technical Analysis - anyone follow it?
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cassiopeia
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Although I don't agree with all of Phillip Coggan's assertions, it is important to address his critisisms and accept them where they are reasonably fair. According to scientific doctrine critisism adds strength to a theory.
Phillip Coggan asserts the following:
1) the Coppick indicator has provided 2 unreliable signals recently and is therefore unreliable.
TA is used to raise the odds in your favour not as a means of providing a sure signal. Users know better than anyone that TA is often wrong and should not be relied upon without a stop loss of some kind. The Coppick is just an entry signal anyway and is therefore not a complete strategy. In fact TA is often used merely as an entry signal.
2) Coggan agrees that price momentum appers to persist, Coggans critisism is aimed at the more elaborate patterns and systems.
Yes, there are many studies which suggest momentum sytems provide good entry signals, but does this not make relative strength (not RSI) a valid TA indicator?
3)No candlestick patterns (such as three black crows) or technical indicators such as head and shoulders have passed tests of statistical significance
David Schwartz has analysed head and shoulder patterns in an objective way and found statistical significance for data based on LSE share patterns, although certain configurations are more significant than others.
I have never seen the most successful methods such as trends in combination with conforming tops/bottom breaks of trend analysed. I do believe there are objective ways of doing this.
4)Technical analysis is rife with so many subjective intepretations:
I agree with him here and only methods which can be subject to objective analysis should be taken seriously.
5)Elliot waves and Kondratieff cycles are too long term to be proven
This is true of Kondratieff cycles but not of shorter term Elliot waves, only the longer term versions are difficult to prove. I agree however the fractal nature of the markets makes it particularily difficult to provide definitive proofs.
6)As people react to patterns their behaviour can change
I have often suspected this and users of any system should be aware that feedback can potentially invalidate what appears to be a valid system, be it based on FA, TA or otherwise. There is no sure long term method in the stockmarket.
7)Financial markets cannot be predicted by one off events such as September 11th
True, therefore one should never be overexposed.
8)We often see patterns which are not there....as stated in the excellent book by Nasim Taleb
That is why we should try to be as objective and critical as possible, and yes it is an excellent book.
One of Coggan's sources of information 'Practical Speculaion by Niederhoffer and Kenner' may not be what TA enthusiasts wish to read but sometimes you can learn more from a sceptical viewpoint than someone preaching to the converted. It doesn't mean the sceptic is right in all respects but they may be able to highlight points which those fully committed to the TA cause have previously overlooked.
Phillip Coggan asserts the following:
1) the Coppick indicator has provided 2 unreliable signals recently and is therefore unreliable.
TA is used to raise the odds in your favour not as a means of providing a sure signal. Users know better than anyone that TA is often wrong and should not be relied upon without a stop loss of some kind. The Coppick is just an entry signal anyway and is therefore not a complete strategy. In fact TA is often used merely as an entry signal.
2) Coggan agrees that price momentum appers to persist, Coggans critisism is aimed at the more elaborate patterns and systems.
Yes, there are many studies which suggest momentum sytems provide good entry signals, but does this not make relative strength (not RSI) a valid TA indicator?
3)No candlestick patterns (such as three black crows) or technical indicators such as head and shoulders have passed tests of statistical significance
David Schwartz has analysed head and shoulder patterns in an objective way and found statistical significance for data based on LSE share patterns, although certain configurations are more significant than others.
I have never seen the most successful methods such as trends in combination with conforming tops/bottom breaks of trend analysed. I do believe there are objective ways of doing this.
4)Technical analysis is rife with so many subjective intepretations:
I agree with him here and only methods which can be subject to objective analysis should be taken seriously.
5)Elliot waves and Kondratieff cycles are too long term to be proven
This is true of Kondratieff cycles but not of shorter term Elliot waves, only the longer term versions are difficult to prove. I agree however the fractal nature of the markets makes it particularily difficult to provide definitive proofs.
6)As people react to patterns their behaviour can change
I have often suspected this and users of any system should be aware that feedback can potentially invalidate what appears to be a valid system, be it based on FA, TA or otherwise. There is no sure long term method in the stockmarket.
7)Financial markets cannot be predicted by one off events such as September 11th
True, therefore one should never be overexposed.
8)We often see patterns which are not there....as stated in the excellent book by Nasim Taleb
That is why we should try to be as objective and critical as possible, and yes it is an excellent book.
One of Coggan's sources of information 'Practical Speculaion by Niederhoffer and Kenner' may not be what TA enthusiasts wish to read but sometimes you can learn more from a sceptical viewpoint than someone preaching to the converted. It doesn't mean the sceptic is right in all respects but they may be able to highlight points which those fully committed to the TA cause have previously overlooked.
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Paul
re your comment about size of charts
its not immediately apparent to me how you can adjust the size
of a chart if you upload it using your "Attach file".
It picks up the chart at its natural size ?
I guess we all need to acquire a gif, jpg or bmp reducer type utility?
Do you have any in mind ?
If I write my own code into the 'Reply' box then its simple but that
requires the chart to already be on the web.
Having said all that some charts could look pretty poor at
reduced sizes ?
? think I have just gone full circle ?
re your comment about size of charts
its not immediately apparent to me how you can adjust the size
of a chart if you upload it using your "Attach file".
It picks up the chart at its natural size ?
I guess we all need to acquire a gif, jpg or bmp reducer type utility?
Do you have any in mind ?
If I write my own code into the 'Reply' box then its simple but that
requires the chart to already be on the web.
Having said all that some charts could look pretty poor at
reduced sizes ?
? think I have just gone full circle ?
Naz
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Some interesting points above.
For me t/a works best on the US market.It seems that on a US stock if they are using one type of t/a set up over and over again for turning points enough people see it and continue to use it.
The best trader i know doesn't use t/a.Infact when he recruits his own prop traders one of the first questions he asks them is,what do you know about t/a.If they smile and know a lot they dont get the job.
For me, most of what i read is on psychology,the answer i believe is within ourselves.
So the trader that does well on gut instinct, sees and feels something and profits from it does so because they are able to take that knowledge and trade with it.The trader who uses t/a takes that knowledge and trades with it.The common thing they both do is trade with it.Most people fail i believe because they cant trade.The answer is not a chart or anything else its themselves.
For me t/a works best on the US market.It seems that on a US stock if they are using one type of t/a set up over and over again for turning points enough people see it and continue to use it.
The best trader i know doesn't use t/a.Infact when he recruits his own prop traders one of the first questions he asks them is,what do you know about t/a.If they smile and know a lot they dont get the job.
For me, most of what i read is on psychology,the answer i believe is within ourselves.
So the trader that does well on gut instinct, sees and feels something and profits from it does so because they are able to take that knowledge and trade with it.The trader who uses t/a takes that knowledge and trades with it.The common thing they both do is trade with it.Most people fail i believe because they cant trade.The answer is not a chart or anything else its themselves.
I agree with you Naz, I think lots of things work, you just need to find the thing that appeals and really get to know it, be it FA if you are a accountant by instinct or TA if you like visual information. But the key thing is being able to act on it and not everyone can do it or can be bothered to learn. How many people start to learn musical instruments and then give up cos it's basically too much effort? I think trading is a similar skill to learn but it can be learnt IF you have the application. But it isn't easy for most of us anyway.
a few more points about my analogy with selling.
Part of recognising WHEN to close is the ability to interpret
the body language of the market.
This leads to early decisions to 'cut and run' or
not waste time - 'this one's never gonna bite'
High powered salesmen would rather move on to the next prospect. They know there are plenty of fish in the sea.
Especially when you are on 'commission only' as we traders are.
Sometimes there is just one more resistance to be overcome
before the sale can be achieved and he can recognise that.
Ever closed and then seen the market zoom immediately afterwards ?
If you have never been or studied the 'science' of selling, all
this might sound a bit strange.
But if you are a book addict, I suggest its worth putting at
least one on your list. it makes very interesting reading in
terms of this analogy.
Unfortunately, this type of selling has been largely outlawed
in recent years, so you may have to hunt.
Part of recognising WHEN to close is the ability to interpret
the body language of the market.
This leads to early decisions to 'cut and run' or
not waste time - 'this one's never gonna bite'
High powered salesmen would rather move on to the next prospect. They know there are plenty of fish in the sea.
Especially when you are on 'commission only' as we traders are.
Sometimes there is just one more resistance to be overcome
before the sale can be achieved and he can recognise that.
Ever closed and then seen the market zoom immediately afterwards ?
If you have never been or studied the 'science' of selling, all
this might sound a bit strange.
But if you are a book addict, I suggest its worth putting at
least one on your list. it makes very interesting reading in
terms of this analogy.
Unfortunately, this type of selling has been largely outlawed
in recent years, so you may have to hunt.
rossored
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Paul - I think you'll find that in general on this site, most charts that are posted either a)take forever to load or b) are quite large on the page due to quality etc.
I just thought it would be useful if people could actually read what was written on the chart, rather than being a blurry old lump if I'd reduced the size much more than 1000x632 pixels.
If, as bonsai says, you know of some way to do this without comprising image quality, then I'll be more than happy to help out and and save you the countless seconds it must take to scroll across the page once.
I just thought it would be useful if people could actually read what was written on the chart, rather than being a blurry old lump if I'd reduced the size much more than 1000x632 pixels.
If, as bonsai says, you know of some way to do this without comprising image quality, then I'll be more than happy to help out and and save you the countless seconds it must take to scroll across the page once.
Trader333
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Rossored, Bonsai,
Many people post charts on here but edit the size in something
like paintshop pro. I have asked Sharky about addressing this issue
but apparently there is little that can be done unless the
person who posts it edits the picture first.
There is a similar problem on the Dow Charts thread which I
now completely ignore as it drives me up the wall having to scroll
to read it and scroll to see who has posted. I am sure that I am
not the only one who finds this very irritating.
Paul
Many people post charts on here but edit the size in something
like paintshop pro. I have asked Sharky about addressing this issue
but apparently there is little that can be done unless the
person who posts it edits the picture first.
There is a similar problem on the Dow Charts thread which I
now completely ignore as it drives me up the wall having to scroll
to read it and scroll to see who has posted. I am sure that I am
not the only one who finds this very irritating.
Paul
Wayno.........seems to me your thread was inspired purely to create controversy. I have been a private investor for very much longer than thou has been in the markets, and I would say the best thing that ever happened was the availability of the P.C. and the subsequent introduction of T.A. programmes. Before that we could rely on such things as sound management and dividends - good solid stuff!!! However, as a "Market Maker" you will know that share prices over many years have been driven by the investment banks pushing clients into mergers and "GROWTH" so they could wax fat on the bonuses from deals which have subsequently resulted in the present state of affairs with many of the "growth companies" now hiving off many of their divisions at great loss.
DONT TELL ME T/A DOESN'T WORK...........USE IT AS A TOOL AND IT IS THE BEST THING SLICED BREAD WAS INTRODUCED - BUT THEN YOU WONT BE OLD ENOUGH TO REMEMBER THAT !!!
John
DONT TELL ME T/A DOESN'T WORK...........USE IT AS A TOOL AND IT IS THE BEST THING SLICED BREAD WAS INTRODUCED - BUT THEN YOU WONT BE OLD ENOUGH TO REMEMBER THAT !!!
John
Mr. Charts
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I echo Trader333's comment about width size.
"save you the countless seconds it must take to scroll across the page once."
Well actually it is then necessary to scroll across on every subsequent post, not just once, and that IS a nuisance.
I too tend to give up on those threads as I choose not to waste my time, so the request does seem fair and reasonable to me.
"save you the countless seconds it must take to scroll across the page once."
Well actually it is then necessary to scroll across on every subsequent post, not just once, and that IS a nuisance.
I too tend to give up on those threads as I choose not to waste my time, so the request does seem fair and reasonable to me.
jonnyy40
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Yes, chartwidth annoys me as well. As for TA - blame it on fish. In the ocean, they congregate around any bit of flotsam. If I put you in a dark room, you'd feel your way to the wall, just for a reference point. It's my understanding that most people tend to have more or less 100 friends/acquaintances. There's something in evolutionary terms that's built this into us. Maybe that's why fibonacci numbers and the rest 'work'? There's something in us that gives them significance? Maybe in this need for a reference point, together with numbers with 'evolutionary significance' lies the answer? Plus the more an indicator is 'pushed', the more it's used, the greater the effect it has? If thats not good lunchtime b#llsh#t -- I don't know what is!
CityTrader
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Uncle, a life without controversy and opinions, would, indeed, be very dull!
Wayno
I would suggest if this thread is the best you can contribute then you better stick to what you know best...........and that is obviously not technical analysis, although if you are the Professional you say you are, then I do not believe you do not look at the charts in some form. so why "KNOCK" those that do.
SO ENDETH THE LESSON !!!!
I would suggest if this thread is the best you can contribute then you better stick to what you know best...........and that is obviously not technical analysis, although if you are the Professional you say you are, then I do not believe you do not look at the charts in some form. so why "KNOCK" those that do.
SO ENDETH THE LESSON !!!!
Mr. Charts
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Hey guys, let's cool things,huh?
I don't think anyone means to cause upset, so we can just agree to disagree and stay polite to one another.
Since Laud Jubbly seems to have departed into a universe all of his own this place has got much better, so let's keep it that way.
Please.
I don't think anyone means to cause upset, so we can just agree to disagree and stay polite to one another.
Since Laud Jubbly seems to have departed into a universe all of his own this place has got much better, so let's keep it that way.
Please.
I agree that large charts can be a real pain.
and in the main add little info over smaller charts.
a lot of my charts are screen captures (bmp) and I already
convert them to gif so they can be posted in places, where there
is a much less generous size allowance for uploads, but dont
think they would take much reducing before they became very
dodgy to read.
the problem is that a poster cannot access the html for the chart if its come from his own pc.
Maybe the solution is to allow access to that code on 'edit' and
then they could be reduced in size ?
after all having been uploaded, no reason why they shoudnt have a t2w url ?
just a thought.
the other thought is to force a cr/lf after n characters in the
Reply box. That would stop messages using the width of the
charts ?
As in this response ?
and in the main add little info over smaller charts.
a lot of my charts are screen captures (bmp) and I already
convert them to gif so they can be posted in places, where there
is a much less generous size allowance for uploads, but dont
think they would take much reducing before they became very
dodgy to read.
the problem is that a poster cannot access the html for the chart if its come from his own pc.
Maybe the solution is to allow access to that code on 'edit' and
then they could be reduced in size ?
after all having been uploaded, no reason why they shoudnt have a t2w url ?
just a thought.
the other thought is to force a cr/lf after n characters in the
Reply box. That would stop messages using the width of the
charts ?
As in this response ?
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I read the article in the FT too. Typical of P Coggan - I'm sure he's a good investor within his own style but he should stick to writing about what he knows about. Not long ago he was sayng that you can't make a profit short-term trading.
Have had a chance to search a few sites on Niederhoffer and Kenner, the authors of the book - interesting. Laurel Kenner is a journalist, so we can assume very little trading/investing/statistical analysis/personal market experience there. Victor Niederhoffer is a failed fund manager who went bust in a big way in 1997, since when he has been running their website and commentating for US business TV.
They're not rubbishing TA for the benefit of us poor gullible investors, they have a book to sell and that will be easier with some controversial swipes at easy targets like TA. They also have a website to generate traffic for.
Us TA people might think the diametric opposite of our approach is value investing as per Graham and Buffet. However, the book also attacks Graham and his approach, and therefore by implication Buffet too.
Of course, P Coggan doesn't mention this, and I wonder if this is because he might be of the long-term/buy-and-hold/value investment/fundamental analysis persuasion.
It would be nice to hear from anyone who has been steered into rewarding investments by Victor Niederhoffer, I'd like to be persuaded so that I can start to follow him too.
Have had a chance to search a few sites on Niederhoffer and Kenner, the authors of the book - interesting. Laurel Kenner is a journalist, so we can assume very little trading/investing/statistical analysis/personal market experience there. Victor Niederhoffer is a failed fund manager who went bust in a big way in 1997, since when he has been running their website and commentating for US business TV.
They're not rubbishing TA for the benefit of us poor gullible investors, they have a book to sell and that will be easier with some controversial swipes at easy targets like TA. They also have a website to generate traffic for.
Us TA people might think the diametric opposite of our approach is value investing as per Graham and Buffet. However, the book also attacks Graham and his approach, and therefore by implication Buffet too.
Of course, P Coggan doesn't mention this, and I wonder if this is because he might be of the long-term/buy-and-hold/value investment/fundamental analysis persuasion.
It would be nice to hear from anyone who has been steered into rewarding investments by Victor Niederhoffer, I'd like to be persuaded so that I can start to follow him too.
While I'm still learning TA I do know a little more about psychology and I believe TA has to be valid because in the end what we see on the charts is a reflection of the way people behave as a group. The bottom line is that in any given set of circumstances most people will react the way they reacted to those circumstances in the past. If they didn't then the market couldn't work because it would chaotic.
TA doesn't work 100% not because it is invalid but because events, major and minor, impact upon peoples behaviour and this changes the outcome.
I think natural traders are those fortunate few who are able to, as bonsai put it 'read the body language of the market' they are still using TA but don't have to grind through the charts like the rest of us.
TA doesn't work 100% not because it is invalid but because events, major and minor, impact upon peoples behaviour and this changes the outcome.
I think natural traders are those fortunate few who are able to, as bonsai put it 'read the body language of the market' they are still using TA but don't have to grind through the charts like the rest of us.
CityTrader
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Uncle, funnily enough I do look at charts- but only to confirm what I want to know. Also I use charts for exactly what I believe they are good for- history. I will look to see where a stock has been where the "noise" is ( periods of activity) so, I guess if I use these pieces of history to make my own interpretation of the future, then yes.. I'm a chartist.
Sorry if you don't like my views Uncle. - I'm not being awkward, just merely expressing my opinions, and I really do firmly think that this sort of discussion is healthy. Surely I've made you think about things today? If you'd rather not read the posts of anyone who doesn't share your views, then I'll take my thoughts elsewhere. I do however believe I have been sort of helpful over the last 2 months- correcting misinterpretations about Market makers and the SEAQ system, and providing some of the little "insiders secrets" on the way the London market works. Maybe I should sell my time to some sort of seminar- " 1 on 1 coaching from an ex market maker" ? ( you listening Richard?!) guess I wouldn't have to many takers from here!
Once again apologies to anyone upset by my views - (that seem to diverge from 95% of the users on here.).
W
I must have at least 1 fan out there!! someone's voted for me!!
Sorry if you don't like my views Uncle. - I'm not being awkward, just merely expressing my opinions, and I really do firmly think that this sort of discussion is healthy. Surely I've made you think about things today? If you'd rather not read the posts of anyone who doesn't share your views, then I'll take my thoughts elsewhere. I do however believe I have been sort of helpful over the last 2 months- correcting misinterpretations about Market makers and the SEAQ system, and providing some of the little "insiders secrets" on the way the London market works. Maybe I should sell my time to some sort of seminar- " 1 on 1 coaching from an ex market maker" ? ( you listening Richard?!) guess I wouldn't have to many takers from here!
Once again apologies to anyone upset by my views - (that seem to diverge from 95% of the users on here.).
W
I must have at least 1 fan out there!! someone's voted for me!!
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