Trading Without Charts?

[tomorton]

John1 - All well put together and in obvious good humour. But still wrong.

I would also add another line of thought - but more likely addressed to others than John1 (though he is coy about his actual methodology) - anyone who trades with knowledge or memory of what the market has already done is a chart / TA trader. They may not have a chart in their hands or on-screen, but if their decision is timed according to past price action, they have such a perception in their minds and that is TA.

 

[virtuos0]

Hi Tomorton,
I would just like to make some final comments in reply before I move on.

Regarding paragraph 1 - If the vast majority advocate charts and/or indicators and/or TA and 80-90% lose in the markets, wouldn't this outcome lead a rational person to suspect that something was not right? Aiming to be better than the vast majority at employing an overwhelmingly unsuccessful approach seems to me to be a strange ambition, but then again each to their own. Wouldn't it be smarter to feed of the 80-90% rather than compete with them for some dubious outome. The points that you make regarding market memory are not advantages but rather their weaknesses to be exploited. When in the wild does a preditor pull down the strongest prey, they in fact look for the weakest prey because that is where safety lies? Think about what happens to an animal that keeps returning to the same watering hole at the same time each day, he usually becomes dinner in short order! Trust me on this, I am well aware of perceived market memory, PA, TA and any number of other approaches.

Regarding paragraph 2 re knowledge - I'm reminded of a movie about 2 pool sharks where the old shark teaches the young one how to play better and eventually he wants to take on the old player. After the match as the old player collects his winnings he turns to the young player and says " just because I taught you everything you know, it didn't mean that I taught you everthing that I know"! The implication and insight of this comment should be obvious.

Regarding paragraph 3 - If you follow the implications of my previous comments you should realize whether you or I believe it possible to make money from charts is of no relevence whatsoever. But rather that you should be concentrating on using the chartists weaknesses to your advantage. How can you trade against the herd if you are running with them?

The surest method will place you next to the herd when they are right and on the other side of their trades when they are wrong! If you ever wonder who is on the other side of your trades when you are wrong I can assure you that it is probably me or someone just like me and when you are right we will have usually entered well before you, that I know for a fact, simply from what you have told me!

There is a vast array of knowledge and concepual thinking that is required, to much to be discussed at this time so I will leave you with one other thought.

Once again I advocate clear objective thinking rather than subjective wishful thinking!

Good Trading

The first point you make is often something I've pondered to myself, and I see it like this. If a group of 10,000 people were to suddenly choose to be a professional sportsman in say, tennis, and trained at the finest tennis academy in the world by ex-pro's for five years, what percentage of those beginners would make it to the professional ranks? Certainly less than 10%, maybe less than 1%.

Would you then assume that the lack of success of that group was down to the method, or just the fact that very few people have the talents and qualities needed?

 

[clorets]

Even if you rely heavily on fundamental analysis, its quite difficult to determine resistance/support levels without a chart

 

[Trader333]

John,

I can see where you are coming from on this but I do not see your reasoning for one of your comments. The view that all those who use charts will all take the same directional trade at the same time or join others who have done does not make sense to me. Unless you meant something else and if so please elaborate.


Paul

 

[montmorencyt2w]

The first point you make is often something I've pondered to myself, and I see it like this. If a group of 10,000 people were to suddenly choose to be a professional sportsman in say, tennis, and trained at the finest tennis academy in the world by ex-pro's for five years, what percentage of those beginners would make it to the professional ranks? Certainly less than 10%, maybe less than 1%.

Would you then assume that the lack of success of that group was down to the method, or just the fact that very few people have the talents and qualities needed?

Interesting question. Maybe not many would make it to the professional ranks but I would bet that a reasonable percentage would end up as good club players, not disgracing themselves.

By analogy, I think that a reasonable percentage of people who really work at it can become "good amateur" traders. Not in the same league as the pros, but nevertheless, making a good part-time income out of it (and, dare I say it, perhaps leading a more balanced life than the pros).

 

[John1]

John1 - All well put together and in obvious good humour. But still wrong.

I would also add another line of thought - but more likely addressed to others than John1 (though he is coy about his actual methodology) - anyone who trades with knowledge or memory of what the market has already done is a chart / TA trader. They may not have a chart in their hands or on-screen, but if their decision is timed according to past price action, they have such a perception in their minds and that is TA.

I did in fact clarify my scope in earlier posts. Shifting the goal posts doesn't prove a thing as the vast majority of TA/charting exponents use traditional methods. Otherwise, one might justifyably say that in order to produce a child a man will have equal success if he has sex with a woman or if he goes out and finds himself a bit of manlove. Good luck with that.

Regarding my coyness, if we were discussing the pro's and con's of particular banking methods, I would not feel a need to post my account details and pin numbers on an open internet forum, why is the nitty gritty of my methods any different? Although considering most of the responses it would appear that they would go straight over the top for most people anyway.

I suspect that this phenomenon is due to conditioning that starts at birth and continues at school and then on thru life for most people. The concept of applying specific formulas to problems provide security for people ( the majority ) who have never learnt to survive on their wits and to trust their instincts. For most thinking independantly and creatively is an extremely difficult thing to do as they must then embrace the unknown after spending their lifetime being told that "there be dragons".

In a country song one line goes something like this " the best country songs come from pain and hardship, and O the joy when these befall me " ( because she gets the opportunity to create a possible masterpiece )of course she says this in jest, but underlining this is the opportunity to benefit from introspection and therefore experience. The one thing that stands out with many of the posts is the lack of introspection and consequent insight.

There is no harder victory than when you must battle yourself!

Good Trading

 

[John1]

The first point you make is often something I've pondered to myself, and I see it like this. If a group of 10,000 people were to suddenly choose to be a professional sportsman in say, tennis, and trained at the finest tennis academy in the world by ex-pro's for five years, what percentage of those beginners would make it to the professional ranks? Certainly less than 10%, maybe less than 1%.

Would you then assume that the lack of success of that group was down to the method, or just the fact that very few people have the talents and qualities needed?

The first question that I have is "where can these generous trading professionals willing to train 10,000 beginners be found", (one more urban myth ) the only reliable trading school that I found was the school of hard knocks laced with the very occasional generousity of people who probably felt sorry for me. What I can say without fear of contradiction is that over the years I would have come across at least 10,000 shysters and blind leading the blind! Why would you expect these people to be successful in the markets under any circumstances?

Good Trading

 

[John1]

John,

I can see where you are coming from on this but I do not see your reasoning for one of your comments. The view that all those who use charts will all take the same directional trade at the same time or join others who have done does not make sense to me. Unless you meant something else and if so please elaborate.


Paul

Hi Trader333,
I'm not suggesting that everyone will do the identical thing concurrently, what you need to do when reading comments is try to visualize what the comment implies, in the jungle there will be many different watering holes and many different prey. The preditors know this and usually set their strategies in the safest places where the most prey are to be found.
I cannot stress the importance of introspection enough, if you don't know how animals behave in the wild, take the time to google their behavior and use the knowledge to benefit yourself, that also goes for any other topic.

I see that you are an Arnie fan, if you have seen the movie Preditor then you should have some idea about what you are up against in the markets.

There are no "Marques of Queensbury" rules here! It's dog eat dog!

Good Trading

 

[counter_violent]

Who are you John

Posts of this depth and quality are rare indeed...cheers.

 

[John1]

Interesting question. Maybe not many would make it to the professional ranks but I would bet that a reasonable percentage would end up as good club players, not disgracing themselves.

By analogy, I think that a reasonable percentage of people who really work at it can become "good amateur" traders. Not in the same league as the pros, but nevertheless, making a good part-time income out of it (and, dare I say it, perhaps leading a more balanced life than the pros).

I'm sorry but once again I find myself disagreeing with someone on this thread. Perhaps a short anecdote will suffice.

As a young man any time I needed money I would simply pick up my Snooker cue and go out to find some. Within myself I harboured the desire to one day become a pro, unfortunately like so many trader hopefuls I to had no realistic idea how this might be achieved. As a consequence of this lack of knowledge and other choices I ended up remaining in the amateur ranks. By 1993/4 my game had slipped yet by amateur standards I still played a mean game. Around that time the Australian open was held in Melbourne and I took my children along to watch as I had played in inter club competition against many of the amateur players some of whom had or were state and Australian champions( I'm not suggesting that I could consistently beat these champions). We also had some very low ranked British professionals come out to play. From the very start the standard of the lowest ranked pro was obviously far superior to our best amateur champion. The upshot was, the professionals took home the money and the amateurs simply had fun.
If there is money involved then it is business, if it is business then it is professional, if it is professional then you better be up to the task or you to will go home empty handed.

The lesson that I needed to learn as a young man was, you must clearly state your goals and discover what is required to achieve them, ensure that nothing stands in your road, but most importantly understand what and who you are up against, this includes yourself.

So if you want to make money at this business you better make sure that you are at least as good as the other professionals.

Good Trading

 

[John1]

Who are you John

Posts of this depth and quality are rare indeed...cheers.

Hi counter_violent,
Thank you for your kind words. I'm just one more anonymous poster on the blog. Initially I signed up in the hope of talking to various posters in the local area as I'm at a loose end until I fly out to the west coast on sunday, but the only response was from the poster who seems to have been deleted, but that was a bizzare experience in itself. Most people would be surprised if they realized just how much their posts and PMs can reveal to an observant reader. It's unusual for me to get into a discussion regarding the pros and cons of charting as these can quickly deteriate into the equivalent of a man arguing against misandry at a feminist convention.

Good Trading

 

[Black Swan]

Who are you John

Posts of this depth and quality are rare indeed...cheers.

Agreed, very enjoyable stuff. He should be given zen master status, forced to sit in a T2W 'enlightened corner' and spout pearls of trading (and life/universe) wisdom each day....so what if we miss our entries, it'll be worth it... You should give him one of those crowns, best posts by a newcomer or something...

 

[pedro01]

John

One thing about your posts... if you are looking for areas where other traders may be 'feeding at the watering hole', aren't going to need to look at charts ?

For instance, it's not that hard to see where breakout traders/S&R traders may have their entries & stops and it's interesting to watch the market go through their entry, reverse over the stops & then march on through their entry again.

To do this though, don't you need a chart ?

Also - you speak of 'who are you trading against' - well, a lot of the time, you aren't trading against anyone. Some people see this game as a 'them against us' thing, pro's against amateurs. Sometimes though, prices go up not because some savvy pro trader is taking out stops but because some mutual fund/UIT has a new influx of cash and needs to go out & buy the necessary stocks. Sure, they can try to limit their footprint and their impact on the price, but they aren't trading against anyone, they are buying because they have to.

Conversly, a mutual fund/UIT may need to sell shares because of redemtions & they may need to do this regardless of how much they lose on the sale. They don't even need to worry about what is lost on the sale as they are not paid commissions based on performance. Their trading is done without regards to profit, they never lose because they always get their management fee.

I think there's plenty of activity in the market that occurs because it has to and not because of some bunch of 'pros' out to move money from the banks of 'amateurs'.

 

[Trader333]

Although considering most of the responses it would appear that they would go straight over the top for most people anyway.

Why not try us as you may be pleasantly surprised ?


Paul

 

[morgan_edge]

This thread shouldn't really be playing on my mind, as I've been reasonably successful and consistent for quite a while now mainly WITH using charts/TA, but what ways of trading are there that dont use charts? Trading stocks based on company analysis/numbers? Trading off of the DOM maybe?
I have a system for the DOW that ive used with good effect for years which i trade purely off of an excel spreadsheet, so maybe that's what we're talking about?
Anyone gonna give a clue? Counter_Violent? You seem to be on John's wave length??

 

[John1]

Why not try us as you may be pleasantly surprised ?


Paul

Hi Paul,
I will address Pedro01s' questions next but please be aware that I have limited time as I have agreed to entertain my 4 year old over the next few days as my wife works on her masters, and I will be on a plane first thing sunday morning.

Good Trading

 

[John1]

John

One thing about your posts... if you are looking for areas where other traders may be 'feeding at the watering hole', aren't going to need to look at charts ?

For instance, it's not that hard to see where breakout traders/S&R traders may have their entries & stops and it's interesting to watch the market go through their entry, reverse over the stops & then march on through their entry again.

To do this though, don't you need a chart ?

Also - you speak of 'who are you trading against' - well, a lot of the time, you aren't trading against anyone. Some people see this game as a 'them against us' thing, pro's against amateurs. Sometimes though, prices go up not because some savvy pro trader is taking out stops but because some mutual fund/UIT has a new influx of cash and needs to go out & buy the necessary stocks. Sure, they can try to limit their footprint and their impact on the price, but they aren't trading against anyone, they are buying because they have to.

Conversly, a mutual fund/UIT may need to sell shares because of redemtions & they may need to do this regardless of how much they lose on the sale. They don't even need to worry about what is lost on the sale as they are not paid commissions based on performance. Their trading is done without regards to profit, they never lose because they always get their management fee.

I think there's plenty of activity in the market that occurs because it has to and not because of some bunch of 'pros' out to move money from the banks of 'amateurs'.

Hi Pedro01,
We seem to be at cross purposes, me viewing things from a intuative perspective and you from a conventional perspective. As such I need to be more aware of these differences in perspective.

When I spoke about who you are trading against I was referring to their approach within the sphere of trading not a specific group of people. Also I am not talking about anyone running stops, you will generally find this occuring when the market is not over extended, that is where the majority of chartists/ TA proponents enter. Why do you think that funds run by professionals would buy stocks willy nilly without considering situational issues,I can think of strategies they might employ to overcome short term price inefficiencys why can't they, any business that is not performance based will not survive in the long run.
In previous posts I referred to introspection, I cannot express how important it is to seriously consider, yourself, each piece of the puzzle and how they intergrate, look at the bottom look at the sides turn it inside out, whatever it takes, insights that I've discovered have often taken months or even years to reveal themselves and still I cannot be sure that I have achieved the full benefit. Whether you realize it or not my posts contain many hidden insights but it is up to you to reveal them in the form that your personality operates.

Good Trading

 

[cr6196]

"Whether you realize it or not my posts contain many hidden insights but it is up to you to reveal them in the form that your personality operates"

that sounds familiar, something about a basement...

 

[John1]

"Whether you realize it or not my posts contain many hidden insights but it is up to you to reveal them in the form that your personality operates"

that sounds familiar, something about a basement...

Hi cr6196,
Sorry mate, I'm not quite sure what you are trying to say, could you please expand on your comment.

Good Trading

 

[cr6196]

sorry i was referring to a previous poster on this site who used to quite like allegories and metaphors and hidden things...i wasn't really going to add any personal input beyond that but i find them to be unhelpful, i tend to be quite simple like that, if you want to say something say it. I have lost the thread of this discussion somewhat.