprofitable/seeking stage and am now improving each week. Of course, if you can show todays live trades made purely on the basis of traditional TA, I will take my hat off to you.

Disclaimer
I will say that I do use TA to find swing trade opportunities as oscillators are great when used in scanners to find stocks pulling back, that along with a few other technical bits and bobs help to narrow down the amount of stocks to look at for long swing trades.

DT, I really couldn't give two hoots what you use to trade, if it works for you great more power to you and I sincerely wish you the very best of success with it.

You point out to me where I've said, "all TA works" and I'll point out where you've read it out of context, deal? Most methods and indicators in my opinion should be used as component parts of a system and you'd be a bit silly to take any single signal in isolation of other evidence, (is this what you're driving at? is this what you THINK I said?)

And frankly to say that all mainstream TA is hogwash is a ridiculous statement in itself, have you tested it all empirically? If so, to what extent and on what sample size?

Incidentally none of my settings are traditional settings, and I agree with you to an extent that a fair amount of main-stream stuff is for the herd, that's why it's main-stream.

And learning to trade in 6 hours, I can well believe it, trading is not a great big mysterious thing, as so many like to make it out to be.

Very basically, it's a matter of defining your edge and what constitutes your edge, seeing your edge, and taking the trade with a pre-defined risk. If it goes your way, great, make sure you execute your initial profit target (I scale out). If it doesn't, then take your loss at your pre-defined stop and move on to the next set-up. No emotion, no nail-biting because you didn't get out at your stop because you thought you could predict the market. I can't believe that as an experienced trader, you are disagreeing with me over this.

 

[jon1971]

Here's a new angle (let's try and shed some light on all of this).

Any system be it whatever (throwing darts if you like), is only as good as the trader trading it.

Discuss...

 

[DionysusToast]

All textbook stuff Jon, especially the part about your nice pre-defined profit target and stop. Well be talking r:r ratios next. All nice 'wrapped up in cotton wool' concepts. What about real, live trading where you can't see the right hand side of the chart ?

Now - you didn't say all TA works. What you did say was that all TA provided a statistical edge. Perhaps in some case the edges could be too small to profit. So whilst you aren't saying that all TA is profitable, you are implying that TA has a relationship with the price action that follows it.

What I say is that for most TA, there is no relationsip between the TA method/indicator and the price action that follows it. That most TA is statistically insignificant. As good as tits on a bull. This is really the issue.

As for your 'non traditional settings' - yes - we've all been there too, I'm afraid.

 

[jon1971]

All textbook stuff Jon, especially the part about your nice pre-defined profit target and stop. Well be talking r:r ratios next. All nice 'wrapped up in cotton wool' concepts. What about real, live trading where you can't see the right hand side of the chart ?

Now - you didn't say all TA works. What you did say was that all TA provided a statistical edge. Perhaps in some case the edges could be too small to profit. So whilst you aren't saying that all TA is profitable, you are implying that TA has a relationship with the price action that follows it.

What I say is that for most TA, there is no relationsip between the TA method/indicator and the price action that follows it. That most TA is statistically insignificant. As good as tits on a bull. This is really the issue.

As for your 'non traditional settings' - yes - we've all been there too, I'm afraid.

No, go back and read it again DT, I said, "if it provides YOUR edge," you've missed out the word YOUR. What I meant is, if it works for YOU as a component of YOUR methodology, there is a difference. You're taking what I said and making your own interpretation of it, much like we all do with market data.

I'm not going down this cul de sac of "you show me yours, if I show you mine" with you. If you must know, I've got about 18 months live trading experience at the hard right edge, I shanked a pretty large account last year after being up a good few thousand initially, a painful experience which has got me to a point where I have taken a step back for a few months and am re-evaluating. I'm going live again in mid April (actually in about a week) and I am not changing my plan to prove an ego point to you, I don't think that my trading partner would be too impressed either.

In all honesty, I would have been more impressed if you'd shown me a position that you'd been stopped out of for a small loss. All you proved with your daily P&L is that you eat like a bird, not much good if you defecate like an elephant, n'est pas?

Also, you're demonstrating to me (even with this conversation & admittedly I'm equally as guilty) that you are operating out of a need to be right (why else would you be so dismissive of the importance of R:R and the need to pre-define risk, because that would mean admitting that you're wrong). What I'm proposing is that there is no right and wrong, the market couldn't give a monkeys about what your analysis says or what you think it's going to do, a certain percentage of the time it will follow your analysis and a certain percentage of the time it won't. Just because you get a few bad signals, that's no reason to "throw the baby out with the bath water."

And as for your blanket statement of there being no correlation between price and indicators, COME OFF IT MATE, I think I'll trust my own judgement on that one.

Cheers.

 

[jon1971]

Just a point of interest; the majority of the time price action could be said to be following random walk theory, but there are certain times when it goes into a predictable pattern. TA isn't much good if it's meandering, but in my humble opinion, it can work like a charm in those predictable phases, (notice that I say, "it CAN," it doesn't always). Good trading is also about knowing when to stay out and stand aside.

You see that's the problem with these types of debate, everyone has a different angle, is working on different time-frames, is trading different market phases and brings some different perception to the party. What suits your personality and strategy is unlikely to suit my personality and strategy and vice versa, and I believe that I've already conceded that the text book approach doesn't work, (in fact I don't think I ever said that it does and it's certainly not what I believe).

There is no "one size fits all."

 

[dealer911]

Just a point of interest; the majority of the time price action could be said to be following random walk theory, but there are certain times when it goes into a predictable pattern. TA isn't much good if it's meandering, but in my humble opinion, it can work like a charm in those predictable phases, (notice that I say, "it CAN" not always), good trading is also about knowing when to stay out and stand aside.

You see that's the problem with these types of debate, everyone has a different angle, is working on different time-frames, is trading different market phases and brings some different perception to the party. What suits your personality and strategy is unlikely to suit my personality and strategy and vice versa, and I believe that I've already conceded that the text book approach doesn't work, (in fact I don't think I ever said that and it's certainly not what I believe).

There is no "one size fits all."

yes good point.. we all come at this from completely different perspectives (and time frames).. There is no holy grail or one size fits all solution.. all I would say is that you dont have to be exclusivly in the TA or the FA camp.. both can work together pretty well!.. most newer traders completly disregard any FA.. the charts look alot prettier!

 

[jon1971]

yes good point.. we all come at this from completely different perspectives (and time frames).. There is no holy grail or one size fits all solution.. all I would say is that you dont have to be exclusivly in the TA or the FA camp.. both can work together pretty well!.. most newer traders completly disregard any FA.. the charts look alot prettier!

I can't dispute that 911, and certainly major fundamental news releases will always trump TA. I'll refer back to the point I made about knowing when to stay out (unless you have reliable insider knowledge of course).

Oh no, just realised, we're getting into EMH territory, DT is going to love that, LOL.

 

[DionysusToast]

Jon - first, accept my apologies that I didn't have a losing trade yesterday. I just chose the days trades, I can't really help it if I didn't have a losing one can I ? Choppy/thin market = small trades. If I'd chosen another day I'd be accused of 'cherry picking' - you can't win on here when it comes to posting actual trades. It does beat 'no trades' though.

When you trade live & make a profit - come back and talk about what works for you. In the meantime, you should not be saying things like this :

"TA is exactly the same, by giving you a probabilistic edge it ensures your profitability over a series of trades, BUT NOT ON ANY INDIVIDUAL TRADE. This is where risk management and trade execution come in, because at the end of the day, these are the only areas that you have control over.

Your particular area of TA methodology, be it divergence, patterns, elliott, whatever, are really incidental, so long as it provides your probabilistic edge, that's all that matters."

Which would be lovely if it were true ! Sadly, it is the kind of thing repeated on forums like this, taken for gospel and then found to not work in reality.

You are providing us with a great insight into the typical trading forum contributor. An expert that has blown an account, doesn't trade but has aims to get back in the game. Sadly, you are still looking in the same places for your answers.

 

[SH-101]

Must say I thought Jon1971's comments about having an edge over a sample of trades rather than over a single trade were quite accurate.

Sure, not all TA provides that edge - I wouldn't trade overbought/oversold views on the strength of an RSI or stoch - but there are some combinations of TA out there capable of providing that edge over a sample of trades. I never think in terms of single trades myself but I have an edge which (to me) is proven to provide me with a profit over a larger sample of trades, thanks to good trade entry/exit levels (all determined with TA!) and the resultant positive r/r ratios.

DT - do you trade only stocks? Reading through this thread it seems that those who trade stocks are less likely to side with TA than those trading other markets. I stick to FX myself and tend to find that they are excellent technical trading markets - I've never attempted to trade stocks.

 

[DionysusToast]

SH - yes just stocks - day trading and swing trading, although right now I am not opening any new swing trades, I'm just not sure about the market direction now although I am not willing to close my current longs as the US market is still rising despite there being plenty of reasons for it not to.

I would say though that if you trade FX and you don't understand the marketplace and your place in it, then you are doing yourself a disservice. Knowledge is power.

I have spoken about this to a few people that became succesful after attempting a pure TA approach. Those that try to understand WHY a losing trade occurs as opposed to writing it off to probability have less chance of being stopped out for that reason if the loser was because of something fundamental and predictable.

So - if you are happy to just say "no worries, that bad trade was just probability", then you are missing the opportunity to learn from it and potentially avoid future losses.

BTW - you play keyboard ?

 

[Devilicus]

DT - do you trade only stocks? Reading through this thread it seems that those who trade stocks are less likely to side with TA than those trading other markets. I stick to FX myself and tend to find that they are excellent technical trading markets - I've never attempted to trade stocks.

I notice the same thing.
Maybe its because there are obvious ways you can trade US stocks using various Fundamental analysis to make decisions from. Lots of readily available info .
However, im not entirely sure how id go about daytrading currencies using 'funamental information'...?...

Some believe that when day trade currencies, Since fundamental factors will have some effect on the price of a currency and the price of a currency can be plotted on a graph, it can be argued that all fundamentals will, at some point or another, be reflected on the chart. So when a trader simply uses the information on the chart to determine when to buy or sell, he is acting on the sum of all the fundamental factors that are influencing the price at that moment in time, regardless whether he knows what each of these factors is and how it "logically" influences a given currency.

I know that Mr Charts seems to PICK stocks based on fundamentals (maybe stocks in the news), but his entry and exits seem to be very chart based. I know he mentions tape reading and level2, but to me that is most definitely TA.
Im not sure about DT, but i get the impression he employs a similar method?

Would I be a 'real' NON TA trader if I waited for big economic announcements regarding GBPUSD and THEN took a trade based on a form of TA?

I think there is a negative stigma attached to TA and people maybe want to believe that TA doesn't come into their trading decisions, when in fact, it probably plays a huge role

 

[Mr. Charts]

"I know that Mr Charts seems to PICK stocks based on fundamentals (maybe stocks in the news)"

Not in the sense of analysing the fundamentals of a stock, but I do read pre-market news flow very briefly for "story" stocks, but that does NOT mean I trade them; it might mean they go on my alert list in case their trading behaviour produces one of a dozen set-ups which MIGHT be triggered by market action.
Other stocks on my alert list appear dynamically DURING market hours by using my scanning methods.
Richard