Sluggish Market & Ant Theory

[chump]

Mr D,
what about this ...
"big problem with that argument though for you..do you see it yet..may be not so I will help...the 'herd' are the 10's of millions who 'blindly' put their money under third party management ..but historically this third party management has been fundie managed investment funds and even though there is more TA practitioners in those today than there used to be they are still not overwhelmingly TA ...and there is your problem...if FA was so good you would be 'dead' in the water..."

Any comment ?

 

[ducati998]

chump

Sure it simply comes down to a distinction between the workman and his tools.
Is the tool faulty, or the practitioner?

My feeling is that with technical analysis, it is less the practitioner, than the tool, that is at fault.
Hence, the point of this thread.

Making a couple of broader generalisations;
If we agree that the "Market" fluctuates to greater or lesser degrees between "Efficient, & Inefficient"...................then,

How does technical analysis measure, detect, quantify, "inefficiency"?
As in an efficient market "price" will adjust to new information randomly, as the news itself is random.

So far, no-one from the technical camp has even attempted to put forward an answer. This is from a community full of successful traders.
That should tell you something.

cheers d998

 

[jafa]

[

How does technical analysis measure, detect, quantify, "inefficiency"?
As in an efficient market "price" will adjust to new information randomly, as the news itself is random.

So far, no-one from the technical camp has even attempted to put forward an answer. This is from a community full of successful traders.
That should tell you something.

cheers d998

I can't speak for other technical traders, but I do this as a living, I want a paycheck at the end of the week.

"Efficiency" at my timeframe is purely acedemic and not relevant.

So as far as putting forth an answer...well, the question does not even exist.

 

[ducati998]

jafa

"Efficiency" at my timeframe is purely acedemic and not relevant.

Really, how so.
There are two distinct methodologies that utilise this so called academic construct to turn profits within a variety of timeframes ranging from intra-day to weeks and months.

As per usual, from the technicals an empty argument.

So as far as putting forth an answer...well, the question does not even exist.

That is obvious.
Cheers d998

 

[LION63]

Ducati,

Jafa is right in saying that efficiency is irrelevant in his time frame and the question that you ask is non existent. He is only interested in the pay cheque at the end of the week, month quarter or year.

That is very easy to say when the markets are headed in one direction but what happens when they turn or move sideways? That pay cheque will no longer be so easy to obtain, then the questions will be asked. But the more discerning trader FA or TA will always ask questions in order to know why markets and other market participants behave in a particular manner.

That is the real difference between the brilliant TA traders and the also rans and the mediocre FA traders and the cream of the crop. One cannot fault anyone for deciding that a broader horizon is not for them.

 

[jafa]

jafa



Really, how so.
There are two distinct methodologies that utilise this so called academic construct to turn profits within a variety of timeframes ranging from intra-day to weeks and months.

As per usual, from the technicals an empty argument.



That is obvious.
Cheers d998

Come again?

This sounds intelligent, but says nothing. As to to relevance of efficient markets in my trading, please tell how it is?






Cheers

 

[charliechan]

Charliechan, though you and I have not met, I am willing to give you some advice, what is more, I am willing to give you this advice in public.

The advice is " don't persist ".

Now there is another separate facet of the same scenario for you to put your attention on :

We are now being invited to comment on "How does a timing methodology identify periods of intermittent inefficiency" , I ask you.......

And as if this was not enough, also, to define the EDGE that technical analysis provides...

Don't you think the envelope of our tolerance has been pushed far enough for us to hang around any longer wasting time pointlessly, and other things to be considered ?

NUDGE !

Kind Regards.

lol!!

 

[charliechan]

You are definitely the kind of chap that would start a brawl in an empty room. Now you even try and manipulate posts to suit your purposes, but what are you seeking to prove by doing this? I suggest you go and read from posts 208 through to 211 before making these lamentable posts.

I cannot recall any post contained in this thread that mentions limitations on the returns that can be achieved by any type of trader and I have never put forward any argument implying such. One can understand why a dedicated TA trader like yourself that constantly makes 7 digit returns every year would be irritated at the thought that your mastery of the markets is not appreciated by those on these boards, it probably gives you sleepless nights.

Since you have revisited the Ant Theory may I suggest that you take time out and observe them, it is fairly obvious that you will not get a good chance to do this in England so you will be better off travelling to a warmer country.

One ant (analyst) will stumble on food and return to the colony to report it's find; a group of ants will now go out and retrieve part of the food and report back to the colony (more analysts and traders). On their return, masses of ants (funds and traders) will now depart and seek to retrieve more of the food (take positions). The routes that they take (trading methods) will be diverse but most will end up at the located food whilst some will be lost in the wilderness (winners and losers). Those that locate the food will now seek to transport it back to the mound with varying degrees of success, some make it back without food (losers). Those that make it back will then return for more (traders chasing markets higher and higher) until there is none left (bottom falls out of the market).

Spurred on by their earlier success ( traders feeling that there are always rich pickings), many ants will now go off in different directions seeking more bounty. Some will find more food (more stocks) and others will return empty handed and hungry (broke, margin calls etc.).

calm down calm down queenie!!

1/ i got the impression fromthe tone of your earlier post that you thought day trading was a fruitless exercise and good returns were unrealistic. sorry if this was not your intention. but to be honest i do find some of your posts some what arrogant.

i hope you dont take that too personally, as i am sure you appreciate the difficulties of this 1 dimensional communication medium we are dealing with. i get the feeling you find the same issue with my post.

2/ for the record, i never have and never will divulge details of my performance. so i would appreciate it if you dropped the sarcastic tone that i have been making such claims. i merely pointed out that there are peopel who are doing very well indeed with the methods that you condemn as useless and irrelevant.

my objective was merely to shine a little light into the darkness. i am sorry you took offence at that.

 

[mark_b_27]

To my mind, the underlying beauty of TA is that it doesn't require the practitioner to think.
React to signals, yes, but think things through, no.
Quite possibly, the less thinking done the better.
Remember TA is an art not a science, and too much thinking can ruin a perfectly good faith.

 

[chump]

"Quite possibly, the less thinking done the better. "...amen ..but let's qualify that..when you have derived a winning strategy ..then turn off the brain and use just your eyes

 

[LION63]

1/ i got the impression fromthe tone of your earlier post that you thought day trading was a fruitless exercise and good returns were unrealistic. sorry if this was not your intention. but to be honest .........

i hope you dont take that too personally, as i am sure you appreciate the difficulties of this 1 dimensional communication medium we are dealing with. i get the feeling you find the same issue with my post.

2/ for the record, i never have and never will divulge details of my performance. so i would appreciate it if you dropped the sarcastic tone that i have been making such claims. i merely pointed out that there are peopel who are doing very well indeed with the methods that you condemn as useless and irrelevant.

my objective was merely to shine a little light into the darkness. i am sorry you took offence at that.

I am sure that most of us agree that there will always be those that are very good at particular facets of trading be it day trading, TA, FA, QA etc. I do not believe anyone here is in denial of that fact, however, one cannot assume that on that basis any particular method is very good or profitable. It is the exponent that is very good at it or at the least, way above average. Most day traders lose money simply because they are gambling and they are not even good at it. Some would go as far as to say that they are living on a prayer.

Whilst I might not like the tone of your posts sometimes (you feel the same), I do not have any problem with them, on the contrary, they are amusing otherwise I would not read them. As long as people do not go over the top, I cannot see the problem.

Granted you have never stated your personal ability or performance but who has? You have stated your disdain for what is being advocated by the FA exponents but have refused to put forward any alternatives or variations. This is unacceptable as you are not contributing to the discussion or argument in a positive manner. There are many that read the posts without commenting (that is their choice) and there are those like yourself that act like back seat drivers but refuse to take the wheel.

 

[charliechan]

yet again you have failed to read the posts properly.

although i admit i take fundamental information with a pinch of salt and a large dash of caution (for reasons explained elsewhere), i have never said it is useless - only that it should be treated with care, and from an unbiased perspective.

as for not suggesting alternatives, again you are incorrect. i have on numerous occasions stated that for a longer term trader, imo, fa + ta is the best route to take.

i could be wrong here - but you seem quite binary in your thought process. i get the impression you are trying to coax me into saying ta alone is the grail, where as you seem to believe that fa alone is the grail. it is not, and i will not. but i do believe that both ta + fa should be considered (2nd time). others have also pointed this out to you.

i hope that is clear now.

 

[SOCRATES]

To my mind, the underlying beauty of TA is that it doesn't require the practitioner to think.
React to signals, yes, but think things through, no.
Quite possibly, the less thinking done the better.
Remember TA is an art not a science, and too much thinking can ruin a perfectly good faith.

I have the pleasure to inform you, that this afternoon, your post above has been printed and is being framed as I post, because it is absolutely priceless.

Be assured that it will occupy it's rigthtful place in the galaxy of pronouncements in the section devoted on the ceiling to sayings by market loominaries.

 

[LION63]

This seems like a case of a dog chasing its tail - a pointless exercise. If the conclusion that you have come to is what is in your post above, then it would serve no purpose whatsoever to continue.

Trying to accuse others of being obtuse in order to deflect the obvious is not the way to explain your disagreement with their pronouncements. Assuming that you are being set up for a fall is not the stance taken by someone who is confident in his utterances and it is quite clear to all who have read the thread that you have constantly called various statements into question without offering any smidgeon of enlightenment to the debate.

 

[mark_b_27]

Socrates,

You may be disappointed to know that I was being facetious.

A promising debate over behaviour theory and EMH has degenerated into 26 pages of:
"TA is better than FA."
"No it isn't."
"Yes it is."
"No it isn't."

While both sides have to take some of the blame for this, at times it almost felt as if the proponents of TA were actively trying to sabotage the debate.

While it can seem very abstract and theoretical , sometimes involves looking at insects, and frequently requires you to think. It may surprise you to learn that it is actually at the cutting edge of modern finance theory.

So much so, that the 2002 Nobel Prize for economics went to two academics studying this very area.

But hey, who needs any of this!!
Old price charts will teach you everything you need to know about the markets, won't they?
(again, being facetious)

 

[JumpOff]

Ducati,

Jafa is right in saying that efficiency is irrelevant in his time frame and the question that you ask is non existent. He is only interested in the pay cheque at the end of the week, month quarter or year.

That is very easy to say when the markets are headed in one direction but what happens when they turn or move sideways? That pay cheque will no longer be so easy to obtain, then the questions will be asked. But the more discerning trader FA or TA will always ask questions in order to know why markets and other market participants behave in a particular manner.

That is the real difference between the brilliant TA traders and the also rans and the mediocre FA traders and the cream of the crop. One cannot fault anyone for deciding that a broader horizon is not for them.

Lion,
I'm not sure I agree that there is any importance to be placed on knowing why the markets move. I'm much more interested in evaluating these questions: Is the market accelerating, steady, or decelerating, and is a setup developing that will give me an entry point with a low risk/ higher than usual profit probability.
JO

 

[frugi]

Would it not be true to say that if one can work out why a particular move is happening then one has a better chance of knowing where/when it is likely to end, and/or what is likely to develop next? For instance a chart pattern taken in isolation during meaningless chop may look very similar to one during professional accumulation. Simple chart analysis may not be sufficient to tell which is happening. Gazing further into the market at this point can gives clues as to why the pattern looks thay way and more importantly, what is really happening under the surface. I don't know if ducati's definition of TA encompasses T&S, DOM and the like, but if so these, along with the simple patterns, can help with the "why" as well as the "what". Understanding "why" should sharpen one's edge; Indeed, understanding the psychology and aims of the various participants may be vital if one is to avoid fifty-fifties.

 

[JumpOff]

Would it not be true to say that if one can work out why a particular move is happening then one has a better chance of knowing where/when it is likely to end, and/or what is likely to develop next? For instance a chart pattern taken in isolation during meaningless chop may look very similar to one during professional accumulation. Simple chart analysis may not be sufficient to tell which is happening. Gazing further into the market at this point can gives clues as to why the pattern looks thay way and more importantly, what is really happening under the surface. I don't know if ducati's definition of TA encompasses T&S, DOM and the like, but if so these, along with the simple patterns, can help with the "why" as well as the "what". Understanding "why" should sharpen one's edge; Indeed, understanding the psychology and aims of the various participants may be vital if one is to avoid fifty-fifties.

What you say may be true oh wise and furry one. For myself, I can't seem to get over that mountainous "if" in your first sentence. I expect that there are people with access to the why, and they know it long before I do. For me, for now, it is a big enough task to learn to recognise their tracks, to see which direction their paw prints are headed, how many are in the herd and how fast they are travelling.

JO

 

[chump]

the problem with trying to ask the question why ? is threefold..first we live in a world of imperfect information..that is we will rarely ever have all the information we need to make the optimally informed decision ...two , even if we some how managed to circumvent the aforementioned we simply do not possess the skills to analyse masses of information and come out with an optimum solution (rocket scientists don't even bother to reply or I won't be round later to change your diapers) and three ..inter related to two we don't come as a blank page ..that is we have ingrained perceptual biases which get in the way of our selection and analysis of information...and thus...

Mark ..when you say 'the less thinking the better" ..I am not being facetious I really do mean Amen with my caveat attached ...to hone a skill set you should find a strategy that works and suits you and then when it is second nature ..switch off the brain and let it do what comes naturally ..don't **** it up by thinking you need X amount more info for an 'optimum' outcome ...blah blah ....I think someone once said to me "why do people insist on making the simple so complex they can no longer understand it"...I concur

 

[LION63]

JumpOff,

You have indicated that you prefer to roll with the tide (if I have read your post correctly) and that is one way of doing things but surely it is an added benefit to know when it started, what the force might be and how far it will go. That would ensure that the moves that might peter out after a brief spurt are not the ones you tend to follow.

Understanding market participant's psychology and what they are likely to do when armed with information and faced with certain environments will always be extra ammunition in trading. A recent example was when oil hit $60, a lot of people panicked and started making silly utterances which they did not make when it was $55.50; surely it would be better to be able to anticipate what the likely impact would be long before it occurred. Even if the trader did not not open positions evasive action to protect capital would have been a good thing.