why-technical-analysis-is-nonsense

rags2riches said:
I found some of the comments interesting/amusing.
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QFT

My viewpoint has always been that most things are valid, everything shows you the same picture really. Indicators work perfectly fine if you understand them and know what to look for. Chart patterns etc are for people who know the market better and can basicly read what an indicator would show you right off the chart, and those in the city (from my experience) just read the tape because they sit at the chair all day and don't need a chart to tell them where price was last month, they know!
 
intraday trading

Hello,

Is it more important to know what than why, when applying candlestick patterns to intraday ES trading? Where almost always, there are 2 runs per day. Or a simple ranging day? With the occasional "trend" day. Does "why" help on a "trend" day, or is what the all day issue? thanks george
 
Thanks, it was worth a read :) Many would say fundamental analysis is nonsense too. and would cite example after example of price doing the opposite of what the fundamentals should imply. Or before crashes the price starting to go into a downtrend which is not based on any known fundamentals. I tend to think that neither is useless. The edge they give may be minimal, but it is added information beyond chucking darts at a board. The only problem is when you misuse some parts of technical analysis.

I mean, trend lines are technical analysis. And it doesn't really matter why it works, but if a % believe in technical analysis, then price will often bounce off a trend line. Fibonacci levels might be nonsense, but if there is a % of traders who believe it will retrace to the 50% level and then continue the original move, then you will see a bounce. It might bounce for a few ticks, and then reverse and go in the opposite direction.

At the end of the day, the price is driven by sentiment. And if 30% believe in fundamantals, and 10% believe in technical analysis, and rest believe in buy and hold or tossing coins to pick up or down, then there is value in knowing which direction those 30% think it will go, and which direction those 10% think it will go. Haven't certain 'market wizards' made fortunes using indicators based only on price? I believe there are some successul trend following hedge funds (and some unsuccessful ones), but this article kinda makes it seem that nobody uses technical analysis.

But what do I know...I'm not an experienced trader.
 
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If I use candlesticks only trading the es, 15 minute chart with no lines, no indicators of any kind, only candles patterns, hammers, shooting stars, etc. is that failure looking for place to happen?
 
Just in case anyone thinks I'm being serious, I think technical analysis is great trading tool and if it works then it works. The "why" is secondary. :)
 
The biggest problem with the broad brush comments about ta being worthless, is , this comes from those who trade position trading, equities, etc. Intraday trading eminis will be conquered when you use candlesticks, no lines, no guessing based on a few years of hard work, all system components are candles and rules...no times/no news/no s/r/no why...never any why...only what and the one word never used........where?...where on the chart is it showing what?...not just what...why is not in my trading vocabulary. The great why traders referred to do not trade emini s intraday relying on why.....2 trades per day normal...why is irrelevant.....what/ trend is ...then get to the point where you can nail the apex within a couple of points and you beat the why guys easily..
 
Calinor said:
Thanks, it was worth a read :) Many would say fundamental analysis is nonsense too. and would cite example after example of price doing the opposite of what the fundamentals should imply. Or before crashes the price starting to go into a downtrend which is not based on any known fundamentals. I tend to think that neither is useless. The edge they give may be minimal, but it is added information beyond chucking darts at a board. The only problem is when you misuse some parts of technical analysis.

I mean, trend lines are technical analysis. And it doesn't really matter why it works, but if a % believe in technical analysis, then price will often bounce off a trend line. Fibonacci levels might be nonsense, but if there is a % of traders who believe it will retrace to the 50% level and then continue the original move, then you will see a bounce. It might bounce for a few ticks, and then reverse and go in the opposite direction.

At the end of the day, the price is driven by sentiment. And if 30% believe in fundamantals, and 10% believe in technical analysis, and rest believe in buy and hold or tossing coins to pick up or down, then there is value in knowing which direction those 30% think it will go, and which direction those 10% think it will go. Haven't certain 'market wizards' made fortunes using indicators based only on price? I believe there are some successul trend following hedge funds (and some unsuccessful ones), but this article kinda makes it seem that nobody uses technical analysis.

But what do I know...I'm not an experienced trader.
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Calinor, an exceptional post and one which leaves me, quite uncharacteristically, with nothing to add.

Spot on.

For those interested in an intelligent review of the usefulness (or lack thereof) of TA from a pro traders perspective I can wholly recommend "Technical Analysis and the Active Trader”; Gary Norden.
 
when i say nail the apex that is something dbphoenix said few can ever do as it takes massive time and effort to get there...few will do that ..it is more of a personal thing for me but it does help to id the end of run and zero starting point {mr marcus term} of new run.../channel.../trend/
 
TheBramble...with much respect I ask the question. Do you remember Mr. Marcus. He is special to me. I know he was gravely ill and I cannot reach him via email. Have you heard anything of him? Thank You ymanly
 
TheBramble said:
Calinor, an exceptional post and one which leaves me, quite uncharacteristically, with nothing to add.

Spot on.

For those interested in an intelligent review of the usefulness (or lack thereof) of TA from a pro traders perspective I can wholly recommend "Technical Analysis and the Active Trader”; Gary Norden.
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Tony,

You seem very 'sheepish' :LOL: in your return from the oblivion. You've just read a post where the poster admits to the markets being driven by sentiment, and yet you have 'uncharacteristically' nothing to add????




I guess you are getting old, Tony.



Love you,



Paul.
 
ymanly said:
TheBramble...with much respect I ask the question. Do you remember Mr. Marcus. He is special to me. I know he was gravely ill and I cannot reach him via email. Have you heard anything of him? Thank You ymanly
Click to expand...
You only joined Tueday this week so how do you know of dbp and Mr.M?

Mr.M has been posting here this week so not that gravely ill obviously.

Try repping or PMing him if you don't have his email.
 
Paul71 said:
You seem very 'sheepish' :LOL:
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That’s lost on me Paul. Sheepish? Spell it out my boy.

Paul71 said:
in your return from the oblivion.
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It seems to me more appropriate to consider I have returned TO the oblivion - to help you lot out, even though most of you don’t deserve it.

Paul71 said:
You've just read a post where the poster admits to the markets being driven by sentiment, and yet you have 'uncharacteristically' nothing to add????
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There are more things in Heaven and Earth…..

Paul71 said:
I guess you are getting old, Tony.
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Undoubtedly. Older but no wiser. It’ll hit you hard when you realise we are probably both aging at a similar rate. Although in my case, my looks will never fade.

Paul71 said:
Love you,
Click to expand...
I know. Love you too hoo….
 
TheBramble said:
That’s lost on me Paul. Sheepish? Spell it out my boy.

It seems to me more appropriate to consider I have returned TO the oblivion - to help you lot out, even though most of you don’t deserve it.

There are more things in Heaven and Earth…..

Undoubtedly. Older but no wiser. It’ll hit you hard when you realise we are probably both aging at a similar rate. Although in my case, my looks will never fade.

I know. Love you too hoo….
Click to expand...





:LOL:Yeah, you are now in the oblivion. The heaven and Earth bit though.....you can't use that.....surely? As for the age thing, surely you will start losing your marbles at a faster rate then me......i'm sure you are older??


Sheepish. I don't know wether or not you have stopped progressing and relapsed into an indicator type trance/mode:)




Q) In a perfect world, who can make the most money out of a move? The indicator trader or the PA trader?
 
Paul71 said:
:LOL:Yeah, you are now in the oblivion. As for the age thing, surely you will start losing your marbles at a faster rate then me......i'm sure you are older??
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All depends on how many marbles you start off with doesn’t it. And I do hear that the half-life of a marble is positively related to the degree and frequency with which it is polished, so self-determination still has a green light. Older than you? No idea. I’ve been on a cusp for so long I’ve forgotten. I guess it’s all relative. I may seem like I’m travelling at NLS, but honest, I’m just young, beautiful and smart. And becoming more so.

Paul71 said:
Q) In a perfect world, who can make the most money out of a move? The indicator trader or the PA trader?
Click to expand...
PA? I’m guessing you meant FA?

You know that’s not the question Paul.

Are both these traders equally intelligent, experienced, versed in all aspects of all markets and the links between them, and in econometrics, math, astrology, astronomy, physics, behavioural finance, biblical archaeology, Egyptology, esoteric studies and the occult, bushido, zen, martial arts, psychology, Taoism, global politics, technology and applied sciences, geometry, music, philosophy, navigation and cartography, meteorology, and do both of them both posses equal measures or wit, charm, humour and patience?

If they do, statistically, they should do equally well over time regardless of their predominant approach, system or methodology. He or she who will do best of all, of course, will adhere no more strongly to one style than the other and will take them and use them both for what they each have to offer. It’s much harder work and it takes greater effort and a little more time.

But what of the Lucky Fool? There are far more of them and they will do what looks good and they will do well, some of them anyway, for a while, at least. And they will swear that is either has to be A or has to be B and it’s definitely this method or that strategy. None of which is correct of course. They just got lucky, but not for long. They will tend to be looking at a screen full of colourful lines.
 
They are all technicians....they just don't realise it.

Measuring something against something...

What do all these different groups do?

Quants
FA
TA
and all the rest of them by whatever name they choose.

They ALL measure...therefore they are ALL technicians.:mad:
 
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