Speculate on the markets using TA and you will lose 1% on average every month

[spinola]

Its peeing down with rain where I am, I looked out my kitchen window and can see about 30 men training in the rain to play football.

These footballers are amateurs , yet they still practice in the rain for hours at the weekend and some nights during the week.

I wonder how much time they need to practice in order to compete with PROFESSIONALS ?

Is it the same recognition of the need to have the resource of availability to practice with trading, in order for one to compete with professionals ?

I mean these amateur football/soccer players put in 20-30 odd hours a week as AMATEURS ? So anyone with professional ambitions in their pursuits, should they make available more time to dedicate to their goals , to become expert, so as they can " begin " to compete with others ?

Is that important ?

 

[tomorton]

ODT - I think this is a cul-de-sac and doesn't prove your point. The same guy would use the same strategy with 1k as 1m because he has found he can work it and it works for him. Two amateur guys, one with 1k and one with 1m, would use the same (amateur) strategy becasue that's all they know. Two professionals might use different strategies from each other with 1k and 1m, but neither would bother trading with 1k so that's academic anyway.

There's only one real difference - how soon does the successful trader find he doesn't have to trade any more? Retiring from trading to live on risk-free capital is going to take a lot longer with 1k than 1m. Whereas, wiping out can be done in the next 5 minutes, just as quickly with 1m as with 1k, and just as easily whether he uses TA or FA or anything else.

 

[tomorton]

spinola - Its good you've raised the subject of practice. Many people are seduced by the idea that they can put in 15 minutes a day and in three years they'll have a pot big enough to retire on. (and wasn't that even in the title of some book or other?)

But as Reward = Risk x Capital x Time, practice is something that can help: it can make Risk a positive factor by increasing their edge. But it is going to take more than 15 minutes a day.

 

[Black Swan]

Attributing the failure of most traders on TA is really akin to claiming that because on average most new businesses fail having a go at a startup is an exercise in futility because well hey startups don't work you know.

The reality why most traders fail has nothing to do with their choice of analysis, it's entirely down to the fact that by far most people prefer being right over making money, want certainty from a holy grail that simply does not exist in a probability game where losing is an intrinsic cost of doing business that is unavoidable.

To make it as a trader you need to be able to cope with uncertainty, have discipline, accept losses without letting them get personal, and have the ability to hold on to your winners.

None of that is rocket science let alone a significant insight, but it's the actual implementation that stumps most psychologicaly.

And that's why trading is simple but not easy, and why most fail.

Top points well made...

 

[oildaytrader]

Its peeing down with rain where I am, I looked out my kitchen window and can see about 30 men training in the rain to play football.

These footballers are amateurs , yet they still practice in the rain for hours at the weekend and some nights during the week.

I wonder how much time they need to practice in order to compete with PROFESSIONALS ?

Is it the same recognition of the need to have the resource of availability to practice with trading, in order for one to compete with professionals ?

I mean these amateur football/soccer players put in 20-30 odd hours a week as AMATEURS ? So anyone with professional ambitions in their pursuits, should they make available more time to dedicate to their goals , to become expert, so as they can " begin " to compete with others ?

Is that important ?

Its not just about technical analysis or practising voodoo science, I call it voodoo science, this is because the same set ups in technical dialysis produces three different outcomes and out comes may vary on different instruments ,

It is about practising how to handle difficult market conditions and losses .An example for one day is market trends down and then up, back down and up again and finally breaks out trending down.This is when t/a is lagging and not of much use.You get four failed trends .four break downs in trends and finally it works and you get a decent trend.This is when analysis becomes paralysis, and trader is freezing and uncertain about putting on trades.Trading different methods/systems will produce different results ,and different time frames will give different analysis and outcomes.

 

[tomorton]

Its not just about technical analysis or practising voodoo science, I call it voodoo science, this is because the same set ups in technical dialysis produces three different outcomes and out comes may vary on different instruments ,

It is about practising how to handle difficult market conditions and losses .An example for one day is market trends down and then up, back down and up again and finally breaks out trending down.This is when t/a is lagging and not of much use.You get four failed trends .four break downs in trends and finally it works and you get a decent trend.This is when analysis becomes paralysis, and trader is freezing and uncertain about putting on trades.Trading different methods/systems will produce different results ,and different time frames will give different analysis and outcomes.

Yes, different outcomes are possible, but this depends on the pre-conceptions and preferences of the trader / investor. And these vary regardless of whether he/she is a technical analyst or fundamentalist. A TA day-trader with a 6-minute holding period will not manage a position in a currency pair in the same way as a TA swing trader will manage a 6-month position on gold. One fundamentalist will have a 10% gain in 3 months as target whereas another will look for 0% gain but 5% dividends over 10 years. Any approach will allow different interpretations in application and that means different outcomes, but that doesn't mean any approach that does allow different outcomes is defective.

I think you're just being argumentative for entertainment. Again.

 

[oildaytrader]

Yes, different outcomes are possible, but this depends on the pre-conceptions and preferences of the trader / investor. And these vary regardless of whether he/she is a technical analyst or fundamentalist. A TA day-trader with a 6-minute holding period will not manage a position in a currency pair in the same way as a TA swing trader will manage a 6-month position on gold. One fundamentalist will have a 10% gain in 3 months as target whereas another will look for 0% gain but 5% dividends over 10 years. Any approach will allow different interpretations in application and that means different outcomes, but that doesn't mean any approach that does allow different outcomes is defective.

I think you're just being argumentative for entertainment. Again.

If 4 out 5 technical analysis results provide the wrong outcomes,added with other mistakes with money management and countless discretionary trading mistakes, it leads to to a cocktail of failures, and voodoo science (technical analysis) being the ambiguous and deceptive road map.Try reading a road map giving ambiguous routes , it will certainly lead to failure.

4 out of 5 is not an extreme , but on occasions it has happened 10 out of 12 times in a row. This is where the contrarian trading skills and other types of skills become very useful.

 

[tomorton]

TA is not voodoo. What is spurious is the marketing of TA as a precise and repeatable scientific method, something that will always predict the future. This is wrong, but it succeeds because of the vast numbers of people who wish it to be true. That's how scams work, the victims are unconscious accessories and willing participants.

I don't accept it as a fact that any single TA method provides a wrong answer 10 times out of 12. But I will accept that 10 out of 12 peple could not apply that TA method to maximum profit over any meaningful period.

 

[oildaytrader]

TA is not voodoo. What is spurious is the marketing of TA as a precise and repeatable scientific method, something that will always predict the future. This is wrong, but it succeeds because of the vast numbers of people who wish it to be true. That's how scams work, the victims are unconscious accessories and willing participants.

I don't accept it as a fact that any single TA method provides a wrong answer 10 times out of 12. But I will accept that 10 out of 12 peple could not apply that TA method to maximum profit over any meaningful period.

Tom

I have done thousands of back tests on currency pairs, the results tell me 10 to 20 consecutive losses is normal for even the best of my strategies.These are highly profitable strategies.

Here is a simple back test showing 15 consecutive losses, and most t/a set ups are likely to show the same.

I make more money when I do not use technical analysis and put on hedged trades. and profiting from the failure and on on other occasions success of t/a..Technical paralysis(inability to execute further trades)is is gained after a trader suffers a stroke from the market, after failure of technical analysis.

 

[tomorton]

Hi ODT - I'm sorry, I misunderstood you to mean that the majority of TA-based trades would always be losers: I do accept that even a successful strategy can produce 10 or 20 consecutive losers without invaldating that system.

But I must also point out that profiting from the failure of a TA signal is still profiting from TA, its just a difference in application.

 

[wackypete2]

This has been said before but bears repeating. I would wager that:
95% of traders using T/A will lose
95% of traders using F/A will lose
95% of traders using their friend's latest recommendation will lose
95% of traders using an analysts hot pick will lose
95% of traders using a proven, time tested, battle worn strategy will lose
on and on and on....

therefore, can we conclude that there is simpy no method that would ever produce a profit for anyone since they all appear to fail?? Put it all together and it seems there has never been a winning trader in history.

Methods don't fail, traders fail.

Peter

 

[wackypete2]

Its peeing down with rain where I am, ...

Thats called technical urinalysys.

Peter

 

[Black Swan]

Tom

I have done thousands of back tests on currency pairs, the results tell me 10 to 20 consecutive losses is normal for even the best of my strategies.These are highly profitable strategies.

hmmm....normal? Don't want to get in too deep re. what your "normal" is but imo that's an EA result, no discretion...
When I *play* off short term TFs during the day (just gone long EU/EJ) I have recently experienced 8 losses in a row but that should have been halved if I'd stuck to the plan and not been experimenting slightly, some of the 8 losses only equalled 0.1% of the account...I'd suggest ten losses on the trot equals a problem, 20 losses in a row could equal 20% account wiped out...er...not good...

 

[Hilarymannah]

BlackSwan,......Any chance of sending me the eight losses, for my perusal,..I'd appreciate it,..thanks!
Obviously, the price you entered at,.and the market.

 

[Hilarymannah]

And the date also,.....

 

[N Rothschild]

I guess that's why these goons have a sorry salaried existence trying to make ends meet publishing nonsensical papers while others get filthy rich trading using TA.

"Superfund's origin dates back to 1991, when Christian Halper and Christian Baha developed a software system for the technical analysis of financial data. Within two years, this program became the leading provider of market delivery software in Austria. This success led to the development of the Quadriga Investment Group, created by Christian Baha in 1995. Today, the group has more than 280 employees worldwide. The quadriga Group launched its first alternative investment product for private investors on March 8, 1996 called the Quadriga Beteiligungs - und Vermogens AG". In 2003 the Quadriga funds were globally unified under the umbrella brand name SUPERFUND. Today, the group has more than 1.5 billion dollars under management from more than 55,000 retail and institutional investors."
http://www.superfund.com/

Technical analysis:
Trading without emotions
Sound managed futures funds like Superfund funds are based on proprietary, fully automated technical trading systems. These eliminate poor investment decisions which are often the result of human emotions. A vast range of technical indicators and historical prices are analyzed by the computerized trading systems to automatically generate buy and sell signals.
http://www.superfund.com/HP07/Superf... System.aspx

omfg how many times you gona post this same post, do you fancie this guy or something

 

[William Waller]

Speculation using Technical analysis is the most deadly way of playing the markets - you have been warned !

http://www.cxoadvisory.com/individu...al-investor-performance-by-motive-and-method/

What is the point of these "academic studies"? They demonstrate precisely nothing.

Sir William

 

[nine]

Actually they demonstrate quite a lot. The issue is how one can make use of the information.

You could for example start a spread betting company and provide lots of technical analysis tools. Add in lots of news tools and low cost tip tools. Then you wouldn't even need to cover the majority of your bettors as the chart shows that they will be donors. Simply wait for the 5% of consistent winners to show up and then offset their bets against the market - the 95% will provide your gravy as shown in the above charts.

The for traders the chart is inspiring - I always worry what will happen if the other guys get better at it. How will I make my money? Will it disappear? And the charts say "no it won't." So I can sleep happily again

 

[arabianights]

the only eeason 95% of traders lose, if this is true, is over leverage.
To lose trading long only stocks ought to be impossible otherwise.

 

[timsk]

The for traders the chart is inspiring - I always worry what will happen if the other guys get better at it. How will I make my money? Will it disappear? And the charts say "no it won't." So I can sleep happily again

Hi nine,
If this is the only factor that determines whether or not you get a good night's sleep, then my guess is that you like a baby every night!
Tim