TA isn't the "Be All & End All"

[jon1971]

I freely admit to being a technically biased trader and by the same token I freely admit that TA isn't perfect and has many limitations.

That's why I place a great deal of importance on the need for risk control and money management.

I'd be interested in reading others' attitudes towards TA and how they think a TA approach could be complimented with other "real world" techniques.

E.g. over/undervalued relative to sector & benchmark indices' strength (which would be an example relevant to screening for a slightly longer watch and or holding period).

I know from previous threads that just the very mention of TA can be incendiary, so I'd appreciate it if you would at least attempt to keep posts constructive and non-confrontational.

Cheers,

Jon

 

[bbmac]

I trade forex and find that a purely technical tactical trading approach combined with the right risk and money management works for me. As far as factoring in other real-world techniques are concerned, I find that taking a fundamental view (for eg) can at worst interfere/cloud my judgement on the purely technical analysis of the pairing from which my trading edge is derived. When price is going down a technical trend may develop on whatever t/f (s) is of interest and that is all I need to know, ie that there are more sellers than buyers, and vice versa for an uptrend...if this trend is contra to the prevailing perceived wisdom re fundamental factors it really shouldn't concern a technical trader..... there are many sustained pullbacks/rallys in both a fundamentally bullish/bearish market.

I am sure thoughthat many market participants trading fundamentally may try to gain the best market entry using some simple TA.

Re your general point and thread title : TA isn't the "Be All & End All I agree, but then nothing is!

 

[jon1971]

Hmm, maybe I'm over complicating and losing sight of keeping a purely probabilistic (technical edge) perspective.

 

[bbmac]

Hmm, maybe I'm over complicating and losing sight of keeping a purely probabilistic (technical edge) perspective.

Whether the trading edge is derived technically or fundamentally or some hybrid of both it has to be treated probabilistically as no trading edge is predictive, all we know about it is that on x % of times it has set-up in the past there has been a successful outcome. When we optimise our money management to this strike rate we can profit from it, but when it next sets-up the only info we have is that there is an x % chance of a successful outcome.

 

[dealer911]

T.A is a windsock not a crystal ball - I am quoting Bill Adlard who is a pretty well regarded technical analyst!

 

[jon1971]

Also no moment in any market is unique, invisible variables may be at play, therefore TA should be viewed for what it really is and there is x% probability that it may not hold up, I think too many view it as being a crystal ball.

I think I started this thread because I needed some kind of confirmation that TA works, not on every trade of course, but if your "edge" parameters are good, then over an extended sample.

 

[Splitlink]

Invisible variables are always in there, somewhere. i.e. Goldman Sachs. How can anyone foresee market changes with operators like that in the market?

 

[jon1971]

You will be well justified in accusing me of "flip, flopping" now, but yeah Spit that's kinda what I'm thinking of; reading the big money plays...

 

[bbmac]

You will be well justified in accusing me of "flip, flopping" now, but yeah Spit that's kinda what I'm thinking of; reading the big money plays...

Unforseen events (andmarket reactions to them) are just tha,t but so long as you use the correct money management your tradiung edge should be capable of standing up over any sample. As for where the big money players are (or may well be again) in the market, TA tells you that: look at the where the largest previous near-term obvious imbalances of supply over demand or demand over supply are in the market...ie say on a 1hr chart upwards, the previous price pivoots=previous swing Hi and Lo's...this is where the 'big money' acted previously and may well do so again.

Ta is imperfect it is true but tjat does not mean to say that, like any analysis, a successful trading edge cannot be derived from it. Of course creating a profitable trading edge (over a sample) is one thing-employing it with impunity such that it delivers is quite another...that's a whole other story...don't get me started-lol !!

G/L

 

[wackypete2]

Similar to bbmac I trade mostly forex now and use TA. Invisible variables are only stumbling blocks regardless of how you trade. If you use proper money management these variables would only set you back a minimum. Anyone trading Goldman Sachs stock for the past year should have made money. The big news event should have only been a stumbling block or temporary set back.

Jon, what I don't understand is why you need confirmation from anyone that TA works or not. I can tell you all day long that is does, someone else can tell you all day that it doesn't. Who is right? The answer is we both are right. There is only 1 simple way to prove TA works or doesn't work FOR YOU....devise a well thought out plan and trade it. If you find it doesn't work for you then all well and good, continue searching for YOUR edge.

EDITED: I posted this before I saw bbmac's post right above mine. He says it better than I could.

Peter

 

[jon1971]

I take your point Pete, well made.

I mean confirm to my own subconscious mind, a few discussions I've had of late have chucked an element of uncertainty in to my bonce, (just natural questioning myself before recommitting full time).

I've got what I regard as an ace probability-edge set-up, well tested, but it is lacking volume & timing. I've got a lifetime's worth of reading material in books and on my hard drive, so I was really just after a few pointers re. volume and timing to help me cut through the stuff I don't need and get straight to the intravenous as it were. But you're quite correct, one man's meat is another man's poison, and maybe I should just follow my own path.