If you want to fail as a trader, study TA

[DionysusToast]

He was but not in any way that can be classed as classic RTA that is being referred to here. In my view Grey1 was the best "technical trader" I have witnessed but his methods were very advanced and not easy to understand.

I wish everyone could understand this.

Grey1 had worked in the industry, had done copious amounts of research, had worked in the industry, knew the markets and many times told us that the market was sometimes 'non-technical' and he knew when those times where

What he did was not RTA at all. Grey1 is as far from the typical Alexander Elder reader as you could possibly get. I find it unlikely that Grey1 got where he was by educating himself on the offerings of Amazon.com

Grey1 also did NOT offer a cookie cutter approach. He always kept a little back and many times stated that. He was a little cryptic, although not as much as TE.

 

[dcraig1]

I wish everyone could understand this.

Grey1 had worked in the industry, had done copious amounts of research, had worked in the industry, knew the markets and many times told us that the market was sometimes 'non-technical' and he knew when those times where

What he did was not RTA at all. Grey1 is as far from the typical Alexander Elder reader as you could possibly get. I find it unlikely that Grey1 got where he was by educating himself on the offerings of Amazon.com

Grey1 also did NOT offer a cookie cutter approach. He always kept a little back and many times stated that. He was a little cryptic, although not as much as TE.

If you want to bang on endlessly about how "RTA" "doesn't" work, you could have the good grace to start by defining what this "RTA" is. For example does it embrace everything mentioned in Murphy - Technical Analysis of the Financial Markets. Cycle theory (very important in Grey's stuff)? How about market profile? Order flow analysis? Chart patterns? Magic numbers (fib, Gann and other such nonsense).

How about all the methods described in Kaufman New Trading Systems and Methods - all 1100 pages of it. What about neural nets as predictors or classifiers?

What about Ehlers signal processing stuff? And lots, lots more.

This whole thread is pointless without some specifics. The whole notion of some clown declaring themselves an expert and dismissing ALL TA as nonsense (except of course THEIR brand of TA) is just ludicrous and reeks of funny business.

 

[N Rothschild]

1100 pages, jeez lol..have you read that bad boy?

 

[dcraig1]

1100 pages, jeez lol..have you read that bad boy?

Nah, just the parts that interested me. The point is that there is an awful lot of stuff out there and surprisingly you can buy a lot of it from Amazon! Some worthwhile and some useless.

If the aim of this thread is to construct a straw man, it's a resounding success. For all other purposes it has no value.

 

[DionysusToast]

OK - let's start with cycles. Note that all books I mention are books that I have read and understood.

Cycle analysis originally started out with J M Hursts short work "Cyclic Analysis: A Dynamic Approach to Technical Analysis " and his follow up book "The profit Magic of Stock Transaction Timing", published in 1970. In a nutshell, the concept was that you can map multiple minor/major cycles on a chart - you envelope a chart with a high/low band and then you 'nest' this set of high low bands in a higher envelope - effectively giving you multiple nested layers of cycles. You then look at past cycles in terms of wavelength and amplitude to PREDICT the next cycle.

The key to the early works of J M Hurst therefore is in using past cycle data to predict future cycles.

Fast forward 34 years and you have the impressive "Cybernetic analysis for stocks and futures" by John Ehlers which takes this concept and instead of simply averaging wavelength and amplitude, John Ehlers applies techniques used in digital signal processing and applying them to the price data. Whilst this book is a real eye opener/page tuner for someone like me with an engineering background, I hear that Ehler himself never managed to apply these techniques to the market and make $$$. The book also discusses Johns masterpiece "MESA" which is the orange stuff below:

Granted, this is taking things to extremes but again I have never heard of anyone making money from what is obviously a masterpiece in math.

Now - onto Grey1. What is it he discusses on the TT forum ?
- Using multiple timeframes - notably 60,30,10,5,3,1
- apply a cycle indicator to those timeframes - a smoothed out CCi
- when all CCis point in one direction - you can trade in that direction

Given that (albeit abbreviated) description, it should be clear that Grey1 is not talking about cycle analysis in the classical/J M Hurst sense. I have not seen ANYONE pick up on this (or more likely were scared to question their mentor). For the CCi average to turn up on the 60 minute timeframe, it means that the price must have turned up too. The CCi Average will follow price, it will not turn up before price does. How many hours of price moving upwards does it take for the CCi Average to point upwards ? More than one, obviously.

So - we first say that the 60 minute timeframe must have a CCi pointing up and then wait for confirmation from some of the other timeframes. There is a term for this and I am sure I will be thrown on the coals for it. The term is 'Following the trend'. That is what the Grey1 mutliple time frame with CCi Average system MUST be doing because price moves in that direction before the oscillator does. This is basic math.No-one should have a problem with this. Problem is - most people will not scratch beneath the surface and so people will follow for years without understanding basic facts about what underlies the things they are being taught.

If you are using analysis of cycle length/amplitude to predict the future cycles, then you are using cycle analysis in the classical Hurst/Ehler sense.

If you are waiting for an oscillator to turn up on an hourly timeframe, you are waiting for a trend to establish itself and that is trend following. There is nothing wrong with that but let's understand clearly what we are talking about here.

So - back to the classical definition of cycle analysis - which is the analysis of past cycles to predict future ones - is anyone out there really making money from it ? Not as far as I can tell.

 

[N Rothschild]

if you are interested in cycles just study elliotwave, can be very powerfull if you know how to use it properly, cept most people dont!

 

[dcraig1]

Now - onto Grey1. What is it he discusses on the TT forum ?
- Using multiple timeframes - notably 60,30,10,5,3,1
- apply a cycle indicator to those timeframes - a smoothed out CCi
- when all CCis point in one direction - you can trade in that direction

You've missed the essential part - cycles on an index, but trade individual stocks (or baskets thereof). Short weak stocks. Long strong stocks. Stock selection very, very important. Apply common sense, be aware of the news and don't go jumping in front of freight trains.

 

[DionysusToast]

You've missed the essential part - cycles on an index, but trade individual stocks (or baskets thereof). Short weak stocks. Long strong stocks. Stock selection very, very important. Apply common sense, be aware of the news and don't go jumping in front of freight trains.

I have not missed that at all - that is just another part. I started off by looking at cycles and showing that there is a lack of evidence that either the pioneers OR our own Grey1 is using cycle analysis in the classical sense and making a profit.

Like I say, the method Grey1 uses in analysing the cycles is a form of trend following. The fact that it is applied to the index is largely irrelevant.At no point did I say he was not making money. I just said that people on the TT forum did not truly understand what he was telling them.

I am probably one of few people that has actually seen the code behind one of Greys systems and the method used to select strong/weak stocks is not the N Min Change. It is something much simpler than that. Just be aware that Grey was never going to come straight out and give people the details of exactly what he was doing.

CRYPTIC ?

 

[dcraig1]

I am probably one of few people that has actually seen the code behind one of Greys systems and the method used to select strong/weak stocks is not the N Min Change. It is something much simpler than that. Just be aware that Grey was never going to come straight out and give people the details of exactly what he was doing.

Whatever about the code. I had a good hard look at N bar stuff. I've never liked it much. Neither did I like the fundamental screens for swing/position trading, or for that matter cycle indicators on individual stocks. You can use conventional TA and it's not that hard to beat all these for stock selection .... and beat the index.

You have a long way to go to prove that "cycles don't work". In fact it can neither be proved or disproved because it is so vague. How are the cycles calculated and how are they used? Any number of ways are possible.

I'm not particularly attached to cycles, but I find self proclaimed and self promoting "experts" who declare that TA is rubbish and only their "special" (and I might add undisclosed) TA to be the shining path to be nothing short of obnoxious.

 

[Ambrose Ackroyd]

I'm not particularly attached to cycles, but I find self proclaimed and self promoting "experts" who declare that TA is rubbish and only their "special" (and I might add undisclosed) TA to be the shining path to be nothing short of obnoxious.

You make it sound like blasphemy.

 

[DionysusToast]

Someone asked on here to be specific of which TA techniques don't work.

I came back with an accurate and detailed layman level explanation of what cycle analysis is. It is the study of wavelength and amplitude of past cycles to predict future cycles. You can be assured that google did not help me to put together that post. This is something I have researched in detail. I also pointed out how what one of the guru's from this site did was not really cycle analysis.

Even someone like Ehler with his seminal work on the topic which he claims took him 20 years, did not come close to anything that makes money.

If you are going to start saying people are obnoxious because of a studied opinion- then put a little meat on the bone of your counter argument. Is it not clear that I have studied cycle analysis in detail and am in a position to actually speak on the subject ?

Are people going to come back with the old strawman that I'm just bitter because I couldn't get it to work ???

Is it even worth moving on to other areas of TA that don't work and discussing them if we can't have sensible educated opinions from both sides of the debate ?

 

[trendie]

the last few posts seem to have veered off the topic.
however, I will add that grey1 was incredibly generous with his time and knowledge, and confidently traded real-time day after day in a paltalk room. my abiding memory of him was his rendition of "Fly me to the Moon" in between trades.
although Grey1 talked about cycle-analysis, I am happy to accept, from DT, that it may not have been classical cycle analysis. I always understtod it was, as dcraig desrcibes, buying strong stocks, and selling weak ones, when seen in context of their sector.

anyway, back to "If you want to fail as a trader, study TA". (which, actually, is a closed statement)

for the purposes of the argument, I accept that it is true.
Now what?

 

[OpenMind]

You should not be concerned with who I am, but with what I am.

In which case, I am forced to conclude that you are but a new nick of an old member.

A new member who knows an awful lot about Socrates, Grey1, his VWAP engine and his trading style... hmmm... I smell a dead and rotten rodent.

Ah the wonderful world of the T2W soap opera... beats Eastenders any day.

 

[DionysusToast]

for the purposes of the argument, I accept that it is true.
Now what?

Buy my special indicator pack - yours for only $5999.99 + VAT

 

[BSD]

My experience of his trades were much more complex than this. He did on occasion do as you say but it was not his main approach to trading. He had a highly complex cycle analysis study that he revealed very little about.
Paul

He may well have had other setups but I witnessed him do his MACCI stuff often enough to be able to state that it was a fully viable stand alone method, Grey's trades I was talking about were set up and 100% replicable by me in the exact same fashion he'd set his up, and all it was was an MA on a CCI on multiple time frames, absolutely nothing undivulged or complex about that, simple OB / OS stuff that's been around for ages and simply works.

Again, there simply are not that many methods to make money trading, there are only 2 basic approaches and that is it, trading trends via breakouts or pullbacks, or trading reversions to the mean.

That is it, no other methods exist to make money trading, so one really shouldn't artificially overcomplicate or construe secrets or complexities into markets that simply don't exist, markets are in essence really simple, no more and no less than the sum of their participants actions.

The single one thing I've always found that unites the truly successful traders I've met is that all had really simple methods because they had grasped the most fundamental truth about trading, there are only two ways to make money at this, so it ain't rocket science.

KISS is the name of the game.

The only people that keep trying to make this more complicated than it is are losers who simply aren't succeeding or posers who need a boost for their fragile ego.

So, there is no beef and T2W has attracted another egotistical fool. Sad. Having worked my way through this thread I now recall why I stopped reading or posting here last time. The internet does seem the perfect place for these folk and T2W seems to be a warm place for them to settle a while.

Let me offer one prediction for the day - the expert (lol) will deliver no beef.

Couldn't agree more yet again, all the OP has posted here or elsewhere is complete and utter drivel completely free of any substance of any sort with absolutely zero value added.



Reading stuff like this thread it''s really easy to understand why some people have a deep need for gurus lol, and how easy it is to make people fall for you, by insinuating secret knowledge only you have access to without ever divulging it.

Hilarious if it weren't kinda sad , really not that bright most of us gullible people, are we.

 

[DionysusToast]

Again, there simply are not that many methods to make money trading, there are only 2 basic approaches and that is it, trading trends via breakouts or pullbacks, or trading reversions to the mean.

Does this mean there are no options strategies that make money when neither of the above occur ?

How about buy and write strategies generating passive income from stocks you own ?

How about strangles ?

There are of course ways to make money that do not include these things. Lest anyone accuse me of making wild generalisations :whistling

 

[BSD]

Does this mean there are no options strategies that make money when neither of the above occur ?

How about buy and write strategies generating passive income from stocks you own ?

How about strangles ?

There are of course ways to make money that do not include these things. Lest anyone accuse me of making wild generalisations :whistling

Last time I wrote that there are only two ways to make money trading, trends or mean reversion, I added the term "directional" trading, but then I got pms asking me to clarify directional lol, so thought I'd leave that out this time.



Don't want to get into the hanky-panky Jayjay and Grey started again, but this post of Jay's sums it up perfectly:

" No B.S. Day Trading
i cannot beleive how simple greys methods were yesterday when i was trading with him. Ok we do have to be aware of news at all times with his methods but they are amazing and so simple and if you can read the market and know when its gone non techical just stay out but even for me this will take time to get. No trendlines, no fibs, no volume, no bs basically, just pure cycle analysis.

Perhaps its futher confirmation that as traders we do like to over complicate and ive been guilty of this for too long now. It works, keep stops tight, run profits and move up stops to breakeven then +10, it works i tell yer."
http://www.trade2win.com/boards/day-trading-scalping/37288-no-b-s-day-trading-11.html#post515736

Couldn't agree more, both about his assement of Grey's method, and about successful trading in general being very KISSy, being predicated exclusively on simple inputs.

 

[Splitlink]

Does this mean there are no options strategies that make money when neither of the above occur ?

How about buy and write strategies generating passive income from stocks you own ?

How about strangles ?

There are of course ways to make money that do not include these things. Lest anyone accuse me of making wild generalisations :whistling

Have you done strangles, butterflies and stuff? All this is not what BSD is on about. I think that he is dealing with simple trading policy, which anyone who is starting to trade should be dealing with first.

Options trading is one big bucket of worms. When Socrates started that thread he was trading relatively simply. Trading naked put options---how simple can you get?
However the optiondealers come up with all sorts of wonderful hedging ideas , cleverly designed to make the trader pay money in commisions. I did one strangle, I think, in my foray into options trading, more than a decade ago. I started to unpick it, bit by bit until I could understand what I'd got myself into. Such is life!

The options part of trading, except for the experts and for big stockholders who write ccvered options, are not to be recommended for those new to trading. I'm not talking about those like you, who may have made detailed studies but, even so, you have to have a very good understanding of the instrument, itself, not just the option covering it.

The opinions that I have expressed are not against TA, itself. That would be a ridiculous
argument, but I do believe that a sector of teachers and students is focused, too much, on certain rules based on resistence, support, averages, Fibs and, especially, indicators based on hindsight. In fact,a whole industry has developed, based on just a few platitudes. Always the same old thing done up in a new ribbon. I do believe that today's market is on top of all these arguments, expects them and acts according, creaming more money out of the unwary's accounts.

 

[Charlton]

Standard TA and Special TA ???

I would define technical analysis as anything that is derived from looking at price, volume and time only. I would define fundamental analysis as anything that is derived from looking at information derived from looking at value statements e.g. profit forecasts, P&L, EPS, news etc.

These 2 statements immediately highlight the difference between the two: the former is limited by its inputs, whereas the latter is more “vague” and the range of possible sources of information (the inputs) are not limited.

Traders can and do use either or both of these to make trading decisions. In the case of Grey1, who has been mentioned several times, he used both. Grey1 was fully conversant with what might be described as traditional TA e.g. support and resistance because he used to teach it, but he worked out his own flavour of TA where he showed that you had to take into account various factors such as market strength/weakness that would override, for example, SR levels i.e. the top-down approach.

As several people have pointed out his methods and code had different versions. Partly this was because they were changing over time due to his continuing research and taking into account market changes, partly because they were aimed at an audience that was being educated and had to be set at an appropriate level, partly to maintain an edge and partly because some of his methods included skills, experience and wisdom that cannot be easily “bottled”. You only have to look at the publicly available posts on VWAP to see how his methods changed and I know that the top-down, multi-timeframe, MACCI-based method shown in his webinars works in certain conditions, but is not necessarily what he practised himself.

Now the simpler concepts of TA are very attractive to newbies and vendors (particularly snake-oil). For the newbie it takes little time to pick up a few concepts that appear to be based in the “scientific “ method. For the vendor it takes little time to produce courses, books, software and the like that satisfy the need of the newbie to absorb such material.

The simpler concepts of TA are what I would call “symptomatic”. Like someone with an illness you can look at the symptoms and be correct about the underlying illness a certain percentage of the time. Likewise you can look at, say trendlines, to make trading decisions and be correct for some of the time. More complex concepts of TA are what I would call “causal”. With the illness analogy this would involve performing scientific tests such as scans and genetic research (also trading concepts) to determine the underlying causes of that illness or even to identify illness where no symptoms exist. This is perhaps more akin to the Grey1 example. It is still a form of TA but at a deeper level that tries to determine cause and effect. This enables earlier and more accurate identification of continuation or reversal.

Returning the focus to the OP and the subject of this thread, I don’t think TE has yet shown that his version of TA (or whatever name he wants to apply) is anything special or different. So far we have only seen on the other thread discussions of Close-open and high-low ranges, and overnight gaps, which is hardly a new way of looking at trading and is, IMHO, fairly standard TA. We will have to wait and see if he can surprise us with new revelations.

However he has prompted discussion of these concepts, which is no bad thing

Charlton

 

[BSD]

I remember chatting with Jay before he went on that ill flung commercial venture together with Grey and he was talking about his day trading with grey, and it all really was as simple as he stated in his post above.

Markets move in permanent oscillations from OB to OS and back again...

Jump onboard a new cycle or dip or pullback or whatever you want to call it in trends or hit extremes in ranges ...

Keep your stops tight...

Let your profits run...

And that's it.

Grey was good but not by any means even close to being one of the greatest traders out there in terms of money made, but what I saw him do, what jay experienced live during a whole day, hit the KISS nail straight on the head.

I can very honestly say that I have never met a trader who makes great money at this who doesn't have a simple method.

The less successful people are the more they start interpreting into the chaos just to find an explanation for the truly simple, people buying or selling and thereby moving markets.

There is a rather well known complexity experiment that Harvard did where two groups of students had to come up with explanations to simple problems. The first group got the correct evaluation from the professors, ie if they had come up with the correct explanation they received a "correct", if not they got a "wrong", while the second group got random evaluations, so that even if they were right they might have received a "wrong" and vice versa.

The first groups solutions were all admirably simple, while the second groups explanations became increasingly complex as they tried desperately to force the inexplicable facts to fit the theory.

The same goes for trading.

As William of Ockham very rightly observed in what came to be known as Occams Razor, "All other things being equal, the simplest solution is the best."

All other things in trading are very equal, and you can even make more money than you can ever spend by being right no more than 30% of the time provided your winners average out at 3 times the size of your losers.

That is all trading is, a probability game driven by the net effect of people buying and selling.

All you need to make a fortune trading is to do what any kid in kindergarten could do, grab a chart, eyeball where the path of least resistance is, jump on board, cut your losses when and as they occur, and otherwise ride that trend all the way until it bends.

Lol THIS is just one more example of how simple trading can be, scroll down all the way to the bottom:

http://lbrgroup.com/index.asp?page=DailyCharts&date=2006-01-24

Right. Off to the gym now.