The Problem with Technical Analysis

[wisefoolx]

Because every market is different. Some markets are used to hedge, and some are more the domain of directionally based decisions.

So TA in "any form" can not be used with any consistency, whether it "works" or not. As the underlying calculations are based on different meanings although its a "physical" number. Its more to do with what the number represents.

Numbers in the future are determined by a lot more than numbers in the past, more to do with time and opportunity, but thats another thread

Yes, I have rephrased that part, hopefully that will make the point better. Sorry but that was written at 2 in the morning.

Anyhow, despite that , numbers are numbers and the analysis should be based n that ( ie. maths) to keep it the calculations OBJECTIVE. That is my point.

 

[tomorton]

I don't think I am agreeing with other critics because I am not saying it is bunk which most other critics are..., only stating that the most of it is SUBJECTIVELY calculated.

Indeed if you read correctly, I did add that one could use both tA and maths together.

And I have stated what my approach , please re-read.

Sorry to bother you, I'm sure you're busy. So am I.

 

[wisefoolx]

What do people mean by removing price from the chart - you mean taking it off the y axis ?

 

[EnlightenedJoe]

I don't think I am agreeing with other critics because I am not saying it is bunk which most other critics are...

But you are unable or unwilling to use it to demonstrate a trade. Therefore it must be bunk. Otherwise, what are you afraid of ?

 

[dbphoenix]

What do people mean by removing price from the chart - you mean taking it off the y axis ?

That's a beginning. One can then better see that the basis of technical analysis is trader behavior and where and when and how they are trading. One can use numbers and math and calculations if he pleases, but that is an additional layer to the analysis, not the basis of the analysis itself.

Look at your charts without any lines of any kind, including price lines and time intervals. You should be able to see waves of buying and selling without interference.

These posts may be of interest to you:

http://www.trade2win.com/boards/trading-journals/217842-trading-price.html#post2796154

http://www.trade2win.com/boards/trading-journals/217842-trading-price-2.html#post2797626

 

[wallstreetwarrior87]

What do people mean by removing price from the chart - you mean taking it off the y axis ?

Yes, I am (personally), then you are left only with movement and time, then TA becomes about price movement.

What has happened over the years is that individuals have tried to devise/develop an indicator by reverse engineering numerical data to represent something of value, (whatever it may be).

Thus real TA has been lost, until the user of the information decides to re-define it, and unlocks the nuts and bolts of what is really being represented.

 

[wisefoolx]

Remember I am concerned only with OBJECTIVITY not what works or not - that is an individual choice.

I not sure how removing the price is objective since it is not a calculation and waves and lines are still products of numbers.

Charts are charts and to make sense they must have a y and x axis, without the dependent axis then the independent axis (x) is redundant which makes no sense. May as well dump the chart altogether.

As said , you could use both, there's no law against that.

 

[EnlightenedJoe]

Remember I am concerned only with OBJECTIVITY not what works or not - that is an individual choice.

Objectively it doesn't work because you cannot demonstrate it to work. This is not your choice, it is what the market imposes on you.

 

[dbphoenix]

Remember I am concerned only with OBJECTIVITY not what works or not - that is an individual choice.

I not sure how removing the price is objective since it is not a calculation and waves and lines are still products of numbers.

Charts are charts and to make sense they must have a y and x axis, without the dependent axis then the independent axis is redundant which makes no sense. May as well dump the chart altogether.

As said , you could use both, there's no law against that.

Waves are the product of -- the result of -- trades. They are objective because the peak of the wave, e.g., yesterday's high, is not the result of what anyone feels about it but of the highest trade made yesterday. Anyone who cares to look it up can determine what the high was and it will be agreed upon by everyone who is aware of it. It doesn't require "settings", nor in fact does it even require a chart.

You are correct that price is not a calculation; it is the result of a completed -- a mutually agreed-upon -- trade.

As for dumping charts, many people do, such as those who trade the ladder. Charts are merely another form of graphic display.

 

[wisefoolx]

Waves are the product of -- the result of -- trades. They are objective because the peak of the wave, e.g., yesterday's high, is not the result of what anyone feels about it but of the highest trade made yesterday. Anyone who cares to look it up can determine what the high was and it will be agreed upon by everyone who is aware of it. It doesn't require "settings", nor in fact does it even require a chart.

You are correct that price is not a calculation; it is the result of a completed -- a mutually agreed-upon -- trade.

As for dumping charts, many people do, such as those who trade the ladder. Charts are merely another form of graphic display.

I think this is semantical, essentially we are saying same thing but you are confusing cause and effect.

As far as the maths basis of charts go , which is what I am mainly concerned about. Every chart must have a y and an x axis, the dependent axis depends on the independent axis (x).

So every future point in time will have a corresponding price sometime in future, even when there are temporary price gaps.

In maths this is the dependent variable price depending on the independent (x) time, and this is the law when it comes to charts, and it is totally objective. Therefore price IS a calculation by time, every price is calculated by what time it is . These are the effects.

So Whaever the cause behind the production of price , eg) what people agree upon or feel about an irrelevant issue but is may be what traders need to solve to be profitable.

Repeating once again - This is a discussion purely about the objective CALCULATION of TA. Removing the y axis would seem to further the subjectivity of the chart, indeed half a chart and this to me is UNOBJECTIVE and I would be very sceptical of that.

 

[dbphoenix]

I think this is semantical, essentially we are saying same thing but you are confusing cause and effect.

As far as the maths basis of charts go , which is what I am mainly concerned about. Every chart must have a y and an x axis, the dependent axis depends on the independent axis (x).

So every future point in time will have a corresponding price sometime in future, even when there are temporary price gaps.

In maths this is the dependent variable price depending on the independent (x) time, and this is the law when it comes to charts, and it is totally objective. Therefore price IS a calculation by time, every price is calculated by what time it is . These are the effects.

So Whaever the cause behind the production of price , eg) what people agree upon or feel about an irrelevant issue but is may be what traders need to solve to be profitable.

Repeating once again - This is a discussion purely about the objective CALCULATION of TA. Removing the y axis would seem to further the subjectivity of the chart, indeed half a chart and this to me is UNOBJECTIVE and I would be very sceptical of that.

My apologies. I misunderstood the purpose of your thread, taking "the problem with technical analysis" literally.

Your thesis appears to be based on the ability to predict future price as a result of past price. No one has ever been able to demonstrate that this can be done. And it is unlikely that anyone will ever be able to do so due to the nature of trading.

But best of luck to you.

 

[wisefoolx]

My apologies. I misunderstood the purpose of your thread, taking "the problem with technical analysis" literally.

Your thesis appears to be based on the ability to predict future price as a result of past price. No one has ever been able to demonstrate that this can be done. And it is unlikely that anyone will ever be able to do so due to the nature of trading.

But best of luck to you.

No apology needed but you might think about not deliberately misleading people. I doubt if you even read the article properly before jumping to your own conclusions regardless of what it said:

Very simple really, we as traders are trying to forecast where future prices might be.

Where is the word predict in this ? I said " Forecast" and that is not the same and has a particular meaning in maths.

The first line reads originally in bold no less:

The problem with TA is simple, it's in its calculation, which is hardly ever objective and almost always subjective

The subject in the " thesis " as you called it, is very very clear, NO PREDICTION there. How did you missread that ? Either you must have bad eyes or you are deliberately cognitively dissonant.

So the rest of your rant is irrelevant, and I think you will need more luck then I; one for predicting prices on charts without axis no less and two for taking things so personally without justification.

 

[seekingTruth16]

No apology needed but you might think about not deliberately misleading people. I doubt if you even read the article properly before jumping to your own conclusions regardless of what it said:

Very simple really, we as traders are trying to forecast where future prices might be.

Where is the word predict in this ? I said " Forecast" and that is not the same and has a particular meaning in maths.

The first line reads originally in bold no less:

The problem with TA is simple, it's in its calculation, which is hardly ever objective and almost always subjective

The subject in the " thesis " as you called it, is very very clear, NO PREDICTION there. How did you missread that ? Either you must have bad eyes or you are deliberately cognitively dissonant.

So the rest of your rant is irrelevant, and I think you will need more luck then I; one for predicting prices on charts without axis no less and two for taking things so personally without justification.

A moving average is objective. You decide what it's based on, you can base it on the close of a particular timeframe, the high the low, whatever you want. It's just an average. It's an example of TA. I think there are a lot of TA indicators that are objective. That doesn't necessarily make them better forecasters

 

[dbphoenix]

No apology needed but you might think about not deliberately misleading people. I doubt if you even read the article properly before jumping to your own conclusions regardless of what it said:

Very simple really, we as traders are trying to forecast where future prices might be.

Where is the word predict in this ? I said " Forecast" and that is not the same and has a particular meaning in maths.

Forecast or predict, it's immaterial. Some/many traders try to forecast/predict the course of future prices but that's not the function of technical analysis, regardless of the contents of any article.

 

[dbphoenix]

Sounds like you need to pick a good maths textbook.

Why? Technical analysis isn't about math. Which is why small children are so much better at it than adults.

But, as I said, best of luck to you.

 

[wisefoolx]

A moving average is objective. You decide what it's based on, you can base it on the close of a particular timeframe, the high the low, whatever you want. It's just an average. It's an example of TA. I think there are a lot of TA indicators that are objective. That doesn't necessarily make them better forecasters

I already covered this :

" The problem with TA is simple, it's in its calculation, which is hardly ever objective and almost always subjective. "

You two need glasses or something ?

Anyway, true that MA and a few other indicators are objective but in my view the calculations are to simple to be of use, too slow.

I'll will be covering these soon, so do keep an eye out for it .

 

[seekingTruth16]

I already covered this :

" The problem with TA is simple, it's in its calculation, which is hardly ever objective and almost always subjective. "

You two need glasses or something ?

Anyway, true that MA and a few other indicators are objective but in my view the calculations are to simple to be of use, too slow.

I'll will be covering these soon, so do keep an eye out for it .

Sometimes when you're lost and failing and don't really understand, you hit out aggressively at people that are offering you help. You might not realise it's help, because you don't want to listen.

It's almost never necessary to be rude or aggressive and insulting to others. It usually indicates something else.

I hope it works out well for you.

 

[wisefoolx]

Sometimes when you're lost and failing and don't really understand, you hit out aggressively at people that are offering you help. You might not realise it's help, because you don't want to listen.

It's almost never necessary to be rude or aggressive and insulting to others. It usually indicates something else.

I hope it works out well for you.

And sometimes self entitled people use the false excuse of taking things personally when they have suffered imagined sleights.

With an attitude like that I wish you good luck, you might need it ....

 

[wisefoolx]

Why? Technical analysis isn't about math. Which is why small children are so much better at it than adults.

But, as I said, best of luck to you.

Again, you misread and misunderstand. You mean why not ! Who's refering to Technical analysis ? you are, not me.

I'm saying for the umpteenth time, price forecast is about futures prices which is a number and that is based on time, another number.

So give me one good reason why numerical forecast should not be based on numerical analysis (maths ).

At this rate a child would be better than you at maths, I think you are the one that needs the luck.

 

[dbphoenix]

Who's refering to Technical analysis ? you are, not me.

Perhaps you should not have included Technical Analysis in the title of your thread. Then I wouldn't have posted here at all.